Hathor Network Review: DAG with Linked Blocks, Easy Custom Tokens, and Feeless Transactions

Hathor is a scalable layer-1 project, which combines both a proof-of-work blockchain, and a DAG (directed acyclic graph). The concept was imagined as a part of CEO Marcelo Brogliato PHD thesis. Hathor is a DAG of transactions, with a chain of linked blocks. Its novel architecture has been coded from scratch, allowing it to be scalable and decentralized, with high levels of security. It is completely unique in crypto. Hathor can currently handle 200 transactions per second, with some tweaking it may get up to 1800 TPS. (For reference, Paypal is 193 TPS, while VISA does 1800.)

The Hathor devs believe that Bitcoin isn’t the “optimal design” for a decentralized and scalable system. By using a DAG, the network’s security will increase, as transactions increase. The blockchain will secure it when volume is low.

The unique features of Hathor include:

  • Instant, feeless transactions, with sybil-resistance. Each transaction is confirmed by a low difficulty proof of work task performed by the user to stop spam attacks.
  • Built-in atomic swaps.
  • Nano contracts – Nano contracts are a simplified type of smart contract, with limited functionality. More complex functionality will be added in Q3 2021.
  • Easy custom token creation. Users can easily create their own tokens. They will soon be able to implement complex logic into the token, without coding knowledge. They aim to be similar to WordPress, for blockchain and token creation.
  • Oracle Integration
  • Layer-0 privacy with HOPR

Important Links:

  1. Whitepaper
  2. Medium
  3. Twitter

DAG vs. Blockchain

Hathor incorporates both a blockchain, and a DAG (like IOTA) into its design. Blockchains provide better security when transactions are low, while a DAG is more secure when the transaction number is higher. With a DAG, hashrate increases with every transaction.

In a DAG, transactions are confirmed by the user. Users must solve their own low-difficulty proof-of-work task, when they submit a transaction. This provides resistance against Sybil attacks (i.e. similar to DDOS attacks). The difficulty level of this task, is lower than the miner’s, and is adjustable. Difficulty may be adjusted automatically in the future. DAGs perform better for things like micro-transactions and IOT, while blockchains perform better when transaction numbers are low.

  • When a custom token is created, the proof-of-work is done in blocks.

Simple Custom Token Creation

Hathor brings simplicity, to custom token creation. It allows users to create tokens, without coding knowledge. Users will soon be able to easily add complex logic to tokens. This will open token creation to the masses, like WordPress did with website creation.

  • They will soon add the ability to create more types of ERCs, including 721 (NFTs), and 1400.

Merged Mining

Hathor does merged mining with Bitcoin and Litecoin. All coins that mine SHA-256, can do merged mining with BTC. The same amount of energy can mine both coins, with no extra costs. This allows the Hathor network to gain a high hashrate quickly, as it taps into the Bitcoin network.

How can Hathor sustain itself without fees?

Hathor can sustain itself with no fees, due to its architecture. There is only a small amount of mining needed to propagate a transaction, since it is a DAG of transactions with linking blocks. Users don’t need to pay fees to broadcast the transaction.

Hathor Green Initiative

Hathor is energy efficient in two ways. It piggy-backs on the mining of Bitcoin, Litecoin, with merged mining. It doesn’t expend extra energy.

Miners can also receive bonus rewards, if they prove they are using renewable energies. They can join the green program here.

Tokenomics

The HTR token will become deflationary, if the network becomes heavily used. 1 HTR token will be locked and removed from circulation, for every 100 custom tokens that are created. This will generate increased value in the Hathor token, as usage picks up.

The marketcap of Hathor is 87 million, giving it growth potential compared to other layer-1 chains. A comparable chain is AVAX, which is valued at 2.1 billion.

Roadmap

The Hathor roadmap for 2021 includes: improved nano-contracts, oracle integration, side-DAGs or side-chains, extended ERC token capabilities, cross-chain integrations, and bridges. The addition of ERC-721 compatability will allow users to create NFTs, which are a hot use case in blockchain currently.

Partners

Hathor is partnered with HOPR. Hopr is a layer-0 protocol that allows users to transmit data privately. It doesn’t expose a user’s data. It also hides connection metadata and hops via relays to the destination, obfuscating who is talking to who.

The Hathor Team

The team consists of researchers and engineers, who have coded the unique blockchain from scratch. The project was created as a part of CEO Marcelo Brogliato PHD thesis. Here is a link to the Hathor team in Linkedin.

Conclusion on Hathor

Hathor has a unique architecture, value proposition, and plenty of growth potential. It fills a gap in the market with its DAG and blockchain combination, differentiating itself from other projects. The architecture makes it cost efficient, energy efficient, and fast.

It has “no code” custom creation token ability, which could open blockchain to the masses. I think it has an excellent marketing angle. It aims to be the WordPress of blockchain, which revolutionized website creation.

The HTR token has the potential to gain value. If usage increases, the token will become deflationary. Giving speculators a reason to purchase the token. The marketcap is around 87 million, which is low for a layer-1 chain.

The team is developing innovative tech. I will likely be investing in it myself, if the market gives me a better opportunity to enter. 2021 should be an amazing year for the project which will add extended nano-contract abilities, cross chain bridges, and more.

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Router Protocol Review: Cross-Chain Liquidity Islands, Space Farming, and Gasless Swaps on DFYN

Router is a blockchain agnostic protocol, that aggregates liquidity into “islands”. These liquidity islands are used to connect various Layer 1 and Layer 2 protocols (image left). This prevents liquidity from being fragmented. It enables swapping, lending, farming, arbitrage, the use of flash loans, and governance across chains!

The Router protocol can route orders through DEXs on various L1/L2 protocols. This allows users to get the lowest price between chains. The team is adding chains including: Matic, BSC, HECO, Avalanche, Cell, LUNA, and Ethereum. (More will be added.)

The $ROUTE token is used as the protocol’s gas fee. It’s the cost to access the liquidity. The $ROUTE token is used, so users don’t need to hold gas tokens for each chain.

Upcoming Events:

  • Router’s mainnet will be live in Q2 of 2021.
  • It’s white paper should be arriving in just a couple weeks.
  • Cross-chain swaps are now live on the testnet, here.

Important Links:

  1. Twitter
  2. Telegram
  3. Medium
  4. Whitepaper (the white paper is not released yet)
  5. Github for Router. Github for DFYN.

Beyond Swaps: Applications of Cross-Chain Liquidity

Router’s tech is very exciting. The liquidity islands will enable cross-chain arbitrage, lending, farming, launchpads, and even governance. Users will be able to borrow against their assets on the ETH chain, for degen farming on Matic. They’ll even be able to do x-chain flash loans, with new partner Unilend!

Router brings us a step closer to a unified system of liquidity. I think that in the near future, users won’t even know which chain they’re using. An app will seemlessly route a transaction between multiple coins and chains, without the user paying much mind to it.

The Team’s Three Products: DFYN Exchange, Spacefarm, and Galaxy Farm

The team has built 3 products using the Router technology: The DFYN Exchange, Spacefarm, and Galaxy Farm.

  1. The DFYN Exchange

DFYN is an exchange (built by the same team) that uses the Router protocol for gasless, cross-chain swaps. DFYN accesses liquidity through Router’s nodes across layer 1 and 2 chains. It will source assets from DEXs on multiple chains, to give the best price, with the lowest slippage. This is DFYN’s competitive advantage!

  • Here is an overview of the DFYN tokenomics.

DFYN has a great farming program. Its APYs are as high as 600%. Farming and swapping is gasless. Over 400k transactions have been done on DFYN, saving over 12 million in fees, as compared to transactions on ETH.

  • DFYN will have a launchpad capable of simultaneously releasing tokens on multiple L1 and L2 chains.
  • DFYN will also have prediction markets soon.

2. GalaxyFarm and SpaceFarm

GalaxyFarm and Space Farm incentivize liquidity for the DFYN ecosystem. The farming is completely gasless. All transaction fees are subsidized by the project.

$ROUTE Tokenomics

The $ROUTE token is used as a gas fee for the protocol.

It has a max supply of 20 million, with a circulating supply of 3.8 million.

Investors in Router Protocol

The Router team has high profile investors, including: Polygon, Avalanche, and MantraDao.

They’re adding high quality partners at a rapid pace, see here. I think many teams are seeing the potential in this project, and the importance of the cross-chain eco-system as well.

Governance and the Cross Chain DAO

The Router DAO will enable users across multiple blockchains to participate in governance. This makes governance easier, cheaper, and more accessible. The future of governance is multi-chain.

The Router Team

The team is composed of nine members based in India.

I feel the team might be getting additional support from Polygon. I think Polygon could be cultivating other Indian teams to build key products in the their ecosystem.

Router Protocol Roadmap

Conclusion on Router, Dfyn, and the Ecosystem of Products

Blockchains in their current form, are walled gardens. Router can help turn them into an unified system of liquidity. It can help remove much of the friction in a multi-chain environment. Users will be able to move value from chain to chain, with minimal effort.

I see the cross-chain narrative building over the second half of 2021. I think the Router team is positioned correctly to experience the growth in this area. Current cross-chain bridges leave room for improvement. Router will make the experience of moving value between chains better, faster, and cheaper.

The team is pumping out new products rapidly, but have yet to complete their whitepaper. I’m ok with this. It gives them more time to plan their strategy and get feedback on the products they are releasing. They are are letting their work speak for itself, and I look forward to see how these projects develop over this year.

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Frax Finance Review: Fifth Gen Algorithmic Stablecoin, Staking, and Bonds

FRAX is a fifth generation algorithmic stablecoin. It is partially collateralized, and partially stabilized algorithmically. FRAX’s collateralization ratio (CR) increases or decreases, as supply and demand changes. The token can become more algorithmic, or more collateralized, as it seeks a stable value.

For example, if FRAX is over $1, it enters an expansion phase. In this phase, it becomes less collateralized. Less USDC is required to mint it. When the price is under $1, its collateralization rate increases. FRAX can even become fully collateralized, if demand is low! In this case, it would essentially be wrapped USDC.

  • The algorithmic portion of FRAX is now 16 million. This value is very stable. FRAX’s algorithmic value is just as stable as the collateralized portion. Over time, the algorithmic portion will likely increase, as user trust increases.

Important Links:

Where will the collateralization ratio settle?

The developers don’t know where the collateral ratio will settle! It is fully determined by the market. It is possible that FRAX could become fully algorithmic. It is also possible, it could become entirely collateralized. Either way, FRAX will always be redeemable for $1.

FRAX’s two-token economy

The Frax.finance ecosystem consists of two tokens.

  1. FRAX is a fractionally-algorithmic stablecoin.
  2. Frax Shares Token (FXS) is a governance and incentives token.

Deeper into Frax Shares (FXS)

Frax Shares (FXS) is a volatile token. It is deflationary. It captures the seigniorage value that is created, when under-collateralized FRAX is minted. To mint FRAX (when under 100% CR), users must also supply FXS, which is burned during the minting process.

  • For example, when a user mints 100 FRAX at an 89% CR, they would need 89 USDC and 1.7 FXS tokens. The 1.7 FXS is burned. The 1.7 FXS tokens captures the seigniorage value, by burning it and reducing the supply. (image below)

The FXS token captures value in four ways:

  • It is burned when minting FRAX.
  • It collects fees from the minting process.
  • It collects fees from redemptions.
  • It also collects fees from unused collateral.

Recollateralization and Buybacks

Sometimes, FRAX needs more collateral. Sometimes, collateral needs to be reduced. In this case it, will undergo re-collateralization, or buybacks (more here).

  • If FRAX is under $1, a user can deposit USDC to receive FXS, with a bonus of .75%. This helps to re-collateralize the protocol.
  • When there is excess collateral, buybacks will happen. The FXS token will be bought and burned with extra funds.

New features for FRAX v2

Improvements coming in v2 include: FRAX bonds, new collateral types, and a vAMM. Frax will soon be expanding to Binance Smart Chain.

FRAX Bonds

The community has voted to add FRAX bonds. These bonds will be tied to the collateral ratio.

Staking

Users can stake in the liquidity pool, for FXS rewards. The more that FRAX becomes algorithmic, the more FXS will be emitted.

The staking rewards are high at a range of 35% – 100% on stablecoins. This is a very good reward for stables.

The problem with Algostables, like ESD and DSD

Unfortunately, most algorithmic stablecoins aren’t stable. They don’t do what they were designed to. They can get stuck under $1, when the price to buy bonds, doesn’t make sense. The mechanics of these coins aren’t effective.

I noticed another problem with algostables, when I was invested in DSD. It had an issue with whale manipulation. As price moved towards expansion, large DSD holders would dump on those seeking to move it into expansion. This stopped it from functioning as intended.

FRAX has very different mechanics, which hopefully will fix these issues. The adjustment of the collateralization ratio, has created stable value in a portion of the coin, without collateral backing. It maintains its peg, and doesn’t have a manipulation problem. The experiment seems to be working so far.

Conclusion on Frax Finance

I see enormous potential in algostables. But, they’re far from perfected. Coins like ESD, DSD, or Debase can’t maintain a stable value. They more or less function as a financial game. FRAX, on the other hand, maintains its $1 peg.

My biggest issue with FRAX, is that it uses USDC as collateral. USDC can be frozen, so this could present a problem if a large portion of the reserves was no longer backed. I think they should transition to a more decentralized stablecoin (or a basket of coins), which can’t be frozen.

As FRAX gains trust, I think it will become more algorithmic. Tether is not fully backed, but maintains a stable value. This shows me that user trust is a major factor in creating price stability for stablecoins.

FRAX v2 is also coming soon. It will be interesting to see if these bonds will further stabilize the price. The bonds will also add another method of profiting on this protocol.

I love to see innovation. FRAX is pushing algostable tech forward and creating a first of its kind product. The team seems competent, and intelligent. I’m looking forward to testing the features implemented in v2. We’ll see if the experiment succeeds, but so far it is looking very positive.

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Kitten.Finance Review: Advanced AMM, Binary Options, Low Gas Fees

Kitten.finance is an advanced defi ecosystem. It’s products will include: a next-generation AMM, advanced order types like: limit and stop orders, binary options, a rebasing stablecoin, lending, and farming to fairly launch its tokens. It solves important problems like: impermanent loss, high gas fees, and even allows one-sided token launches, with no ETH!

This project is innovative, and the devs are geniuses. They are tackling hard problems, and seem to have a grand plan. Their dapps address key issues that face defi users and developers alike. The only criticism i do have, is the name. I think they should rebrand, but for now, i hope they just keep working hard to realize their vision.

Kitten Finance Products include:

  • Kittenswap – a new type of AMM, w/ advanced features and order types
  • Alpha Dex – binary options, compounding strategies
  • 12 farming pools for fair tokens launches
  • 4 tokens: KIF, DEX, kBASE, and LIQUID

Important Links:

Kitten.Finance’s Products

1) Kittenswap, an innovative new AMM

Kittenswap is a gas friendly AMM, with advanced order types like limits and stops. It doesn’t need liquidity providers, and it solves impermanent loss. It can be used to conduct IKO’s, or Initial Kittenswap Offerings, with only one-sided liquidity. NO ETH is required. It is a superior way to conduct an IDO. Devs can use advanced market making orders to launch a token, without needing to conduct a pre-sale to raise Eth!

Read about how their AMM can work without LPs here.

Kittenswap will also have advanced order types like: limit orders, wide-limit orders, and stops.

Advanced Market Making Orders

The team recently used Kittenswap’s Advanced Market Making Order, to launch its new $LIQUID token. They only provided one side of liquidity, no ETH. This proves that their new AMM works, and pre-sales are no longer needed to raise ETH for liquidity. This is game changing tech for token launches!

Advanced Order-Types on Kittenswap

Their AMM will offer advanced order types including: limit orders, stop orders, wide limit orders, automatic market-making orders. Limit orders are now live on the testnet. (the image below is the interface)

Their medium post here, discusses how stop orders can be used as collateral for loans. The stop orders guarantee that a token price will be above a certain point, at a certain time/date. Users will be able to borrow funds based on their stop orders.

  • Here’s an example: Betty is able to borrow 6000 USD, because her “Sell stop 10 ETH @ 700 USD” order guarantees the value of her 10 ETH is higher than approximately 7000 USD.”

Another type of order launching soon, is wide limit orders. This is a limit order that covers a range of prices.

Kittenswap = Lower Gas Fees

Kittenswap contracts are optimized for lower gas fees. Swaps are about 1/3 the cost of Uniswap. (I bought some $LIQUID and it cost $5, compared to Uniswap’s $15.)

2) AlphaDex – Binary Options and Auto-Staking

AlphaDex is a dapp that offers binary options, auto-staking, and compounding strategies. Users can buy bullish/bearish shares, which payout if a user correctly predicts price direction. The dex uses a time-weighted average price (TWAP) to combat oracle manipulation, or flash loan attacks. (V2 in coming soon)

  • The $DEX token is for governance, dividends, buybacks, and staking on Alphaswap.

Version 2.0 of AlphaDex will have auto-staking. This will compound wins/losses into the next round. Users can choose strategies like:bull, bear, momentum, and contrarian.

Kitten Finance: 4 Token Ecosystem

$KIF – this is the governance and staking token for Kittenswap. It is used for dividends, buybacks, and will allow users to access kittenswap IKO’s. The max supply is 42,000. The token was distributed via liquidity mining, with no presale or premine.

$DEX – this token is for governance, dividends, and buybacks on AlphaDex. The max supply is 420,000.

$kBASE – this is an elastic supply stablecoin. It will be used for staking. It can be minted by locking assets as collateral.

$LIQUID – LIQUID is a token with a decreasing supply. Its main utility will be lending. Users will be able to deposit $LIQUID to borrow ETH, from inside of the LIQUID contract. Taxes on the LIQUID token are used to create liquidity for lending.

When token transfer/sells are taxed, they are burned to reward holders. The floor price of LIQUID will increase as it is burned, because its price is shifted on the bonding curve!

The image below describes LIQUID v2 improvements, which are coming in 2-3 weeks.

Fair Token Distribution via Farming

There are 12 farming pools to distribute KIF, DEX, and kBASE. The APY % shows the weekly earnings. The rewards half each week.

My Conclusion on Kitten Finance

Kitten Finance makes key innovations, which could turn this low-cap gem, into a blue-chip star. It’s very early, but the launch of $LIQUID proves its one-sided AMM works. Kittenswap can do token launches without ETH liquidity!

This means crypto projects no longer need to conduct pre-sales, to raise ETH for liquidity. They can launch on Kittenswap with an Advanced market-making order to save valuable tokens, in their earliest stages.

Kittenswap also has low gas fees. My $LIQUID purchase cost me about 1/3 of a Uniswap trade, a 75% discount. In our current gas crisis, anyone who provides a solution, will be a big winner.

I’m dying to try Kittenswap’s advanced order types. Limit orders, wide limit orders, and stop-orders, will help us scoop up low-caps at rock-bottom. The ability to take out loans, against stop orders will also keep this money from being tied up. The binary options and strategies that Alphadex provides, will give us even more ways to exploit this market.

The tokenomics of KIF, DEX, kBASE, and LIQUID are well thought-out. $LIQUID will provide liquidity for lending. $LIQUID holders will be rewarded, as the price floor elevates from the sell/transfer taxation. $KIF and $DEX will provide dividends, and access to launches on the AMM. $kBASE will be the stable asset of the system.

Kitten finance is tackling tough problems faced in defi. Most projects are just copycats, but the kitten devs are truly intelligent innovators. This is a project i’m going to hold for a longer term. I do hope they change that name tho 😉

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Dollar Protocol Review: Algorithmic Stablecoins, Scalability, and Negative Rebase Protection

We need better decentralized stablecoins. USDC can be frozen. Dai could suffer from a price collapse of ETH. Tether is fractionally backed. Perfecting a synthetic stablecoin, is the key to making defi bullet-proof.

What is Dollar Protocol?

Dollar Protocol is an algorithmic stablecoin protocol. It’s based on a 2014 whitepaper, written by Robert Sams. It is very scalable, and will soon include many types of synthetic assets.

  • The protocol separates value stability (USDx), and speculation (SHARE, xBOND) into three different coins.

Important Links:

What are Algorithmic Stablecoins?

Algorithmic stablecoins have a supply that can expand or contract. The supply changes, when the token price is off its peg. Incentives are given to create buying or selling pressure, to move the price up or down. This creates a resilient non-collateralized, stable asset.

Algo-stables like $ESD, $DSD, $DEBASE are getting alot of attention. I think the stabilization mechanics in these protocols will be widely adopted. Once they are perfected, they will become an important defi lego piece.

Dollar protocol’s first stablecoin is USDx. It will soon add assets, like the EUROx, YUANx, etc.

Dollar Protocol’s Three Token Economy

Dollar protocol consists of three tokens: USDx, SHARE, and xBOND.

  • $SHARE is a governance and rewards token. It earns 20% of the rebasing rewards on all stablecoins. $SHARE can be locked in the liquidity pool, to bump up rewards to 33%. It carries no risk of negative rebase. The supply is capped at 21 million.
  • xBOND receives 40% of rebase rewards. xUSD must be burned by the protocol to mint it. xBOND’s price goes up on a bonding curve when there is a positive rebase. Each time a negative rebase occurs, the bonding curve is reset 1:1 with xUSD. Users can move into xBOND if they feel there will be a series of positive rebases, after the negative rebase. xBOND allows holders to profit on the longterm growth of the protocol.
  • USDx is a rebasing stablecoin, with a price target of 1 USD. Its supply fluctuates to maintain its price stability. It is one of many stable-assets that will be added to the protocol.

A deeper dive into xBOND. How it prevents negative rebasing.

If USDx is bonded, its supply doesn’t decrease during a negative rebase. Users can bond (burn) their USDx, to mint xBOND. Bonding it removes the USDx supply from circulation, and helps move the xBOND price upward.

xBOND is designed to reward users that believe in the long term growth of the protocol. If a user thinks a negative rebase will be followed by multiple positive rebases, they can move into xBOND to profit. The token will continue to gain value, if more positive rebases occur. xBOND’s price curve is reset 1:1 with USDx, whenever there is a negative rebase.

  • The catch is that xBOND cannot be redeemed all at once. There is a limit to what you can redeem per positive rebase.

What happens when a positive rebase occurs?

Positive rebases inflate the USDx supply. The supply increase creates user rewards and selling pressure.

How is the Bonding Curve reset after a negative rebase?

When a negative rebase occurs, USDx is removed from circulation. Also, the price of xBOND is reset 1:1 with xUSD. This is an opportunity for users to flee into xBOND to protect their USDx, while making profits from gains on the bonding curve.

How are rewards distributed?

The protocol’s rebase rewards are split among 3 groups: Share token holders, Bond token holders, and Liquidity Providers in the following percentages.

The Seignorage and Share Mining Liquidity Pools

The protocol has two types of liquidity pools: The Seigniorage mining pool and the SHARE mining pool.

  • Seigniorage mining allows you to earn stablecoin rebasing rewards on all stablecoins by providing liquidity. Rebase’s occur every 12 hours (at 12:30 EST am and pm).
  • Share mining allows you to earn SHARE rewards by contributing to the liquidity pools.

In the future, their might be an xBOND mining pool.

Audits

Dollar Protocol is now being audited by market leaders Certik and Slowmist.

DAO Governance

Dollar Protocol’s DAO governance seems to be effective. It has passed multiple measures that benefit the project. The community recently voted to increase the rewards percentage on the $SHARE token. It also reduced the amount of votes needed to pass a resolution from 50% – 25%.

My Conclusion on the Dollar Protocol

Dollar protocol’s scalability, is its biggest strength. It could grow into a huge network of non-collateralized stablecoins. Each new coin will feed rebasing rewards to its token holders.

$SHARE holders will be the big winners, if this project scales. Rebasing rewards will scale, as the project grows.

Community participation is very strong. Governance is filled with devotees. Participants have fixed major flaws, like the reward split and voting threshold.

I think one of the main reasons Dollar Protocol isn’t more successful yet, is its complexity. It can be difficult to understand xBOND’s role, as well as seignorage coins in general. I hope that writing this article will trigger people to look at it more deeply. I hope they can see the potential that i see too.

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Dynamic Set Dollar Review: A More Reactive Algorithmic Stablecoin, with Dynamic Supply and Incentives.

Dynamic Set Dollar is an algorithmic stablecoin, with a fluctuating supply. It is NOT a rebase coin. Its balance does not change within a users wallet. DSD reaches stability by giving its users financial incentives, that encourage them to sell or burn tokens. This helps the $DSD price move towards its goal of $1. Devs call this mechanism, Voluntary Elastic Supply.

How the DSD supply changes:

  • If the price of DSD is above a dollar: new DSD tokens are minted. These new coins go to reward the stakers of the DAO, and providers to the liquidity pools. These new coins create sell pressure, moving the price downwards.
  • If the price of DSD is under $1: users are encouraged to burn their tokens in exchange for coupons. These coupons can be exchanged for a higher percentage of coins, once the price crosses back above $1.

The devs felt incentives were a better method of price control, compared to rebasing. Reducing a user’s balance, can give users a bad feeling. Rebasing also breaks the composability of defi, and the ERC-20 standard.

What is the difference between Empty Set Dollar (ESD) and Dynamic Set Dollar?

Dynamic Set Dollar is a fork of Empty Set Dollar (ESD). DSD fixes the issue of bot manipulation of the coupon and redemption system. It also shortens the epoch to 2 hours, making it more reactive to price fluctuations. The DSD changes include: epoch duration, rebase amount, supply/reward mechanisms, and coupon expiry.

Reaching Equilibrium: The 2 Phases of Dynamic Set Dollar

Dynamic Set Dollar goes through 2 different phases in order to reach its one dollar peg: Expansion and Contraction

The Expansion Phase

When the price of DSD is over a dollar, it enters an expansion phase. During this phase, the supply expands by a maximum of 10% each epoch (An epoch is 2 hours). The increased supply adds selling pressure to DSD, which coaxes the price downwards. The maximum amount the supply can expand is 35%.

The expanding supply goes to reward liquidity providers, and DAO stakers. 60% of rewards go to pay DAO stakers, 40% goes to liquidity providers. DAO bonders earn compounding rewards, liquidity providers rewards are non-compounding.

The Contraction Phase

When the price of DSD is under $1, it enters a contraction phase. During this phase, users are incentivized to burn their tokens. Reducing the DSD supply will move the price upward.

During the contraction phase, users can burn DSD tokens in exchange for coupons. These coupons guarantee premiums (currently 45%) on tokens. The coupons can be redeemed when the price crosses back over $1. The coupons expire after 360 epochs, which is around 30 days.

  • Once the price goes under $1, the Liquidity Provider rewards and DAO rewards stop.

How are Coupons Redeemed for a Premium?

The coupon system encourages users to burn DSD tokens, in exchange for coupons. This reduces the supply, leading to a price increase. The coupons can be redeemed for a premium when $DSD breaks $1. Currently coupons are worth 1.45 times the amount of tokens burned.

How DSD’s coupon system is different from ESD’s

The DSD fork altered the ESD coupon system. These changes help to reduce bot manipulation of coupon redemptions. It gives user incentives to buy coupons early, by creating a redemption penalty on coupons which are bought late. Users can still redeem coupons early, if they are willing to accept this penalty.

The chart below demonstrates the penalty:

DSD Statistics

Live statistics for the protocol can be found here.

Rewards: Liquidity Provider and DAO

Users can earn DSD rewards by staking. They can bond tokens to the DAO, or stake their liquidity pool tokens to earn rewards. Compounding interest is earned when bonding to the DAO, at a rate of 60%. Non-compounding rewards are earned by staking LP tokens. In both instances, the tokens are locked for 36 epochs.

My Conclusion on Dynamic Set Dollar

The Dynamic Set Dollar protocol offers two core features. First, it creates a price reactive algorithmic stablecoin that will hopefully maintain a stable value, in a very volatile market. Secondly, it provides financial opportunities for speculators, as $DSD fluctuates between its expansion and contraction phases.

I think DSD’s incentive system is more fair, than a rebasing system. An incentive system allows users to hold DSD, without taking on the risk of a negative rebase. Users can speculate with the coupon system to earn incentives, or choose not to. There is risk and reward in the incentive system, but it is totally voluntary.

The staking and coupon system offers ample opportunity for gains. But, users should have a strong grasp on DSD’s fundamentals before utilizing it. Holders can only earn rewards, when its price is above $1. This means its price will always be retreating towards its peg, as rewards are earned. They need to sure that their staking rewards will be greater than the loss of the coins value, as DSDs price descends. They also need to be wary of the unbonding period. They will not immediately dump their coins!

DSD offers important improvements to the Empty Set Dollar’s protocol. Its addition of a coupon redemption penalty, fixes the issue of front-running by bots. Its epoch time changes, make it more reactive to price fluctuations. The DSD and ESD protocols offer a new type of stablecoin. If the price of these coins eventually settle firmly at their $1 peg, it will make a nice addition to the current selection of non-collateralized stablecoins. But, it will take time to see if it can hit its target, and maintain a stable value.

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Linear Finance Review: Synthetic Assets, High Rewards, Cross-Chain

Linear Finance is a cross-chain synthetic assets exchange, with DAO governance. It will allow users to trade delta-one synthetic assets like gold, oil, and index funds. Linear’s devs hope to improve on design flaws that they perceived in the Synthetix project. They saw problems in areas like: the oracle price update speed, pledge ratio, tokenomics, transaction costs, rewards, speed, and multi-chain accessibility.

I think the standout feature for Linear will be interoperability. The team will start out by building on ETH and EVM compatible chains, like Binance Smart Chain (BSC). Then, it’ll expand to non-ETH compatible chains. These alternate chains can offer higher speeds, lower transaction costs, and greater accessibility.

Linear Finance is backed by noteable investors like: Alameda Research, Kinetic, and Hashed. (See the image below)

Important Links:

How Does Linear.Finance Work?

Linear Finance allows the minting and trading of synthetic assets. Each synthetic asset is over-collateralized, by lUSD stablecoins. This over-collateralization ensures the system will not break, even in times of heavy volatility or a black swan event.

To encourage users to maintain the proper collateral for their synthetics, the project offers rewards. Exchange and inflation rewards can be earned, by maintaining a certain ratio of lUSD collateral to synths. This ratio is known as the p-ratio or pledge ratio. This helps to maintain the overall health of the system.

Within this system, Linear’s liquidity pool acts as the counter-party. This allows for almost unlimited liquidity, with zero slippage. Users can also earn $LINA rewards for contributing to the pool.

The project is now in its testing phase. Currently, users can only mint lUSD and stake. Soon, they will be able to buy synthetic assets, and trade them.

What is a Pledge Ratio?

The Pledge ratio (p-ratio) is the ratio between a user’s lUSD collateral, and their synthetic asset holdings. Over-pledging ensures that even in high volatility, the system will work. In order to receive $LINA exchange rewards, a user must have a p-ratio that hits a certain threshold. The starting p-ratio will be 600%, but this can be changed by the DAO.

How to Mint lUSD Stablecoins on the Buildr App

Users can mint lUSD stablecoins from $LINA tokens. This is done on the Buildr app. Soon, other collateral types will be accepted to mint lUSD. This will be in a ratio decided by users of the DAO (possibly a 80:20 ratio).

The Synthetic Assets Exchange

The exchange will allow the trading of liquids, aka synthetic assets. This includes: precious metals, stocks, cryptos, and commodities like gold. Any asset with a price feed can be added. The fee on every trade, is 0.25%. Fees are rewarded to users, if they have a pledge ratio above the set threshold. Rewarding users to maintain a certain p-ratio, helps ensure that the overall system wont fail due to insufficient collateral backing.

Using BAND Protocol to solve oracle front running

The project chose BAND as its oracle provider. It was chosen because of its near instant finality, and 2-3 sec block times. Devs believe that this will help to solve the oracle front-running problem, which is a type of arbitrage on the price feed delays.

Which Assets can be Traded?

Tradeable asset types will include: cryptocurrencies, commodities, and indicies. Users will vote in the DAO on the types of assets that will be included.

Staking and Rewards on the Platform

Users can earn three types of $LINA rewards on the platform: Transaction Fees, Inflationary Rewards, and Yield Farming Rewards.

  • The transaction fee of 0.25% is distributed to LINA stakers that have a pledge ratio above the threshold.
  • The inflation rate of the LINA token is set to 75%. It will reduce each week at a rate of 1.5%. Stakers can get these inflation rewards if their pledge ratio is above the threshold determined by the governance.
  • Users can yield farm by providing liquidity to the debt pools. Rewards are currently about 1% interest per day. This liquidity will help bootstrap the project.
  • Users can also earn $LINA rewards by creating and burning liquids.

DAO governance

Linear Finance uses DAO governance. $LINA holders can vote on variables like: pledge ratio, asset types, and the insurance fund. Any token holder can create proposals and vote.

$LINA Tokenomics

LINA has a max supply of 10 billion. Its circulating supply is 475 million. It has 75% inflation built-in to enhance user rewards. This will decrease by 1.5% weekly. This can be changed by the DAO.

The $LINA token is used for: staking, minting of synthetic assets, governance, and payments.

The Team

Linear’s team is well rounded. They have experience in crypto, exotic assets, and structured financial assets. Check out their Linkedin here.

My Conclusion on Linear Finance

I think Linear Finance is a solid, under-valued project. It has a strong team and noteable investors like Alameda Research. It will provide an avenue to trade synthetic assets on chains other than ETH, which is needed in crypto. It also seeks to improve on perceived flaws in the Synthetix design. The project’s tokenomics, low marketcap, high rewards, and current interest rate of about 1% daily, make it very enticing.

On the other hand, Synthetix is stiff competition. Its is very innovative. It will soon upgrade to V2, with layer 2 implementation. This will improve its speed, costs, and feature set. This might make some of Linear’s improvements, less dramatic. BUT, i feel that just bringing synths to BSC and other chains, is enough of a selling point. Its exchange will be utilized just due to this. It’s rewards, tokenomics, and growth potential are a bonus.

After launch, i hope that Linear Finance will differentiate itself. Offering a cross-chain product with design improvements, is great, but I would also like to see uniqueness after it is up and running. I want exotic assets, a multitude of inverse assets, traditional assets, and things i cant find elsewhere. Maybe diversity of assets is where Linear can begin to set itself apart. It would also be nice to see leveraged trading on the exchange.

The rewards and tokenomics are great. If Linear can fix certain pain-points, and offer interoperability, i think users will become active on the exchange. The project wouldn’t have high profile backers, if they didn’t think this was possible as well.

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Mstable Review: Tokenized Baskets, Yield, Capital Loss Protection

What is mStable?

mStable is a platform for users to mint a customizable stable-asset called mUSD. It can also perform no-slippage stablecoin swaps, and generate yield.

What is mUSD?

mUSD is a stable asset which offers high value stability, native yield, and protection from permanent capital loss. It is minted from a tokenized basket of base stable-coin assets. These base-assets can include: USDC, USDT, sUSD, TUSD, or DAI. Benefits of mUSD are: 1) a high native interest rate, 2) recollateralization mechanisms, 3) reduced centralization, 4) and community governance.

What is Meta ($MTA)?

Meta (MTA) is the second token in the mStable economy. It is used for user rewards, governance, and to help re-collateralize assets in-case of currency collapse of a stablecoin.

Important Links:

The 5 products: MINT, SAVE, EARn, SWAP, and REDEEM

How to MINT mUSD from Base Assets

The MINT feature allows users to create mUSD from base assets in a 1:1 ratio. Base assets can include: USDC, USDT, sUSD, TUSD, and DAI. Users earn MTA rewards for minting mUSD.

The image (below) shows how users can choose which stablecoins they want to mint, and the percentage they want allocated.

SAVE: How to generate Interest with mUSD

The SAVE feature lets users deposit mUSD, to earn a variable interest rate.



Interest is generated in 2 ways:

  1. mStable lends funds to protocols like Aave and Compound.
  2. mStable takes 0.06% fees on swaps.

Swap fees generate significant APY when swap amounts are high. (Notice image below, where the APY rocketed to 107% on a day, due to high swap activity.)

EARN: Provide Liquidity to earn rewards

EARN is mStable’s liquidity mining program.

Users can stake pool tokens from Uniswap, Curve, or Balancer, to earn MTA (Meta) rewards.

SWAP your stablecoins

The SWAP feature lets users trade base stable assets. Assets can be traded with zero slippage, regardless of size! This creates arbitrage opportunities.

The video below shows you how to find arbitrage opportunities in defi.

REDEEM: untokenize a basket of coins

The REDEEM function swaps mUSD for individual base-assets. These assets can be redeemed in any ratio, as long as they don’t go over the “max weight”. This would expose the network to more risk. The fee for redeeming mStable assets, goes to the stakers of mUSD.

mStable’s Constant Sum AMM (automatic market maker)

$MTA TOKEN Utility

The MTA token serves three purposes.

  1. its a safeguard against collapse of base-assets
  2. it is used for governance on the platform
  3. it rewards users for providing liquidity, creating mAssets, and engaging in governance.
  • How MTA protects against currency collapse

MTA is a safeguard, in case a stablecoin loses its peg. It can be minted and sold, to make up for losses in a currency collapse. MTA holders could be diluted if a currency collapses.

  • MTA is a governance token

MTA incentivizes governance. MTA holders must stake, to vote and earn interest. Governance is currently centralized, in the hands of the core team. It will soon be transitioned to the community under a DAO.

Users vote on: adding and removing assets, adding/removing collateral assets, the max weight of collateral assets, redemption fees, oracles, and upgradability.

  • MTA incentivizes liquidity

Liquidity is incentivized with MTA tokens. Users can stake LP tokens from Curve, Uniswap, or Balancer to earn rewards. This does come at the risk of impermanent loss.

$MTA Tokenomics

MTA’s max supply is 100 million. It is used for rewards, governance, and to re-collateralize assets in-case of currency collapse.

Below is the token allocation of MTA:

My Conclusion on mUSD and mStable

I think mUSD is a superior stablecoin. It offers 5 significant advantages over individual stable assets.

The advantages of mUSD include:

  1. Reduced vulnerability of currency collapse.
  2. Less centralization.
  3. A mechanism to re-collateralize in case a currency fails.
  4. Above average yield.
  5. Governance.

mUSD is extemely safe, and beneficial for holders. But, mUSD stakers do take on some risk. Stakers can be liquidated, if a base currency, like USDT collapses. mUSD stakers are rewarded with yield, for assuming this risk.

The platform also offers arbitrage opportunities. It provides zero-slippage stablecoin swaps. Periods of high swap volume can boost interest rewards to mUSD stakers. Arbitrage has caused liquidity issues for certain assets. But…devs say this is being addressed in a future update.

I’ve also read that a tokenized BTC basket might be coming in the future. This is a product i’m interested in. It would be very nice if a tokenized BTC basket could earn the native interest rate as well! That will make for a superior form of tokenized BTC.

Better stability, re-collateralization, and high interest rates make the platform’s tokenized baskets, preferable to holding the individual assets. I hope mStable’s roster grows to offer more types of tokenized products. I would love to see a tokenized defi index that earns interest 😉

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Barn Bridge Review: Fluctuation Derivatives, Yield Farming, Risk Management

BarnBridge tokenizes market fluctuations and risk exposure. It’s a new type of defi lego to create tradable tokens, that expose a user to more or less volatility in a market. It can reduce volatility for conservative investors, or increase it for traders. Its tokens open up new opportunities for risk management, speculation, and hedging. 

There is over 200 trillion in global debt. Bonds on corporate debt are now earning below 2% interest for the first time ever! This corporate debt might be coaxed into defi, if the yield and price fluctuations were less volatile. Barnbridge can reduce this volatility. It can even offer a stable yield rate, by consolidating the return from multiple protocols.

Important Barnbridge Links:

What are Tokenized Fluctuation Derivatives?

Barnbridge creates tokenized derivatives on market fluctuations. Examples of these markets could include: yield rates, price, prediction market odds, mortgage default rates, etc. These ERC-20 derivative tokens are separated into high, medium, and low risk/reward baskets, called tranches.

Barnbridge’s first derivative TOKENs

Barnbridge’s first two derivative tokens: Smart Yield Bonds and Smart Alpha Bonds.

Smart Yield Bonds

Smart yield bonds consolidate and tokenize yield from multiple defi protocols. The ERC-20 tokens can offer high risk/high yield, lower risk/lower yield, or stabilized yields.

The yield bonds are structured according to the image below:

Smart Alpha Bonds 

Smart Alpha Bonds tokenize price exposure. They can expose users to a high, medium, or low amount of price fluctuation. Higher risk price exposure gives higher returns, but also higher losses. 

  • Each token doesn’t have to be flat on the price exposure curve! For example, the first 10% of price exposure can have a different exposure curve than the second 10%. The second 10% can move the price up more/less up or down, than the first 10%.

Barnbridge also plans to develop more derivative products including: SMART Prediction Hedge, SMART Swaps, and a Market Driven Ratings Oracle. 

$BOND Tokenomics

$BOND is the native ERC-20 token of the protocol. Its total supply is 10,000,000. It is used for staking, governance, and incentives. $BOND’s fair release model was inspired by yEarn. It is distributed to the community by yield farming.

The 2.2 million $BOND tokens allocated to founders, seed investors, and advisors are vested, then released on a weekly basis over a two year period.

$BOND Yield Farming

The team will distribute the $BOND token fairly. It uses a Proof of Capital model to release the token as yield for liquidity providers. Barnbridge needed this liquidity to “structure”, then release its product. 

Below are the 2 liquidity pools available for farming:

  • USDC/DAI/sUSD Pool (#1) – Pool 1 is composed of stablecoins, so impermanent loss is not possible. 
  • USDC/BOND Uniswap Pool (#2) – Pool 2 may be less vulnerable to smart contract failure, as Uniswap smart contracts have been deployed and tested longer.

DAO Governance

Barnbridge started under a “launch DAO”, using the Aragon platform. (Access it here.) Soon it will soon be transitioned to the final Barnbridge DAO.

The Barnbridge Team

The founders of Barnbridge have a history with crypto startups including: SingularDTV, Dharma Capital, and Gnosis. Its devs are part of the web 3 development company in Bucharest called Digital Mob. 

Conclusion on Barnbridge

I think the risk management tools offered by Barnbridge, will encourage new types of debt to enter our space. Defi can give exceptional APY’s on mortgage and corporate debt, but institutional investors might afraid of a risky, unproven protocol. Barnbridge can spreadout and stabilize this risk. Tools to mitigate the exposure, and steady interest rates, will allow conservative investors to slowly dip their toes in.

Barnbridge is a very unique product. There’s no comparable protocol in defi. Its derivative tokens offer new ways to speculate, manage risk, and hedge. The ERC-20 tokens will be used by both conservative and aggressive investors to give stability, or maximize gains.

I also think the team made a smart decision by going with DAO governance from the very start. The market highly values fairly run projects, like yEarn! Barnbridge has enthusiastic community support, with $400 million locked in now. I’m very curious to see which market types Barnbridge will tokenize next.

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Rio Chain and Mantra Dao Review: the Emerging Defi Ecosystem on Polkadot

Rio Chain is a well-funded substrate based blockchain. It will power a suite of cross-chain financial applications, in the Polkadot ecosystem. Rio plans to connect traditional banks with blockchain. Working directly with banks allows it to create secure custody services, interest bearing saving accounts, debit cards, and a fiat gateway into crypto. Rio is positioning itself to be a multi-chain Crypto.com!

The Rio team is based in Hong Kong. Its target market is China, USA and globally. Rio Chain is well funded, and was audited by Certik. Co-founder Calvin Ng, is also managing director at Plutus.vc, which is a $200 million dollar venture capital fund. Rio is supported by 12 venture capital companies, and has raised $15 million in private rounds.

Rio Chain’s Roadmap

Rio has 8 releases coming in Q4 2020, and into Q1 2021. They include: a wallet, dapp store, exchange, payment system, debit card, and fiat gateway. The Rio team also plans to create a stablecoin, and launch new defi applications on the chain.

  • Rio’s flagship dapp, Mantra Dao was launched in Q3.

Basics of the Rio Blockchain

Rio is an interoperable blockchain, built on Substrate. Its native token is called $RFUEL. RFUEL is used for transaction fees and rewards. Rio currently uses Proof-of-Authority (PoA) consensus, but will soon switch to Proof-of-Stake (POS). Rio is now a federated chain, but this will change in the future. A federated chain offers improved speed, TPS, privacy, and costs, but, it is more centralized. The Rio chain has reached up to 3000 TPS, with 2 second block times. The team plans to make Rio more decentralized, as the tech improves.

Here is a recent update about Rio’s progress:

Important Links:

Rio’s Cross-Chain Interoperability

Rio will use Polkadot for its interoperability. Until Polkadot is ready, Rio will use a “federation based cross-chain mechanism” to move assets to other chains. It will use a cold storage, multi-sig wallet for custody. Its Generic Asset Bridge, will power cross-chain transfers.

Tokenomics of $RFUEL

$RFUEL is Rio Chain’s native token used as gas for transactions. Rfuel requires a flat 0.1% transaction fee, instead of a variable fee. It is needed to conduct a transaction, or to execute a smart contract.

  • The Total supply of $RFUEL is 1 billion. 70% is allocated for rewards. 35% of the rewards will be distributed to those staking RFUEL and validating transactions on the network. (Here is the token emission schedule.) RFUEL has a circulating supply of 116 mil, putting it at a $10 million cap.
  • 80% of all transaction fees on the network, go to node operators. 20% of fees reward the dApp creators. They hope this economic incentive for dapp builders will encourage developers to build on Rio Chain.
  • Users are now able to stake RFUEL on Mantra Dao’s staking app to earn 50% APY rewards.

The RIO Wallet

The Rio Wallet will be released in Q4. It will be pre-loaded with $RFUEL, to use for transactions! It can hold ALL assets on RioChain, and on some other chains. At launch, Rio Wallet will hold Bitcoin (BTC), Tether (USDT), Rio Fuel (RFUEL), and BIT Token (BIT).

Mantra Dao: Rio Chain’s Flagship Dapp

Mantra DAO was incubated by Rio Chain. It offers borrowing, lending, staking, a savings pool, reputation mechanism called karma, and governance. Mantra sees itself as a community governed credit union.

  • Mantra has created partnerships with: Kira, Bonded Finance, TomoChain, and Kardia Chain.
  • Releases like: the Mantra Pool, their Proprietary Lending Protocol, and a Stablecoin are coming in Q4 2020, and Q1 2021.
  • Here are the latest blog updates on Mantra Dao.

Below is its roadmap:

My Conclusion on Rio Chain and Mantra Dao

I think Multi-chain defi will be a strong crypto narrative in 2021. A cross-chain environment, will invite in alot of value. Rio is also a strong candidate for one of 100 Polkadot parachain slots. It’s strong banking/institutional ties can be leveraged to provide financial services and custody, which can’t easily be replicated.

The $RFUEL token’s price has performed poorly so far. I believe this will reverse, as it hits major milestones in the next few months. It will release its mainnet, wallet, debit card, and fiat gateway in the next 3-6 months. Users can now stake $RFUEL on the Mantra Dao app to earn 50% interest. If $RFUEL can hit a $50 mil cap, like Mantra Dao, it would 5X from here. ($10 million circulating mcap)

Mantra Dao, RioChain’s first defi offering, ($OM) had a very successful launch, but has cooled off since. It just opened staking, and is now offering 88% APY rewards. This is attractive to those who know what is upcoming in the next few months. With important partnerships like: Kira, Bonded Finance, TomoChain, and Kardia Chain, it is positioning itself to be a major player in defi. Once it launches the Mantra Pool, Lending protocol, and stablecoin, investors will jump back on board. If $OM hits its previous high mcap of 50 mil., it will 3x from here.

Rio and Mantra Dao are huge, well funded projects, with powerful institutional connections. That is not forkable! The fact that it is multi-chain, means the value which could flow into it, could grow beyond chain specific protocols like Crypto.com. As multi-chain defi becomes a reality, Rio will be perfectly positioned at its forefront.

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