Since the inception of crypto-assets, tokenomics have been a fresh attempt at designing asset ownership instruments from first principles.
However, we're just scratching the surface. A thread on how tokenomics can develop in a xchain world
👇
1/ Recap
Currently, tokens are used primarily as a growth marketing tool. Via liquidity mining, protocols spend 'equity' in return for bootstrapping initial adoption.
This has been wildly successful, with Compound's LM event kickstarting the original DeFi Summer last year.
2/ Since then, LM programs have been the bread & butter growth hacking mechanism for new protocols.
However designing LM programs are extremely tricky.
Give away too much, and you'll have little left in the tank for the future. Too little, and competitors will overshadow you.
3/ Cross chain world
When everyone was playing in the same pond (base layer ETH), things were simple.
Vampiric forks were deemed as direct competitors attempting to take away incumbents' market share.
But what happens when cross-chain / L2 ecosystems begin springing up?
4/ At this juncture, few protocols have the necessary resources to launch multiple versions of their product across different chains.
Not only does it cost an exorbitant amt of technical resources, but launching multiple LM programs at once is simply unsustainable.
5/ Friendly forks
As such, cross-ecosystem collaborations between different dev teams are now feasible.
Why spend the time/effort/tokens on another chain if you could green stamp another team that forks your code and channels value to you?
Ellipsis is an authorized fork of Curve on BSC that is publicly backed by Curve. This has allowed them to garner much stronger market traction, riding on the goodwill and brand recognition of Curve.
Fluity is a similar friendly fork of Liquity on BSC. All $LQTY holders are rewarded with 25% of all the $FLTY tokens over the course of 2 years. However, Liquity currently has 'no oversight' over Fluity.
9/ These examples show how protocols are beginning to work together to form Parent - Subsidiary relationships.
Parent enjoys 'royalties' in the form of airdrops / fees generated by the sub.
Subsidiary enjoys brand recognition + advisory from Parent to accelerate early adoption
10/ DeFi Conglomerates
Moving forward, this type of growth strategy will likely see increased adoption by ETH-based DeFi majors.
Most of them are simply swamped with meeting roadmap goals and have not designed LT strategies & LM programs to include multiple DeFi ecosystems
11/ If DeFi bluechips are able to formulate partnerships with clear value accrual to their own token, I see no reason why they can't become the dominant Parent token across different ecosystems.
This may very well be how the first DeFi Conglomerates take shape.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
4 months ago, Bancor released their flagship single sided Impermanent Loss protection solution for LPs.
70x increase in TVL and 55x increase in volume later,
I present a deep dive on a forgotten DEX that may be the dark horse of 2021
👇
1/ Story so far
Bancor is a OG DEX launched in 2018 (to much fanfare) but suffered from an overcomplicated token model and lacked noticeable traction despite lofty promises.
2/ After 2 years of behind the scenes product iteration and a leadership reshuffle, the original Bancor vision is being realised. Consequently, the Bancorian community is stronger than ever led by @yudilevi@NateHindman@MBRichardson87.
2/ dHedge's value proposition is simple. It provides a platform for active fund managers to showcase their trading prowess, with a transparent scoreboard for all to see.
Managers can also interact with their investors via public and private posts
3/ Since Mainnet launch in late Oct 2020, dHedge's traction has been growing steadily with ~14m TVL today and over 200 active managers.
Cumulative trading vol on the platform stand at $87m, providing a nice boost to the underlying SNX system as well.
Right now ~$2.3bn funds are deployed farming UNI, with $ETH being the reference token.
This means that there is currently ~$1.1bn ETH locked up, about to be released into the wild.
Where do you think that ETH will go?
2/ Whilst a large portion of current TVL will stay in the same pools (fees generated are juicy), I posit a reasonable amount of ETH will leave the Uniswap system in search of higher yields.
Nobody knows numbers at this point but 50% of TVL leaving may be within reason.
3/ If this holds true, ~$500mm ETH will be on the market. They can:
A): Stake elsewhere ($SUSHI/$ALPHA/ETH 2.0 etc)
B): Remain in holder wallets (unlikely)
C): Be sold for stables / altcoins