Background: This piece is written by the PhutureDAO creators, who are merely catalysts in the conception and construction of PhutureDAO. The community will run and govern the eco-system. Listed here is our vision for the ‘phuture’ of the PhutureDAO eco-system. Ultimately, the community can take it in whichever direction they decide, but we thought it would be cool to share our initial thoughts for the launch.
Following the success of our last post, ‘The Secret PhutureDAO MasterPlan (just between you and me)’ — we are pleased to deliver the follow up.
For those reading this and not familiar with PhutureDAO, PhutureDAO’s closest comparison would be a user first, Vanguard type Index provider, built upon a Web 3.0 foundation. Open for all to build upon.
This piece is going to focus on PhutureDAO’s incentive structures within the protocol. With an open platform, that users can build and create indexes upon, we believe incentivisation is key. It will make sure that indexes reflect new assets and new sectors appearing within the crypto sphere, with PhutureDAO anyone can create an index. If you are a fan of DeFi insurance, why not create an index that represents that? Do you like NFT’s? Why not create an index? If you believe DEX’s will play a pivotal role in the future of the crypto eco-system, why not create an index? If it’s built on Ethereum then only your imagination can limit you.
All this is great, but the real question is how does the platform incentivise each participant, because at the end of the day altruism only gets you so far. That’s what we aim to list below.
PhutureDAO empowers anyone to create an index. When a user/creator/project/company creates or as we say, ‘mints’ an index, that index will be represented with one token, an M-token. Let’s say John wants to create an index that owns the ‘Top 10 Decentralised Exchange (DEX)’ tokens, John will need USDC to create an index and will be charged 50 basis points (bps) when he creates an index (this is taken automatically after creating the index).
Now, John has his auto-rebalancing and auto-adjusting index that owns the top 10 (DEX) tokens represented with one token, an M-token. Jill, another user who believes in the future of DEX’s, sees this index and decides to purchase it (there are no minimums for index investment). When buying John’s index on the PhutureDAO platform Jill will be charged a 50bps minting fee and John will receive 5% of this fee.
When it comes time for Jill to sell her index she has two options. 1) Redeem her M-tokens on the PhutureDAO platform for either USDC or its constituent assets; 2) Swap her M tokens on the open market e.g. Uniswap or any other DEX.
In this scenario, John has obtained market exposure through the index he created and in addition is receiving a reward from other users investing into his index. In this example we have kept it simple, however, anyone can buy into the index, meaning John’s rewards are limitless for eternity as long as the index is demanded.
Jill and other investors can trust the index because John doesn’t have control over the assets in the index, Jill can trust the trustless PhutureDAO protocol.
We see a huge opportunity for people to create a range of interesting indexes right at the start. With this model, indexes will always move with the fast pace of innovation in the crypto eco-system. The index creators can benefit from investor interest in the latest crypto segments/sectors.
Liquidity Provider (LP’s) Incentive:
Liquidity providers will play a key role within the PhutureDAO ecosystem and we take seriously the need to create a set of exciting incentives that will draw in LP’s organically.
The liquidity providers will benefit from two sets of rewards.
- Minting fees: This 0.5% fee is generated whenever a new M-token is minted with 90% of the reward distributed proportionally to the liquidity pools involved in creating the new M-token. Those rewards are then distributed to liquidity providers according to their time weighted stake.
- Swap fees: This fee varies from 0.05% up to 1% and depends on how close each liquidity pool is to its perfect balance. The default fee is 0.3%. When a liquidity pool is at perfect balance the fee for both sides of the swap will be equal to the default fee. If the pool is far from the perfect balance then one side of the swap will be cheap and the other side of the swap will be expensive. 90% of the swap fee is distributed proportional to liquidity providers proportional to their time weighted stake.
All else held equal, liquidity providers benefit from more M-tokens being minted and more swaps taking place on their liquidity pool. In addition, index holders benefit from a greater volume of trades being executed since each trade brings the system more in-balance. Therefore, a symbiotic relationship exists between index holders and liquidity providers ensuring that everybody is aligned with the growth of PhutureDAO.
Ultimately, as PhutureDAO grows, so will the rewards for LP’s. We believe in openness and transparency, along with the right incentives for key actors in the system.
At PhutureDAO, we have an obsession over our users’ personal experience with the PhutureDAO protocol and we believe this comes first. Making it easy to use and as user friendly as possible. Abstracting away any blockchain complexities. We believe this is what the future of Web 3.0 applications will look and feel like.
We value you, our early supporters, and want to thank you for your continued support! Feel free to share and promote the good word of PhutureDAO, if you haven’t already, follow us on: