How DAFI Protocol Rewards Long-Term Token Holders and Supports Sustainable Project Growth

Sunday 07 March 2021, 5:14 PM AEST - 1 month ago

As more cryptocurrency projects are beginning to understand firsthand, keeping key stakeholders and early investors involved in a projects ecosystem long-term is tough. With increasing speculation around new blockchain networks, specifically DeFi-focused platforms, cryptocurrencies can see instant price growth as they hit the market. With these profits too high for early investors to forgo, the people who supported the project earliest can end up cashing out, which is bad for the overall ecosystem.

DAFI Protocol has come up with an innovative solution to this problem, rewarding long-term users with a metric-based reward structure that allows new crypto projects to maintain their original community over time.

Synthetic Tokens Are the Answer

DAFI Protocols solution revolves around synthetic tokens, or newly minted tokens produced to represent the value of other assets. Using synthetic tokens, new projects can deposit a portion of their total supply into the DAFI protocol. Following the deposit, synthetic tokens representing ownership rights to the original coins will be minted and distributed to holders. These tokens are not tradable, meaning original token holders cannot monetize these synthetic tokens while they hold them. Their only use is exchanging back for the initial token after a predetermined time period runs out.

This may seem like it only benefits project development teams, but it rewards early token adopters as well. Following the distribution of the initial synthetic tokens, the number of tokens a user holds will change based on a smart contract algorithm that allows for the flow of token supply. Using a decentralized oracle, DAFI will be able to evaluate off-chain metrics such as token price, platform adoption, and trading volume to determine the platforms growth. The more usability the platform receives over time, the larger the amount of synthetic tokens distributed to each token holder.

Creating Holders Out of Sellers

With DAFI, platforms are not discouraging speculation on their native cryptocurrencies; they just want the commitment to become a longer-term arrangement. With its innovative solution, DAFI turns investors from sellers to holders, incentivizing them to realize their investment value if the platform sees measurable growt ...

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