Rewarding users based on network adoption. DAFI uses synthetics for a better incentive model for every decentralized economy. The first protocol to enable staking, liquidity and bounties proportional to every network's own demand.
DAO Approved Metrics
What is DAFI Protocol (DAFI)?
All decentralized economies distribute tokens to users. The problem is that distributing tokens when adoption is low, creates an excess supply & devalues the economy. There is no link between the release of network supply and the network's adoption. This harms longer-term users and only favours short-term participants.
Dafi introduces the first alternative since Bitcoin, to use network rewards for building a decentralized economy. Instead of directly issuing tokens for staking & liquidity – Dafi ties synthetics to each network's adoption. This means that the token release & network demand is proportional. Meaning users are still incentivized when adoption is low, but by being rewarded later, not earlier. By linking these two factors, it attracts longer-term users to be incentivized longer, supporting adoption.
Dafi enables every protocol and platform to create a synthetic flavor from their native token. This is then algorithmically pegged to the demand of their network and distributed to users. Synthetic dTokens on Dafi can be created by projects and distributed to their users for Staking, Nodes, Liquidity, or even Participation/Bounty rewards.
Individuals can stake the DAFI token for governance and collateralize the creation of dDAFI, the first synthetic unit which is tied to network demand. The quantity of the synthetic can increase only as network adoption rises – incentivizing longer-term users.
Dafi is based on core economic principles, including:
1. Reducing the number of network rewards initially, as demand is too low. This would only lead to supply-shocks and risks, such as single-user control of network value.
2. Increasing issuance of tokens only as adoption rises – forming a direct link between these two market-factors for a better, healthy growth of decentralized economies.
3. Enhancing scarcity when networks decline in demand, to protect an economy, an adaptive response is required to prevent an over-release of tokens. Even during low demand periods, users are still rewarded for participation later – when demand rises.
What is DAFI Protocol (DAFI) marketing strategy?
Dafi solves a pain-point, for both projects (which want to reward users without destroying a token) and users (the current model only favors short term participants).
If a project has a token, they can create a dToken with Dafi. Even as low as 0.1% of their supply can be used. Meaning, the strategy is not to tackle replacing staking or liquidity incentives straight away. The best strategy is to start small, allow for a protocol to issue out a synthetic reward tied to the adoption/demand of their network - for bounty purposes.
There was a time when bounties used to work, but economically they make no sense. It became an expensive user acquisition strategy. Dafi allows projects to distribute a reduced quantity of synthetics instead and allow that quantity to grow only as the demand of the network grows. Meaning short-term users burn the synthetic for a low end-token quantity. Longer-term users hold onto the synthetic and are rewarded through the adoption of the network (synthetic quantity expanding).
What makes DAFI Protocol (DAFI) unique?
Dafi creates a plug-and-play solution, which is simple to use for most networks, with minor changes in their architecture. The synthetics are represented as tokens that are governed by smart contracts that adjust their quantity relative to the chosen network demand. Projects lock the amount of tokens they desire and create a number of dTokens based on (current demand/baseline demand) * Synthetic quantity.
Demand itself can be modified to select a range of variables to suit each token economy, including:
- Price (the most significant weight, to calculate a demand factor)
- On-chain volume (TX quantities)
- Transaction value (Beckstrom's law, the value of TX's minus cost of TX's)
- Off-chain volume (a chosen CEX)
- Nodes (Metcalfe's law, nodes quantity squared, n2)
- TVL (Value locked in the network e.g. in Staking contracts)
Dafi is implementing demand as a condition for network rewards, because that is what markets are controlled by, not time.
What is DAFI Protocol (DAFI) roadmap?
DAFI Protocol (DAFI) revenue streams
What technologies DAFI Protocol (DAFI) created and used?
Dafi uses Ethereum blockchain as their core blockchain network. This blockchain has the largest ecosystem of protocols for implementations with Dafi. Dafi will later implement a chain compatibility solution for protocols to create synthetics.
The project is using this high-level programming language for the smart contracts development.
Integration with decentralized oracle providers to retrieve the desired data from each network.
The team has developed a proprietary pegging algorithm for the correct functioning and price peg of synthetics created with the protocol.
What are DAFI Protocol (DAFI) tokenomics?