DAFI Protocol is reinventing how decentralized networks reward their participants. Interestingly, it is being built to be capable of reinventing every decentralized network by changing the reward model distribution for staking, nodes, and liquidity providers. The excitement about this shift is so high that within one week of enabling pre-staking on BitMax, over 40 million DAFI stood staked. While the staking numbers are impressive enough, the project also announced a trail of noteworthy partnerships with projects like API3, Bridge Mutual, Blockchain Cuties, Router Protocol and more.
DAFI Protocol promises to solve the biggest problem of hyperinflation in the existing token models. Basically, the decentralized network participants rely on network incentives to stay engaged with the networks for the long-term. To make them stay, the protocols keep on increasing the rewards and this takes a toll on the token model. As a result, the price and utility of many DeFi and blockchain tokens crashed to nearly useless in the past.
An EPIC first week for $DAFI ☄️
Here are some of the notable achievements since the TGE, with many more to come soon. pic.twitter.com/85B1zrL6HC
— DAFI Protocol (@DafiProtocol) March 27, 2021
To combat this, DAFI Protocol, the project incubated by the Royal Bank of Scotland has built a program that will reshape the crypto incentives model for every decentralized network. Moreover, it will reward the users based upon the adoption of the project rather than just some hype and will protect projects against token dumping.
$DAFI staking went live on BitMax on 18 March 2021 but by 25 March, over 20% of the total network value was already staked. According to the official blog, staking is an important pillar of the protocol. That’s because users need to stake $DAFI to create synthetic dDAFI which will find their use in rewarding the network participants. Later on, when the users want to redeem their $DAFI, they need to burn the dDAFI, the synthetic. Using this method, the decentralized networks that use the protocol can protect against token dumping. Interestingly, DAFI Protocol offers this unique proposition for both existing and new layer 1 and layer 2 protocols.
How does DAFI work?
DAFI Protocol is trying to tie network rewards to market demand rather than time. This kind of participation favors the long-term network participants. Here is how it functions:
- Protocols that use DAFI need to determine the network demand. This will depend on the maturity level of the protocol and factors like staking volumes, transaction volumes, price, and liquidity volumes. These factors would change with time.
- Once the DAFI Protocol users select the factors, the protocol will collect both off-chain and on-chain data using oracles like API3 and ChainLink. Using this, it will calculate the demand score.
- Using DAFI, the protocol founders need to deposit a certain amount of their native token into the smart contract.
- This will help generate DAFI-native synthetic token in the ratio of 1:1.
- Based on the network demand score, the protocols using DAFI will be able to reward the holders of these DAFI-native synthetics proportionately.
- The synthetic asset holders can redeem the native tokens at any time. These are redeemable in a ratio of 1:1.
DAFI plans to launch a Synthetic Creating product in April 2021 and by June 2021 on-chain DAFI staking for dDAFI synthetic rewards will go live.
In the last 7 days, $DAFI price is up by over 26.6% and is trading close to $0.1622. It also made it to our “HOTTEST UPCOMING CRYPTO 100x MOONSHOTS” list.