Dafi Protocol & EncryptClub AMA Recap
Judy_Host of EncryptClub: Just as expected, the crypto market reacted fiercely after the Federal Reserve (FED) revealed its hawkish strategy — the final blow after various bad news. I guess there is no worse news for the crypto space in the following days, so just do what we should do. Today, we will have AMA with Dafi Protocol, the first decentralized incentive protocol on-chain. I have read its white paper for a long time but failed to understand what its incentive mechanism is, however, my intuition tells me that sometimes, the project I don’t understand is a great one.
We are honored to have Zain Rana, the founder and CEO of DaFi Protocol with us and Zain will tell us more about Dafi Protocol in details.
Welcome to EncryptClub, Zain. Would you please introduce yourself to the audience?
Zain: Sure. My name is Zain, I’m the founder of DAFI. I’ve been a keynote speaker at the biggest events in Blockchain & Finance, and we founded DAFI after being inspired by the 2018 market crash. Since then, we’ve partnered with some of the biggest names in Crypto and Traditional Finance.
Q1:Zain, could you give us an introduction to Dafi Protocol?
Zain: DAFI is reinventing how decentralized networks are rewarded. DAFI creates synthetics for new possibilities in Staking, Nodes and Liquidity. By using synthetics for network rewards, rather than just simply tokens — DAFI creates a smarter inflation model for every protocol and network.
Everything decentralized relies on network inflation and incentives — for example Miners receiving Bitcoin.
However, since Satoshi — the model of network incentives has not changed, and it leads to an excess supply of native tokens, as well as favouring shorter term users.
DAFI uses demand-pegged synthetics to incentivize based on network adoption metrics, which builds better chains for better users.
Q2：What is the balance mechanism of Dafi Protocol, the first blockchain incentive protocol? Which on-chain protocols are you working with and what kind of incentives can you provide for these native on-chain protocols?
Zain: DAFI has already partnered with Elrond, Bridge Mutual, API3 and many more well-known projects, all of whom are participating in the ‘Switch to DAFI’ adoption. All of the DAFI partners are switching their Staking or Liquidity reward model to synthetics, rather than just tokens — by using DAFI. We have a good history of being one of the first projects incubated by the Royal Bank of Scotland in 2020, and DAFI’s team have showcased the project to some of the leading universities in England.
Q3：Dafi Protocol has garnered lots of attention from top VCs and exchanges since its staking mining. May we know why these institutions think highly of the on-chain governance effect of Dafi Protocol?
Zain:We closed our oversubscribed fundraising round with some of the most ambitious VC’s in the space, including Moonrock, Morningstar, Rarestone and many more.
DAFI was inspired by the 2018 market crash, where it became clear that the current model of how networks incentivize nodes, liquidity providers, and stakers — is fundamentally flawed. We’re glad to see so many VC’s support us throughout this journey, for the long term mission.
All of whom are very long-term on DAFI, and the new foundation of decentralized economies it will create. You may notice the VC’s who supported DAFI, speak very highly of the project, because it’s needed in the decentralized world.
Q4：This is our first time to know about Dafi Protocol and on-chain incentive protocol, can we define Dafi Protocol as a new model that breaks the traditional incentive mechanism? What progress can Dafi bring to on-chain decentralized governance?
Zain:It’s simple really. Currently, all decentralized networks reward based on time, not demand. DAFI creates a link between network demand/adoption and the reward emission/quantity. In other words, users who are short term receive fewer synthetic dTokens. As demand rises, the long term users are rewarded, without the supply-shocks, devaluation and hyperinflation that exist in today’s model.
The traditional model of simply distributing token incentives to stakers and users it creates excess supply being created leads to large supply-shocks. It is a model which has short term benefit, and no reason for long term users. It’s the (High reward quantity) * (Low network adoption) that leads to devaluation — we saw this clearly in 2018’s chaos.
Now, by using synthetics for Staking rewards, the initial reward quantity is not high, however users are rewarded later when network demand rises. DAFI simply creates a link, for the first time, between reward quantity and network demand. Building more stable chains and long term users.
Q5：What does Dafi Protocol think of the future development of DeFi ecology? What’s Dafi Protocol’s next development goal?
Zain:We are launching our first synthetic platform in April. Following this, onchain DAFI staking for synthetic rewards will go live in Q2. We are also onboarding some very big names in crypto to adopt the DAFI model for their staking, liquidity providers etc. You can expect to see a regular flow of announcements on new partners, adoption and product releases. This is just the beginning.
Here comes free QA session, guest can choose 1–2 lucky questions to answer.
User1: DAFI seems a complex projects from your description, is your team competent to fulfill the project goal?
Zain: DAFI simply rewards with synthetics, instead of tokens. This means that staking has the reward quantity increase with network adoption. I recommend reading www.dafiprotocol.io/litepaper
With regards to the team, we have a mix of highly capable from backgrounds including the ex-engineer of EOS, Matic & Holochain team members.
User2: Dafi uses synthetic asset dtoken to replace decentralized network native token to reward users. What is the relationship between native token and dtoken? Will additional issuance of dtoken affect the value of native token?
Zain: A project locks some of their native tokens to create dTokens on DAFI. These synthetic dTokens are distributed for staking rewards, liquidity providers, nodes, bounties etc — they are algorithmically pegged to the network demand.
Eventually a user will burn their dToken to get the quantity of real native tokens 1:1.
Judy_Host of EncryptClub: Thank Zain for joining our AMA and sharing so much valuable information with us. Thank you all for watching this AMA. EncryptClub will work hard and bring more wonderful content for you in future.
