Ponzinomics at its best or how to evaluate a fair price for $ACID
Thread 🧵
Thread 🧵
1/ What is @0xAcidDAO?
0xACID aims to maximize the return on LSD assets (such as stETH, rETH, frxETH, etc.) and provide a much higher return than ordinary LSD assets (which typically only have 4-5% APR).
But how?
0xACID aims to maximize the return on LSD assets (such as stETH, rETH, frxETH, etc.) and provide a much higher return than ordinary LSD assets (which typically only have 4-5% APR).
But how?
2/ Since everyone is in the same conditions (Lido or Frax are not paying an extra % to Acid), there should be a way how Acid would pay higher returns.
Here come the ponzinomics.
Here come the ponzinomics.
3/ All profits generated by the 0xACID protocol are distributed to the holders of locked-up $ACID in the form of $wstETH.
When $ACID locked-up TVL is lower than the treasury value, users will always be getting higher staking rewards.
When $ACID locked-up TVL is lower than the treasury value, users will always be getting higher staking rewards.
4/ More than that, $ACID yield is $wstETH also depends on the length of locking (up to 1 year) and the ratio of supply locked. The lower the locking ratio - the higher the rewards.
Currently, locked $acid is earning 10-27% APR in $wstETH.
Currently, locked $acid is earning 10-27% APR in $wstETH.
5/ There are 3 ways how $acid is entering the market:
• Bonding
Users can bond $eth and get acid at a discount which is vested for 36 hours.
• Bonding
Users can bond $eth and get acid at a discount which is vested for 36 hours.
7/ Or
• esACID vesting
$ACID stakers are receiving esACID rewards.
To initiate esACID vesting user has to stake a 200% amount of $ACID first and then esACID tokens will vest linearly into $ACID over a 30-day period.
• esACID vesting
$ACID stakers are receiving esACID rewards.
To initiate esACID vesting user has to stake a 200% amount of $ACID first and then esACID tokens will vest linearly into $ACID over a 30-day period.
8/ With the current emissions (500% APR into the acid-eth pool), esACID rewards (3000-9000% APR), and bond discount 5-12% vested for 36 hours we can expect that the price of $ACID might go to zero.
But is it the case?
But is it the case?
9/ I don't think so, but I would not also rush to buy/bond $acid right now either. Instead, we can calculate what would be an attractive price to buy $acid.
Acid treasury is 4670 $ETH ~ $8.3M, while the $ACID market cap is $11.8m. So $acid is traded at a 42% premium now, but...
Acid treasury is 4670 $ETH ~ $8.3M, while the $ACID market cap is $11.8m. So $acid is traded at a 42% premium now, but...
10/ But you can bond $ETH to get $ACID at a discount. Discounts are varying and while I was writing this thread I saw they were in the range of 5% to 12%.
Even at the highest 12% discount $ACID will is at a 25% premium which is still expensive, except...
Even at the highest 12% discount $ACID will is at a 25% premium which is still expensive, except...
11/ Except locked $ACID has boosted staking rewards (paid in $ETH).
However, I am still expecting that the $acid price will go lower due to high emissions and bonding, but will not go to zero for 2 simple reasons.
However, I am still expecting that the $acid price will go lower due to high emissions and bonding, but will not go to zero for 2 simple reasons.
12/
• When the $acid market cap is lower than the treasury, users will be simply buying "discounted ETH exposure" (buying $acid is nothing else than getting exposure to ETH+yield) with boosted yield (even if 100% supply is locked $acid yield will be higher than $eth yield).
• When the $acid market cap is lower than the treasury, users will be simply buying "discounted ETH exposure" (buying $acid is nothing else than getting exposure to ETH+yield) with boosted yield (even if 100% supply is locked $acid yield will be higher than $eth yield).
13/
• And the protocol will be exposed to treasury hunters.
$ACID market cap is way lower than the treasury value?
No problem, @dcfgod will buy your governance tokens and liquidate the treasury (governance is not yet introduced at Acid).
• And the protocol will be exposed to treasury hunters.
$ACID market cap is way lower than the treasury value?
No problem, @dcfgod will buy your governance tokens and liquidate the treasury (governance is not yet introduced at Acid).
https://twitter.com/DeFi_Made_Here/status/1554473664120250371?s=20
14/ For me $ACID might be attractive if
• I want to have exposure to $eth
• $acid market cap is ~= $eth in the treasury
• Governance is live
But anyways it would be interesting to monitor how investors and the price behave over time.
• I want to have exposure to $eth
• $acid market cap is ~= $eth in the treasury
• Governance is live
But anyways it would be interesting to monitor how investors and the price behave over time.
15/ I think that Acid has great ponzinomics, very similar to ohm forks. Some investors will lose again because they do not really understand what/why they are buying.
But that's their problem.
But that's their problem.
16/ Imo, Acid can survive long term if not rugged / exploited, or in the worst case treasury might be liquidated (and distributed to $acid holders).
What do you think?
What do you think?
17/ Oh, when writing this thread I found out there is a thread competition, so I'll try to participate, but I expect that this thread will be marked as FUD by the @0xAcidDAO team)) #acidthreadchallenge
https://twitter.com/0xAcidDAO/status/1635652290744053760?s=20
18/ That’s a wrap.
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