Introducing DungeonDAO
TL;DR DungeonDAO is an OHM fork on Binance Smart Chain which have the most aggressive rebase strategy.
In this post, I will try to explain how DungeonDAO works in low complexity terms. I hope it provides you with a good understanding of the problem we’re tackling and how we aim to solve it.
So, what is the problem? That we still do not have an independently valued digital currency. I think it’s pretty well understood at this point that Bitcoin is not a currency; it is money (an asset). The same goes for ETH, and any other “cryptocurrency” out there today. The perfect currency holds the same purchasing power today as in 50 years. It provides a stable and consistent foundation upon which contracts can be formed, financial planning can be done, prices can be marketed; basically, upon which an economy can run. This is impossible in absolute terms, but I don’t think anything out there even comes close to this today.
How are we addressing this problem? With dollar coins (imo incorrectly dubbed “stablecoins”). At the time of writing, there are $38 billion in USD tokens circulating. They have become the primary trading pairs in crypto markets and the most popular assets in DeFi. There’s a strange irony to the fact that the most utilized cryptocurrency is really just a digitized dollar. While functional stablecoins may achieve a stable USD value, that does not mean they’re stable in purchasing power. Their real value changes just like dollars in a bank account, and that value is heavily reliant on the policies of the Federal Reserve and US government, and on the US economy.
Recently, there’s been a wave of algorithmic stablecoins seeking to emulate a dollar peg without collateral (or less than 1:1 backing). I believe we can go a step further. Each iteration in the line of algos has demonstrated different ways of achieving stability, and many of them work! What if we could achieve stability while still maintaining a floating market-driven price? That is Olympus, and we forked it to make it even more efficient.
How it works:
Each LIFE token is backed by 1 BUSD in the Dungeon Treasury. However, tokens can’t be minted or burned by anyone except the protocol. The protocol only does so in response to price. When LIFE trades below 1 BUSD, the protocol buys back and burns LIFE; when LIFE trades above 1 BUSD, the protocol mints and sells new LIFE. Because the treasury must hold 1 BUSD and only 1 BUSD for each LIFE, every time it buys or sells it makes a profit. It either gets more than 1 BUSD for the sale, or spent less than 1 BUSD on the purchase.
The fact that the protocol holds BUSD for each token allows us to say with certainty that LIFE will not trade below its intrinsic value in the long term. This allows investments to be made with defined risk (1 BUSD is your guaranteed long-term price floor), because the protocol can and will buy indefinitely below 1 BUSD until no one is left to sell, even if it means supply is reduced to 0. In fact, an event like that would be immensely profitable to those who didn’t sell; they’d end up with a chunk of every token burned.
It is important to understand that LIFE does not rebase. Rather, new supply is created via direct sales into the market and burned via direct purchases from the market. This way, LIFE remains backed by real assets in the treasury.
Holding BUSD to back tokens also creates a yield generation opportunity. We could keep it all locked away in a vault, but that would be a waste. The protocol never needs more than a few percent of reserves on even the largest down days, meaning we are free to utilize the rest. We will plug those assets into yield aggregators and add the proceeds onto profits from buying and selling LIFE.
The initial profit distribution will be: 90% to stakers and 10% to the DAO (these allocations will be changed if necessary, as decided by the DAO). All rewards are paid in LIFE backed by BUSD. This system maintains a stable intrinsic value and reduces the incentive role of appreciation in favor of accumulation, like with real currency: you try to get more dollars, you don’t hope your dollars become worth more (though we do have both).
So, how do I play this? The best way is to buy as close to or below 1 BUSD as you can. The distance from 1 is the risk you take on (it’s actually negative below 1!). Regardless of where you buy, you can then stake your LIFE or provide it to the Pancake pool as liquidity and bond the LP token. In both cases, you earn a more LIFE over time.
When can I play this? We are actively in development, targeting a launch in next few weeks. We will announce details of our launch event closer to then.
Some additional notes:
The treasury does not have to be BUSD forever. We are starting with it because USD is familiar and common, and we want to minimize complexity in this initial stage. Plus, BUSD enjoys some of the highest yields in DeFi. However, down the road I hope to see Bitcoin become part of the treasury. I believe the best currency should be backed by the best money.
A portion of all of the protocols revenues go to the DAO, capitalizing it with real assets. Unlike many projects, we will not have to sell our native token into the market to realize DAO funds, because we always have the option of using their backing.
LIFE will be most successful if it is positioned as a USD-alternative primitive for DeFi. We will work hard to get LIFE integrated into money markets, DEX pairs, and yield farming protocols. We will also encourage its use as an alternative to holding USD. Eventually, you’ll be able to quote prices in LIFE with a reasonable expectation that they’ll remain the same in the future. At that point, we hope to see people flee to LIFE as a safe haven during risk-off periods rather than USD. We will do as much as we can to realize this, but ultimately it is a mindset and belief system (like any money or currency) that will rely on the support of you, the community.
We are excited to embark on this journey, and we hope that you join us :)
DungeonMaster
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The information provided in this Medium Post pertaining to DungeonDAO,
Inc. (“DungeonDAO” or the “Company”), its crypto-assets, business assets,
strategy, and operations, is for general informational purposes only and is not
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contained in this Medium Post should not be relied upon as advice to buy or
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financial situation of any person. DungeonDAO and its agents, advisors,
directors, officers, employees and shareholders make no representation or
warranties, expressed or implied, as to the accuracy of such information and DungeonDAO expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. DungeonDAO reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this Medium Post supersedes any prior Medium Post or conversation concerning the same, similar or related information. Any information, representations or statements not contained herein shall not be relied upon for any purpose. Neither DungeonDAO nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person
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