As more and more cryptocurrency projects begin to understand firsthand, it is difficult to include key stakeholders and early investors in a project’s ecosystem over the long term. With speculation mounting on new blockchain networks, especially DeFi-focused platforms, cryptocurrencies can see instant price growth when they hit the market. Because these profits are too high for early investors to pass up, the earliest people who supported the project may end up receiving a payout, which is bad for the entire ecosystem.
The DAFI protocol has developed an innovative solution to this problem that rewards long-term users with a metrics-based reward structure that allows new crypto projects to maintain their original community over time.
Synthetic tokens are the answer
The solution to the DAFI protocol revolves around synthetic tokens, or newly minted tokens, which are manufactured to represent the value of other assets. With synthetic tokens, new projects can pay part of their total offer into the DAFI protocol. Once deposited, synthetic tokens representing the ownership rights to the original coins will be minted and distributed to the holders. These tokens are not tradable, which means that original token holders cannot monetize these synthetic tokens as long as they hold them. Their only use is to swap back for the original token after a predetermined amount of time has passed.
This only seems to benefit the project development teams, but it also rewards early token adopters. After the initial synthetic tokens are distributed, the number of tokens a user owns changes based on a smart contract algorithm that allows the token supply to flow. With the help of a decentralized oracle, DAFI can evaluate metrics outside the chain such as token price, platform acceptance and trading volume in order to determine the growth of the platform. The more user-friendly the platform becomes over time, the more synthetic tokens will be distributed to each token holder.
Create owners from sellers
With DAFI, platforms don’t discourage speculation about their native cryptocurrencies. They just want the engagement to become a longer term arrangement. With its innovative solution, DAFI transforms investors from sellers to owners and motivates them to realize their investment value when the platform sees measurable growth.
This is extremely beneficial for new projects as they need to establish a platform usage base so they know what is working well and where it needs improvement. This structure will serve the best interests of projects and token holders in the future as tokens achieve a value based on the network being updated. Given that some projects worth hundreds of millions or billions of dollars get almost no network usage, DAFI promises to adequately motivate stakeholders based on more than widespread speculation.
There is currently no relationship between token holder rewards and network adoption. that needs to change. While users may not be able to benefit from short term speculation through DAFI, they have a much better chance of generating long term value besides being introduced. This mechanism will deter gamblers and speculators hoping to get rich quick on the next hyped project and provide investment opportunities for those planning to stay on the project for an extended period of time. With this superior token distribution method, projects will use DAFI to deposit part of their token offering in favor of non-tradable and elastic synthetic tokens for users and reward them over time.
Image by anncapictures from Pixabay
