deFarm 👋

deFarm Economy

Tokenomics design of deFarm Protocol

The economic model of deFarm is what our team has been cooking on for a long period of time, ever since the project has been just a concept. Extensive research and lots of economic models have been studied in order to find and build one that is best suitable for the concept and vision of deFarm. The tokenomics of deFarm has been designed to benefit the platform's good actors, to sustain the development, and utilize our platform capacity. Read more about the idea of a good tokenomics design in our Game Theory articles.

TL;DR:

The key goals that we keep in mind while constructing our tokenomics and token metrics include the following:

The practical and necessity of the token. The main purpose of deFarm token is to become a key to access our services and power the incentive mechanism of our ecosystem along the way. This means that we are focusing on the Utilities and Demand of the token.

The Game Theory between incentivizing the Good Actors and punishing the Bad Actors. While token price post-launch is always subject to the market's condition and speculation, we will try to benefit loyal holders and good actors while avoiding giving rewards to mercenaries yield farmers.

Sustainability of the token and deFarm ecosystem. Our tokenomics was designed to sustain the project and its ecosystem for a long period of time. The Treasury will also be an essential part of our token economy. Almost all token flows are related to it, aiming to give deFarm a self-sustainable status in the future.

The Motto is Community First. And the last but most important part is this. The community has always been the backbone of deFarm and will be the most important aspect of anything. The tokenomics was designed to incentivize communities to support deFarm, benefiting the loyal supporters while staying easy to access to attract newcomers.

The Goals

deFarm Protocol, with its tokenomics, is designed around the idea of leveraging a decentralized structure to leverage the platform's success and transfer yields into the hands of contributors. The core concept is that all participants within the ecosystem share an interest in its success and growth. The incentives and rewards within the tokenomics system are crafted to encourage behaviors that benefit the entire community, rather than just individual stakeholders.

In recent years, the DeFi world has largely revolved around the concept of rewards through new token issuance. This has been the primary method for protocols to incentivize user contributions to liquidity and maintain market efficiency. However, this approach has faced criticism for its inflationary impact on token value and the potential over-reliance on rewards as the sole driver of participation.

The argument posits that the reward structure used by traditional DeFi protocols, such as Liquidity Mining Programs where users receive all newly-created tokens from the protocols, is no longer suitable for this market cycle or beyond. Real Yield is an alternative approach to incentivize participation that focuses on generating more tokens for token holders through the actual usage of protocols.

We thoroughly understand these issues. Instead of depending on new token issuance, deFarm rewards users with a portion of the yield generated by the protocol's activities. deFarm tokens serve as a means of transferring value from the platform's mercenaries to loyal holders/value contributors.

The Actors

There are multiple actors involved in the operational cycle of deFarm, each bringing unique benefits to the platform and seeking distinct rewards. The tokenomics of deFarm are designed to reward each actor fairly and appropriately, while also encouraging their participation in the governance process of the system.

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Farm Managers and Liquidity Providers

Farm Managers and Liquidity Providers are the main users of the platform. All efforts of the deFarm current team and future governors are directed towards enhancing the on-chain experience of these actors, making it smoother and more efficient. These are also the actors who will generate the primary revenue for deFarm. For these actors, deFarm's tokenomics are designed to retain them over the long term through rewards.

deFarm clearly understands the importance of maintaining the satisfaction and long-term commitment of these two participants. To achieve this, the platform has developed a strategic approach that focuses on incentives and financial benefits.

Both Farm Managers and Liquidity Providers are offered significant advantages for their active participation in the platform. These rewards can come in various forms, such as additional tokens and rewards from the treasury. This approach not only serves as an acknowledgment of their contributions but also as an incentive to continue their involvement with deFarm.

Token Holders

deFarm places significant emphasis on the role of Token Holders in its ecosystem. Token Holders are integral to the success of deFarm's ecosystem. By holding onto their tokens, they provide stability and trust in the platform. This is not just a passive role; their actions directly impact the platform's health and growth. In essence, Token Holders are not just purchasers but the foundations of deFarm's financial structure.

Recognizing their importance, deFarm has crafted its tokenomics framework to support and encourage Token Holders to maintain their purchases for the long term. deFarm has developed a staking program that serves multiple purposes. Firstly, it offers Token Holders a compelling reason to keep holding. Through this program, they receive incentives and rewards. These rewards are not merely a token of appreciation but a strategic move to bind the interests of the Token Holders with the platform.

By participating in the staking program, Token Holders do more than just hold their assets; they gain a say in the protocol's governance. This governance power is a crucial aspect of DeFarm's decentralized nature, allowing Token Holders to actively advise on the decision-making processes that shape the platform's future.

Moreover, DeFarm has hinted at various other perks that will be disclosed as the product develops. Though yet to be fully disclosed, these perks are designed to integrate Token Holders further into the platform, offering them additional benefits and opportunities as active participants in the ecosystem.

Founding Team

deFarm's founding and developer team plays a pivotal role in shaping the platform's direction, functionality, and overall success. The team is responsible for the initial vision, development, and ongoing improvements of the platform. The founding team's involvement does not stop at development; they are also crucial in setting the strategic direction of the platform. Their decisions on partnerships, feature development, and overall management have a significant impact on the platform's future. In DeFarm, their involvement and compensation are thoughtfully integrated into the tokenomics.

The founding team is allocated a certain proportion of the platform's tokens with a long vesting schedule. This allocation is a common practice in blockchain projects, serving multiple purposes. Firstly, it ensures that the team is intentionally aligned with the success of the platform. As the value of the platform grows, so does the value of their token holdings, directly linking their rewards to their performance and the platform's success.

In addition to the token allocation, the founding team also receives reward from the protocol's treasury. This reward system also bonds their interest with the platform's success. This setup makes sure that the team's goals are aligned with those of the users, including Token Holders, Liquidity Providers, and Farm Managers.

Social Supporters

DeFarm strategically leverages the power of Social Supporters, which includes KOLs and active members of deFarm’s community. This group plays a crucial role in pushing the platform's visibility and building a strong, supportive user base.

KOLs, with their influential voices in crypto, are pivotal in spreading DeFarm's presence and message. To incentivize and engage these influencers, DeFarm offers them a range of benefits. This includes a share of marketing tokens and strategic round allocations. Such incentives are not just rewards; they're a means to align the KOLs' interests with the platform's success, ensuring that their promotions and endorsements are genuinely supportive of DeFarm's growth.

At the same time, DeFarm recognizes and values the contributions of its active community members on social media. These members, through their engagement and support, help create a welcoming community atmosphere. To reward their efforts and involvement, DeFarm organizes various activities like social events, lotteries, and targeted airdrops. These initiatives serve multiple purposes: acknowledge the community's contributions, build a sense of belonging, and encourage ongoing active participation.

The phases

Initial Foundation Phase

The Initial Foundation Phase, as its name implies, is a crucial pre-launch stage that sets the groundwork for all subsequent phases.

During this phase, the primary focus of the deFarm team is on developing and delivering the best possible product and solutions to its users and the wider community. A key component of this phase is the implementation of incentive programs designed to reward users who actively participate in on-chain activities on deFarm. These programs are not just about encouraging usage; they are about building a solid user base that is engaged and invested in the platform's success.

Growth and Distribution Phase

The Growth and Distribution Phase marks the post-launch period of deFarm's tokenomics, a critical stage where the platform begins to expand and evolve.

A significant portion of the tokens, including community tokens, are vesting for purposes that encourage the growth and visibility of deFarm. These tokens are used to energize the community, enhance the product, and drive marketing initiatives. This strategic allocation is essential for building a strong and engaged user base, as well as for increasing the platform's reach and influence.

Investors who participated in the seed and strategic rounds see their tokens begin to vest during this phase. This vesting process is a way to reward these early investors for their faith and risk in backing deFarm from its early stages.

Simultaneously, team tokens are also in a vesting period. These tokens are reserved for operational needs and act as a motivational tool for the founding team, aligning their efforts directly with the success of the protocol. This alignment is crucial as it makes sure that the team’s goals are in sync with the platform's long-term prosperity.

A key consideration during the Growth and Distribution Phase is managing selling pressure to protect the interests of $DEF holders and the integrity of the protocol. As tokens vest, strategies are employed to mitigate any negative impact on the $DEF's value and stability.

During this phase, the team continues to develop and introduce new products and solutions. This ongoing innovation is geared towards attracting more users, thereby generating additional revenue for the protocol. $DEF holders, especially those who have shown a deep belief in the project, are rewarded from the treasury. Beyond this, the phase is characterized by numerous incentive programs aimed at $DEF holders, further solidifying their engagement and investment in the platform. As newcomers see the genuine utilities and benefits of holding $DEF, they are encouraged to purchase, which in turn helps to maintain and potentially enhance the token's value.

Maturity and Sustainability Phase

The Maturity and Sustainability Phase represents a significant milestone in deFarm's journey, marking a period where the platform has established a solid user base and stable revenue streams from its solutions.

At this point, all $DEF tokens have been released, meaning there's no longer any selling pressure from newly emitted tokens. This eliminates one of the major sources of volatility typically associated with the early stages of a cryptocurrency's life cycle. Moreover, with an inflation rate of 0%, the platform enters a state of economic stability, which is crucial for long-term sustainability and attractiveness to both current and prospective token holders.

Financially, $DEF holders stand to benefit significantly during this phase. The stable revenue generated by deFarm's solutions translates into a consistent stream of reward for $DEF holders.

A crucial shift occurs in governance during the Maturity and Sustainability Phase. $DEF holders transition to become the true owners and decision-makers of the project. This change means that any developments, new features, and major decisions are driven by the $DEF holder community. This democratization of control ensures that the platform evolves in alignment with the interests and needs of its most committed stakeholders.

The founding team, in this phase, takes a step back, allowing $DEF holders to lead the way. Their role becomes more supportive, focusing on facilitating and implementing the decisions made by the community. This shift highlights the founding team's confidence in the governance model and their commitment to upholding the principles of decentralization.

In essence, the Maturity and Sustainability Phase marks deFarm's evolution into a mature, stable, and community-driven platform with full token vesting, zero inflation, stable revenues, and a decentralized governance model.

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Tokenomics & Utilities⁠

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Treasury and Governance⁠

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