Thread by @ahboyash

1/
With crypto experiencing high degree of price fluctuations, it is imperative for protocols to offer safer products for the more risk averse investors.

Enter @templedao, which aims to offer a safe place for DeFi natives to seek refuge against volatility.

An ELI5 thread 👇

2/
TLDR: TempleDAO offers users automated investment pools to stake tokens to earn yield while reducing price fluctuations often seen in high risk crypto coins.

They employ several stability features in order to help stabilize the protocol and ensure investors are protected.

3/
Gap in the market
- Fixed supply of tokens: as more people enter this causes price to rise > early investors start selling which causes price to fall

- Mint 2nd token to incentivize staking: usually a worthless token which causes also causes mass selling

PUMP & DUMP 👎

4/
TempleDAO - what is it?
As mentioned, the primary function of TempleDAO is to offer a safe place to shelter DeFi users from market volatility.

Their flagship token, $TEMPLE is the first coin that can be staked to reduce volatility and earn yield.

5/
*Key points:
- Intrinsic value (IV) of $TEMPLE = total reserves / total supply.
- New $TEMPLE can only be minted if the IV is still increasing (prevents dilution of value)

6/
Why should users stake in the temple?
$TEMPLE was designed with 3 concepts in mind:
- Community first (ecosystem growth benefits $TEMPLE holders)
- Long term value creation (stakers enjoy full benefits)
- An automated and simple strategy (ability to pre-select risk level)

7/
How does TempleDAO protect its users?
There are 5 mechanisms used in the $TEMPLE to help stabilize the protocol which will be covered in more detail in the following tweets

8/
a) Rewards Backed by Intrinsic Value
Instead of minting infinite rewards for farmers (diluting the IV), a Safe Harvest is conducted.

This is done by:
i. Setting a limit of $TEMPLE rewards that can be shared without diluting the intrinsic value

9/
ii. Not giving all of the rewards to users, the rest are:
- given back to the team for future developments
- burned in order for the intrinsic value to rise over time

10/
b) Price Premium Ceiling reduces dumps
Users are incentivized to purchase $TEMPLE directly from the protocol over an AMM because:
- TempleDAO offers $TEMPLE at a fixed price (cheaper than AMM)
- Arbitrage opportunity - buy from the protocol and sell it on the AMM for profit

11/
*Note: the price cap is not disadvantageous for $TEMPLE holders because every purchase in TempleDAO is fed back to the reserves which is used for rewarding stakers and compounding value.

12/
c) Bonus APY Offer encourages buying
During periods where the Temple may have excess rewards due to its Safe Harvest mechanism, special offers are available for a short duration.

Buyers can stake their $TEMPLE to receive the Bonus APY offer (on top of existing rewards).

13/
d) Unstaking Queue stops the pump and dump
Should users unstake their $TEMPLE, it enters a queue based on first in first out.

Every block will have a specific volume of $TEMPLE that is processed for unstaking - effectively reducing the sell pressure of dumping all at once

14/
e) Temple Defend - price floor
During periods of selling pressure, users are incentivized to purchase cheap $TEMPLE from AMMs and have the right to sell it to the Temple at a predetermined floor price.

Users profit due to an arbitrage opportunity while driving prices up.

15/
In the event where the price of $TEMPLE rises (as it should) and surpasses its IV, you can opt to keep your $TEMPLE and stake it.

Since you can always sell it at Defend price, it's a win-win situation regardless the price of $TEMPLE is. Your money, your risk preference.

16/
Closing thoughts
Personally, I am very excited with the unique stability mechanisms that TempleDAO has crafted.

Would be interesting to see how this would reflect IRL conditions. With a strong community building on Discord and Twitter, I will be keeping a close eye on this

17/
Relevant links
Discord: discord.com/invite/frCbCrG…

Website: templedao.link

Twitter: twitter.com/templedao

Medium: templedao.medium.com

@CHICHIROBOTTO @BBO_gmon3y @lostboyfi