As the end of our liquidity mining campaign approaches, we feel it is important to introduce the user to the next step of our LP incentivization strategy: Capitalization. Built from the ground up without forking any protocol’s existing methods of accruing protocol owned liquidity, capitalization will allow the user to be rewarded with discounted DAMO, in exchange for DAMO liquidity pairs. While currently these pairs are limited to DAMO/DAI, plans for v2 will include more DAMO pair tokens, as well as certain LP tokens provided as collateral for our Decentralized Investment Vehicles.
Capitalization is a more sustainable method for incentivizing liquidity provision, allowing the protocol to acquire needed liquidity. With this liquidity comes a revenue stream that can be directed back towards the users in the form of multi asset rewards. In return for giving up their liquidity, the user will be vested in DAMO at a discount, receiving (at launch) 10% more DAMO than their share is worth.
How is the discount calculated?
The discounted payout is calculated at time of capitalization, by referencing the value of the deposited LP tokens in terms of DAMO. The LP token amount which is deposited will always represent an equal share of DAMO and DAI. To calculate the payout, the LP token is treated as if it is represented solely in DAMO. This is accomplished by quoting the price of DAI in terms of DAMO and summing both this price and the DAMO amount. Then, a percentage discount is applied to this summed total and added, thus providing more DAMO than the user would be able to receive if they were to redeem their LP token entirely in DAMO.
Following Capitalization will be Staking, where the user can flexibly ‘secure’ their DAMO to immediately begin ree. (rewarded, engaged and early). With DAMO comes access to governance power, potential access to multi asset rewards through participation in bribenomics and tokens from protocols incubated by the DAO. Users who continue to stake will continue to increase their say in protocol governance, but will have the option to unstake at any time, unlike current vote escrow models, which require a rigid lock up of tokens. However, DAMO staking will still mirror many of the positive elements of voted escrow style staking, just in a more liquid form.
- Generative NFT representing “staked DAMO”
- A liquid form of vote escrow styled staking
- Multi-asset rewards
- Ree (rewarded, engaged, and early)
- Early DAMO emissions
Capitalization will launch upon audit completion within the next week. Following the launch of Capitalization is Staking. Staking will allow for users to gain access to a multi-asset reward system, further incentivizing governance over DIVs. DIVs or Decentralized Investment Vehicles are asset backed tokens designed to hedge risk.