DAPP Network: Multi-Chain NFTs and DeFi Gamification
Bancor’s Single-Sided LP Recap
Bancor makes it possible to provide liquidity as a service. DAPP token is the perfect candidate because it has a small market cap with low liquidity. There’s a huge opportunity to bootstrap DAPP liquidity with Bancor’s AMM.
Check out my previous article to learn more about single-sided liquidity on Bancor: Earn Risk-Free Yield on DAPP Tokens.
Once the DAPP token goes live on Bancor’s AMM, DAPP holders will earn higher yields by staking to the LP rather than staking to DSPs. Bancor will become the liquidity hub for DAPP tokens. They’ll provide impermanent loss protection, compensating for the loss in fee generations or BNT tokens. This concept is super innovative because it allows single token exposure.
Big players might want to own DAPP, but they don’t necessarily want to own EOS. Right now, it’s not possible to gain exposure to DAPP without touching EOS. But the DAPP ERC20 tokens trading on Bancor’s LP make it easy to enter and exit DAPP without EOS. This solves both the liquidity issues and limitations of building solely on EOS.
Bancor is providing roughly 2-million dollars of liquidity on their side of the LP. This gesture allows 2-million dollars worth of DAPP on the other side. DAPP is going from barely any liquidity (50K - 100K on Defibox) to $2M in liquidity depth on each side. This increase in liquidity eliminates slippage and allows those interested in building DSPs to purchase a large stake.
DAPP holders will be able to bridge tokens before the liquidity initiatives begin. This strategy also helps strengthen the Bancor proposal once it’s live. It’s important to get the front-end up and running for the bridge. DAPP’s community should aim to place more DAPP on-chain so those looking at the proposal will see there’s already tokens on ETH.
If the Bancor LP hits its cap after launch, you can still enter the pool. You’ll just have to stake an equal part in BNT. Also, if you perform a two-sided stake (BNT to DAPP) before it becomes a single-sided LP, you should be able to withdraw your BNT post launch.
Role of Future DSPs
DAPP Network nodes (DSPs) maintain a business model based on incentivizing community members to stake for their services. But they’re also large stakeholders themselves. The high liquidity on Bancor will allow new DSPs to enter the ecosystem and purchase large stakes in DAPP tokens. These DSPs are incentivized to promote and build on the network because they have skin in the game.
DSPs can’t reinvest in the DAPP Network if they don’t have liquidity to enter or exit the market. If bigger stakeholders don’t have liquidity, they can’t realize gains to hire more developers or continue innovation. Right now, the only way a large player could acquire a sizable DAPP position is over a long period of time on Defibox. It’s risky for big players to enter the market slowly because they’re holding an illiquid asset.
Lack of liquidity on EOS is the biggest hindrance keeping DAPP Network from realizing its potential. DAPP Network’s increase in liquidity depth will create profits for AMMs and DeFi arbitragers. Current DSPs will have the opportunity to realize profits. And new DSPs will be able to enter the ecosystem.
The largest stakeholders on DAPP Network are DSPs. The best way to onboard new, bigger DSPs is through Ethereum venture funds or similar projects like Matic and Solana. Venture funds will move towards liquidity. LINK’s community is another good example where stakers promote the network. Many large entities pushing LINK’s marketing are also building on the platform. They own a huge stake and run LINK nodes themselves.
DAPP Network needs larger DSPs to adopt the network. They’ll have skin in the game and will want to grow the network. More liquidity adds great value because capital should enter the DAPP ecosystem. Nobody would invest money developing a technology unless they own a stake. The DAPP token is also required for utility purposes and should generate more demand as the network grows.
Cross-Chain NFT Staking
The DAPP Network NFT bridge allows multi-chain capabilities between DeFi and non-fungible token platforms. You could ideally stake NFTs to earn yield. These new mechanisms are required to pass governance proposals before implementation. Nothing is finalized, but there’s community discussions on how DAPP Network can attribute staking NFTs to generate DeFi yields.
There will eventually be ways to accumulate NFTs being a liquidity provider of DAPP. NFTs will combine for better NFTs. And each NFT will have staking utility. This NFT staking utility will be used by LPs to multiply their own reward. NFTs could act like a weight multiplier to level-up or advance one’s staking rewards. More active stakers will generate higher rewards than passive stakers. This idea places the greatest value on those actively involved with DAPP Network.
DAPP’s community is currently working on a reward and liquidity engine front-end. Everything discussed and built for the future of DAPP Network is created generically so other developers can adopt and implement their own ideas. The gamification and reward engine is being constructed with the intention of ETH and DeFi devs copying this model. All the code is open sourced so it’s easy to replicate. Those replicating this code will need to use the DAPP Network. Devs could not execute this concept in a high-gas-fee environment like ETH without DAPP Network.
DAPP Network’s gamification of DeFi and NFTs could also be deployed on Matic, but the liquidity itself would remain on Bancor. DAPP’s community doesn’t want the majority of DAPP tokens in one LP forever. It’s also not good for Bancor to host the only major LP because they generate fees on trading volume. Since most volume happening on DEXs is arbitrage, the more DEXs listing DAPP leads to more volume and fee generation. DAPP’s community will eventually target Uniswap and Quickswap to generate more significant volume. Bancor’s whitelisting is the first major step to increase DAPP token’s liquidity depth.
If DAPP performs well on Bancor and then it’s listed on Uniswap, DAPP’s community could potentially receive another round of BNT funding. Less votes are required to add more BNT to the LP after a token is onboarded. The DAPP pool on Bancor should only continue to grow as demand for the token grows.
Once DAPP bootstraps 2-million dollars worth of liquidity and bigger entities jump into the DAPP ecosystem, these players might be willing to put-up capital for pools on other platforms like Uniswap. UNI V3 concentrated liquidity allows stakers to amplify liquidity. Since Bancor and DAPP’s governance communities are covering the initial liquidity (BNT and DAPP), big players will have tokens available for other LPs. This capital could be used for Uniswap or Quickswap pools.
One-million-dollars could potentially act like three-million using amplification and arbitrage strategies on UNI V3. This idea creates huge opportunities for big trades with minimum slippage. There will be opportunities for arbitrage, where big players could potentially make multimillion-dollar trades on UNI V3 to generate more fees. And, with more fees, DAPP’s community could request more capital in the Bancor liquidity pool.
DAPP’s community will keep their eyes on DeFi opportunities for many different chains. The DeFi gamification engine on Matic would require a liquidity pool on Quickswap. If the gamification engine could be tailored in a generic way then projects on Quickswap might want to adopt the incentives and reward engine for their own tokens. It creates a new level of engagement, requiring those earning maximum rewards to remain active. Passive LPs will earn money too, but those most active and staking NFTs will earn more.
DAPP & Bancor Proposals
The newest DAPP Network proposal to whitelist DAPP ERC20 with a 500K BNT co-investment was submitted to Bancor’s government forum. The DAPP whitelisting incentivizes both BNT stakers and DAPP LPs.
Liquidity incentives will encourage DAPP LPs to bridge their tokens to Ethereum. Bancor would become the top liquidity source for DAPP ERC20 tokens. And DAPP’s volume, plus fees on Ethereum, will kick back yield to BNT holders. The DAPP token will continue to become more widely used by ETH devs. And developer teams will need Bancor to acquire their DAPP tokens.
You can view or contribute to DAPP Network proposals at dappgovernance.com.
The mint / burn functionality must be removed from previously approved DAPP ERC20 contract to meet Bancor's whitelisting guidelines. This will require a new token contract to be deployed on Ethereum which will remove the existing one. DO NOT send any DAPP tokens to Ethereum in the meantime.
A new amendment to Proposal 7 will be initiated after the updated ERC20 contract is deployed. This will recognize DAPP ERC20 as the official token used for liquidity mining incentives. The draft proposition on Bancor’s government forum will also be updated.
DAPP Network’s community needs to move forward with the voting snapshot date for DAPP’s whitelisting proposal to Bancor. This proposal should be submitted on-chain. The community is aiming to create a snapshot target date within the next two weeks. The subsequent proposal will outline specific allocations for liquidity rewards and IL protection allocations.
DAPP Expands to Major Blockchains
DAPP token’s liquidity on Bancor will expand the network to Ethereum. But DAPP will eventually reach every blockchain supporting Ethereum’s virtual machine. After deploying smart contracts on ETH, it'll be easy to move DAPP Network to Binance Chain, Vechain, Polkadot, Luna, Atom, and Polygon. LiquidApps will start marketing when everything is ready on ETH. There’s already NON-EOSIO based projects showing interest in the DAPP Network. Many EOSIO projects, however, still use DAPP Network’s technology to innovate on their own. Chintai, for example, is using DAPP Network to create a bridge that’ll transfer the CHEX token to Binance Smart Chain. A draft of their bridge was posted on the kylin testnet.
Stay tuned for more updates!
This article was prepared and accomplished by Wes Carmichael in his personal capacity. The opinions expressed here are my own and do not reflect the views or opinions of LiquidApps.
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