DAFI Protocol: Reinventing Chains

Website: https://www.dafiprotocol.io/
Telegram: https://t.me/dafiprotocol
Twitter: https://twitter.com/dafiprotocol

A new approach towards value creation for staking, liquidity, and blockchains.

Overview

The current approach to incentivizing decentralized economies is far from perfect. Creating value through liquidity rewards, mining, and staking sound attractive, but it is not sustainable. This approach leads to hyperinflation that results in projects simply burning out. A lot of projects that follow the traditional approach end up dying during their early phases or when a bear-cycle hits them.

DAFI’s goal is to solve this problem; to incentivize staking in a more sustainable manner. DAFI does this by moving from traditional token rewards to demand-pegged rewards instead. The beauty of DAFI is the fact that its new approach to incentivization can be adopted by projects that are currently in existence. This means that DAFI gives new and old projects a chance to become more sustainable.

Value Proposition

What Makes DAFI Relevant?

DAFI introduces a new and better way to incentivize staking. It ensures that projects can offer liquidity rewards leading to hyperinflation. The DAFI token (DFY) is designed to be staked for demand-pegged units that are elastic in nature.

Any project that is currently in existence can adopt DAFI. This is one of the most attractive aspects of this project. Using the DAFI protocol, different projects can create their own variant of DFY (which is designed to function as an intermediary token).

Currently existing projects have a number of problems that need to be solved.

· In order to attract more users, a lot of projects end up distributing a lot of their currency in their initial phases. This increases participation, but it also increases the chances of hyperinflation occurring, leading to devaluation that eventually renders the currency useless.

· The ability to reward early adopters with a decent reward rate is important. Unfortunately, currently existing projects have a hard time maintaining a balance between attractive rewards and high-reward rates.

· Current reward and staking models often lead to an excess in supply. What this does is devalue the currency.

DAFI’s Solution

The core purpose of DAFI is to make DeFi applications more sustainable. To manage hyperinflation, excess supply, and to reward early adopters without upsetting the entire ecosystem.

Whenever DAFI tokens get staked, synthetic DFY units get released. These synthetic units can be burned in exchange for DAFI. The number of synthetic units is directly proportional to the expansion of the protocol using them. This relation between the number of tokens and the maturity of the protocol incentivizes the value of the protocol itself for users.

DAFI’s proposed financial model makes blockchain ecosystems more sustainable by tying user incentive with the growth of the platform itself. This encourages users to make an effort to support the protocol instead of just focusing on staking and liquefying tokens.

The DAFI Token

Token Symbol: DAFI

Total Supply: 2,250,000,000

Distribution: February-March

The DAFI token is at the heart of DAFI’s proposed financial model. It works by releasing synthetic, elastic units that are pegged to the demand of the protocol. They create inflation in blockchains not through tokens, but through demand, this helps counter hyperinflation and token devaluation in the long-run.

Blockchains that adopt DAFI have the option to create their own synthetic xDFY. They can tweak the tokens as per their requirements and use them to provide early-adopters with rewards without upsetting the protocol’s ecosystem.

The DAFI financial model is recreating an already existing model that is being followed by almost all projects. This means that it can be adopted easily by existing protocols, making it a universal solution.

DFY

The DFY is a synthetic token that is created when DAFI tokens are staked. The DFY is elastic in nature and it functions as an intermediary unit whose purpose is to be burned in order to gain access to DAFI tokens.

Since DFYs are designed to be adaptive to their protocol’s demand, they can be used to create liquidity even when the protocol is facing periods of low-demand. Being adaptive, the DFY encourages users to continue participating even when there’s low-demand. They are encouraged to stick around for bigger rewards later on when the protocol matures.

RoadMap

Currently, the DAFI model’s MVP has been launched and it’s currently active. DAFI tokens are set to become available for the public very soon. And once they’ve become available, they can be staked in order to release DFY.

The next phase for DAFI is to bring all DeFi applications and protocols together. It shall allow them all to create their own variant of DFY that they can peg to their protocol’s demand. The newer model is designed to be adopted by new and old protocols.

The long-term vision of DAFI revolves around making DeFi more accessible for the general public. The DAFI model will allow various kinds of DeFi products to be built on its demand-pegged inflation model.

Conclusion

The current method of incentivizing participation is flawed. The process of attracting new users in a protocol’s early phases often compromises the long-term sustainability of the protocol.

DAFI plans on recreating the way incentivization works. It targets key problems such as hyperinflation and excess supply and remedies them by tying user value directly with the growth of the protocol. What this means is that users will be able to enjoy bigger and better rewards as the protocol matures.

This financial model will encourage users to participate in the expansion of protocols. It shall also allow protocols to reward early adopters without having to worry about hyperinflation.

Currently, the DAFI project has become active as proof of concept. In the near future, its tokens will become publicly available and then different protocols will be able to start adopting this financial model.

The DAFI project shows promise since it has the ability to streamline existing DeFi models and make them more sustainable.

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