How DAFI Is Reshaping Crypto Incentive Models
Defi token sales are seeing huge demand right now, with everyone looking to capitalize on the release of the latest IDOs from emerging crypto projects. The token launch of an innovative project is just the first step in creating a sustainable ecosystem, with a community of early stakeholders necessary to evangelize the platform. The success of cryptocurrency IDOs has been a blessing and a curse for project development teams. They provide access to large amounts […]
Defi token sales are seeing huge demand right now, with everyone looking to capitalize on the release of the latest IDOs from emerging crypto projects. The token launch of an innovative project is just the first step in creating a sustainable ecosystem, with a community of early stakeholders necessary to evangelize the platform.
The success of cryptocurrency IDOs has been a blessing and a curse for project development teams. They provide access to large amounts of capital, but they also lose many established community members in the process who cannot help but capitalize on the massive gains from the private sale to public listing. With many projects seeing significant price gains after issuing their token on the secondary market, DAFI has created a solution to incentivize early adopters to hold their tokens long term.
A democratic and open market is essential for users to realize the full value of their assets, but as we’ve seen, these price gains have a significant impact on a project’s sustainability in the long run. To combat this, DAFI has introduced a program that allows project teams to create synthetic tokens to reward their token holders over an extended period. Using this method, projects can protect against token dumping. The platform of the crypto project in question must generate high rates of adoption and daily trading volume for investors to realize their profits from the original token, creating a more secure and sustainable token economy.
Using Synthetic Tokens for Steady Platform Growth
Synthetic tokens are crypto assets that are created on a new platform or blockchain, deriving their value from a different underlying asset. DAFI is strategically using synthetic tokens to enhance the value of new crypto platforms and protocols. To operate as a DAFI partner, projects deposit a portion of their total token supply into the platform. DAFI will then create and distribute a smaller amount of synthetic tokens to users. Users cannot trade these tokens: they can only use them to redeem the original cryptocurrency at the end of a predetermined time period.
This may sound disadvantageous to investors, but the quantity of synthetic tokens they hold will grow over time with the growth of the network. Using an oracle to introduce off-chain data for the underlying asset price, platform usage, and daily trading volume, the number of synthetic tokens each user owns will fluctuate based on a proprietary algorithmS. As more value comes to the network in the form of users and platform adoption, more synthetic tokens will be added to each holder’s supply, allowing for the redemption of more of the original coin over time. Utilizing DAFI, projects can properly incentivize users to stay involved in the platform for the long run.
Projects Provide Value to Users and Vice Versa
Due to blockchain’s democratic and decentralized nature, a project cannot survive without a robust user base, regardless of how revolutionary the tech may be. If the principal backers abandon the native token in the name of profit right after it launches, it is much harder to establish a dedicated and long-term user base. With DAFI, projects can create a proper incentivization structure to keep stakeholders involved throughout the life of the project.
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