Thread by @ogiberstein

The many ways of the Temple are not always clear to the aspiring acolytes.

Here's a ELI5 thread about Temple Defend.

1) Remember, @templedao's goal is to create 'safe haven' low volatility pools. Its $TEMPLE token captures and incorporates this same principle.

2) What do $TEMPLE believers hate? Pumps and dumps, boring stablecoins, hyped projects that quickly go to the moon and drop even faster (I am looking at you $TITAN and $GAIA) - there is nothing of value here.

What do $TEMPLE believers like? Enter the 'backed, not pegged' meme.

3) You might remember this from @OlympusDAO. Indeed, the genius treasury mechanics behind $OHM are now being smartly utilised by other projects.

The goal? Suck out liquidity, control liquidity, build treasury reserves. Pegs are volatile. Pegs must be defended, pegs can break.

4) What is less likely to break? Built-up treasury reserves that can BACK the value of an asset without guaranteeing a specific price. While this does not remove volatility, it's fascinating to see how $OHM seems to move in pretty stable ranges in terms of price

5) The gains to holders come through market cap appreciation. Stakers win as they keep increasing their total share of market cap, traders lose.

This is quickly becoming a holy-grail approach. What do you need to make it work? An army of true believers. Maybe even a cult...

6) Why army of true believers? Because you need a shared belief/meme about holding the lines and how not selling will benefit everyone. Anon, you might have heard of (3,3) by now.

@templedao takes this concept and innovates it further. This is where Temple Defend comes in.

7) What @OlympusDAO calls risk-free value is referred to as Intrinsic Value by @templedao. For both protocols you can buy their tokens directly from a DEX like @SushiSwap OR you can choose to buy it from the protocol. Buying from the protocol gives you advantages...

8) such as a discounted price through bonds on @OlympusDAO.

Intrinsic Value is critical. Both protocols use the funds generated through sales to a) reward stakers [hence the high APY] and b) build a reserves treasury. The ratio is locked so for every sale of $TEMPLE...

9) The Intrinsic Value of $TEMPLE goes up. It means that $TEMPLE's market cap is BACKED by a larger number of stablecoins [we can talk about stablecoin regulatory attack vectors another time ...]. This sets a 'fair minimum price' which the treasury can DEFEND.

10) $TEMPLE expansion is only possible at a certain multiple above this Intrinsic Value. The priests want to keep $TEMPLE on a tight leash, not going too low but also not too high with the believers slowly staking their way to wealth and spiritual freedom.

Back to DEFEND.

11) What happens if there is a dump on an AMM? Let's look at a hypothetical numbers example:

Intrinsic Value of assets in treasury: $5m
Supply: 1m $TEMPLE

Let's assume the backing multiple is 5. Each $TEMPLE would be backed by $1 of assets in the treasury. That means that if

12) $TEMPLE starts trading for $0.8 on a Dex, the priests are confident that price will soon enough come back to the Intrinsic Value price of $1. They could let it be or intervene themselves to arb the gain but instead they give you, anon, the opportunity to right this wrong.

13) As the exchange price drops below Intrinsic Value, DEFEND gets triggered [I wonder what oracle they use?]. A Smart Contract activates to attract EVEN MORE staking by incentivising people to buy $TEMPLE on the Dex and stake it in the Temple.

You now have ... options.

14) With DEFEND, the Temple makes you a Win/Win offer: as per example above, buy 1 $TEMPLE for $1 on the Dex. Stake it in the DEFEND Smart Contract.

IF the price of $TEMPLE returns above $1, you benefit from price appreciation and can just migrate your $TEMPLE to the ...

15) regular staking contract. Congrats, you just got $TEMPLE at a discount and are making money through staking.

But IF, for whatever reason, the price of $TEMPLE does not return above Intrinsic Value quickly, you keep the Option to sell to the Temple at...

16) the Intrinsic Value price of, in our example, $1. In finance this would be called a Put Option. Either way you win.

DEFEND is yet another smart mechanism to suck volatility out of $TEMPLE and ensure its value moves smoothly within the desired minimum/maximum price channel..

17) priests are peaceful but they are armed to their teeth with everything it takes to defend their token. Think of DEFEND as the inner defence mechanisms to ensure that doubters become stakers. Anyone who might have wanted to net the arbitrage opportunity instead...

18) has the option to become a staker without giving up the possibility to take that arbitrage profit if things don't play out as promised. As added benefit this arbitrageur might now become a long-term staker. Win/Win.

Pretty smart, huh? Don't mess with the Priests, anon!

19) I am really enjoying these $TEMPLE deep-dives!

A few open questions for me:
1) How do I know in Defend that the protocol will have sufficient 'Intrinsic Value' assets to guarantee me that original price?

2) Who triggers the Defend mode? Is an oracle involved?

#fireritual