Interpretation of New DeFi 3.0-BlackHoleDAO
BlackHoleDAO is a decentralized asset management protocol based on DAO governance.
BlackHoleDAO is a decentralized asset management protocol based on DAO governance. "BlackHole DAO Protocol (BHDP)" is a brand new standardized model constructed based on DeFi 3.0. The BHDP burn mechanism, by drawing on the stock split and stock merge in the traditional stock market, resolves the imbalance between high inflation and deflation in the market. It also rolls out the DAOs credit-based loan service.
BlackHoleDAO can be interpreted simply as a service protocol for enterprise asset management, which includes the splitting and merging function, while providing the unsecured credit loan services based on itself.
1.0 BHDP Components
Important parts of BHDP:
BHDP: BlackHole DAO Protocol
BHDP extreme deflation formula: X-[X/(Y*H)]=Z
VC Pool: Fund pool with all quality Token assets
Donation Pool: An asset pool with high returns from investment institutions, DAOs and individual investments
DAOs: Different DAO communities
Transaction Fee Pool: Accumulated asset pool of transaction tax
Black Hole Reactor: The reactor will be opened upon reaching a certain amount of BUSD
1.1 BHDP Design Highlights
From the above picture, BHDP (BlackHole DAO Protocol) is supported by a Treasury, with smart contracts to connect VC Pool and Donation Pool. VC Pool supports multi-asset certificate investments, part of which is used to burn BHO in the liquidity pool and the rest for credit loans after the DAOs investment succeeds. Donation Pool receives the BUSD direct investment from investment institutions, DAOs teams as well as individuals and all donors will get the final return in BUSD. Transaction tax pool supports the operation in Donation Pool, DAOs community and Black Hole Reactor.
3 BHDP Ways of Deflation:
● It is a common way to burn directly 60% BHO of the transaction tax, but the proportion in the BlackHole DAO Protocol burning platform is already very high in DeFi.
● 50% of VC Pool is also used to burn BHO in the liquidity pool, which means that the more assets entered VC Pool, the more BHO in the Swap pool is burnt, and the token price will increase rapidly.
● The BHDP extreme deflation mechanism will be triggered when the extreme inflation happens:
When the stock (BHO) in the market reaches a certain amount with a 0 support rate, the deflation mechanism will be triggered. The interest on Stak will gradually decrease by a proportion, so is the proportion of the stock (BHO) purchased through Bond and then, the stock (BHO) minted through VC Pool. If the support rate is less than 0, the Stake will stop generating interest, Bond and VC Pool will stop minting new coins, and the deflation mechanism will be triggered, starting to burn the inventory circulating supply according to time and proportion until the support rate is greater than 0.
X-[X/(Y*H)]=Z
x: amount when the burn mechanism is triggered
y: burn rate
h: Time (days)
z: amount remained when the support rate is greater than 0
On the whole, the BHDP design is centered on the economic model, with a distinctive business model. This set of models is representative of generality in the DeFi industry, with a strong correlation between businesses. There are three adjustments made in the deflation mechanism to prevent the malignant impact on products caused by too much early circulating supply, a problem that already exists in DeFi for a long time. Hence, the mechanism itself is remarkable, but all this has yet to be verified by the market. It is worth looking forward to.
2.0 Wise Use of Olympus Stake and Bond
Stake mining always happens in DeFi, but there is also a problem of high inflation. The high APY mechanism based on the compound interest, since introduced by Olympus, has been followed by many products. Despite significant results in user acquisition, the mechanism has also failed to save them from the death spiral, and rather, sped up death.
2.1 Evolved Stake and Bond
After OlympusDAO staking, the interest is calculated according to the total circulating supply minted. With the increasing staking quantity, the staking interest grows rapidly, attracting an influx of staking speculators, resulting in the inevitable behavior of making a profit and fleeing. BlackHole DAO Stake regulates minting dynamically by the proportion of the total staking amount. In other words, when the market is in inflation, the staking interest will decrease, while in deflation, it will increase. However, it will never exceed the total staking amount. The advantage of dynamic regulation is that this free market transaction prevents the collective behavior to flee after making a profit.
Staking reward is calculated as:
The interest is calculated according to the compound interest, represented by the annual percentage yield (APY). APY is the real rate of return on your principal, taking into account the effect of compound interest. Your staked BHO is your principal. According to the rebase mechanism, compound interest is regularly added at each epoch (about 8 hours).
Rebase occurs 3 times a day. As there are 365 days in a year, the rebase frequency will be 365 * 3 = 1095.
BlackHole DAO Bond looks the same as Olympusdao. Both are designed to reserve treasury assets to support the market circulation, but also an effective way to supplement the liquidity pool. This mechanism is almost common in DeFi 3.0, adopted in Ve(3 3) and Tokenmak. Hence, this mechanism has become standard in this field.
The nature of Bond is that users purchase securities through BUSD or BHDP-supported tokens. After the successful purchase, BHDP will have BUSD group LPs provided to the liquidity pool, LPs will directly enter the treasury, and the corresponding BHO will be minted to users and DAO pools. All cannot be claimed before the locked position for 5 days.
However, BlackHole DAO has made some improvements based on the original bond mechanism. These improvements, similar to Stake, to some extent have innovations and are of great value for reference in the development of this field.
Improvements:
● Olympusdao can mint tokens all the time, while BlackHole DAO dynamically regulates the proportion of minted tokens according to the inflation rate. In a relatively high inflation rate, the proportion of BHO minted by Bond will decrease. Upon a 0 support rate, Bond will stop minting.
● It provides a discount to buy Tokens through Olympusdao, while to buy Tokens through BlackHole DAO is the same as the market price, but saves 15% of transaction tax.
For both choices, in fact, the most attractive or valuable point is that when the market circulation value is equal to the treasury value, Bond is no longer the previous high premium minting, but stopped minting, indicating that before the market is in inflation, the proportion of minting in the channel will gradually decrease until the minting is stopped, preventing further asset shrinkage during inflation.
For example, the US dollar issued by the Federal Reserve has been inflated and the Federal Reserve will not continue to issue US dollars in fact. According to the previous logic of Olympusdao, users can obtain newly issued US dollars from the Federal Reserve, but at a relatively higher cost. If the amount is huge, after circulating in the market, it will further shrink the existing US dollar held by users. Hence, the result of the high premium minting is the continuous asset to shrinkage.
To sum up, the improvements of BlackHole DAO Stake and Bond are innovative and landmark.
2.1VC Pool with All Vouchers
According to the official document, the nature and concept of VC Pool is actually clear-cut, that is, it is defined as a "VC pool with vouchers". The document describes: [Any project Token that enters VC Pool will undergo rigorous review and screening to prevent the malicious behavior from causing the loss of the long tail effect on potential assets, resulting in deflation and inflation of stocks (BHO) and failure to play a locking role in the Token project entering into VC Pool. If not ending up with a long-curve growth trend like BTC, it will go against the original idea of creating the VC Pool. Hence, any voucher that can enter the VC Pool must have a long-curve growth trend.]
From the content, we can see that VC Pool is the asset management business, and may eventually become the community organization with the most types of digital asset management. It can rely on the professional ability of autonomous community members to discover and recommend excellent and brand-new digital asset products to enter the asset pool. Once established in BHDP, this method reserves much room for imagination. If many vouchers enter VC Pool, the value will increase, with the final stock reflected in the intrinsic value of VC Pool. We know that if the U.S. stock market contains a lot of high-quality stocks, the U.S. stock market index will also have a great performance. However, what is different from the U.S. stock market is in its operation, that is, BlackHole DAO Stake is all the DAOs community behaviors.
VC Pool accepts such valuable vouchers as stablecoins, NFTs and liquidity LPs. These valuable vouchers, upon up to a certain amount in VC Pool, will group LP and provide liquidity and LP loan services to the third party. All the claimed earnings will enter the VC Pool to support circulation value of the stock (BHO). Besides, one potential value of VC Pool is to serve as the credit pool. Bound with the DAOs community, it uses the DAOs community protocol to accumulate the credit and issue unsecured credit loans according to the accumulated credit.
Meanwhile, VC Pool plays a regulatory role in BHDP
● In deflation, the proportion of the stock (BHO) minted through VC pool will increase
● In inflation, the proportion of the stock (BHO) minted through VC pool will decrease
● For BHO minted through VC pool and entering VC Pool, 50% assets will be used to burn BHO in the liquidity pool. The other 50% will be kept in the pool for DAOs community credit loan.
3.0 Ensure Benefit Fairness for Sustainable Earnings
The BlackHoleDAO transaction tax is used to prevent the plate from malicious acts by whales and to fund the operation of the entire project for the community and different DAOs communities. It also provides the guarantee to the final Black Hole Reactor and burning.
Transaction tax: 15% for buying (BHO) and 25% for selling (BUSD), the total tax will go into the transaction tax pool, together with multi-signature addresses to ensure the fund security. It is settled every week. The transaction tax will grow with liquidity, while the proportion will gradually decrease until it is abolished. Definitely, all is for the betterment of the project itself.
Transaction Tax Pool Distribution:
● 60% of the total transaction tax goes directly to the Black Hole Reactor and BHO is burned directly
● (BUSD + BHO) 10%: returns to donation pool investment institutions
● (BUSD + BHO) 10%: marketing wallet
● (BUSD+BH0)10%: development team
● (BUSD + BHO) 5%: rewards for DAOs community rankings
● (BUSD + BHO) 3%: DAOs community investors
● (BUSD + BHO) 2%: individual investors
4.0 Reverse Investment to Cater for Different Customers
It rolls out the stable investment to cater for all customers. There are 3 types of investments:
Investment Institutions
The investment starts at 10,000 BUSD, able to receive earnings from transaction tax (BUSD+BHO)10% until the investment doubles. The earning will stop at the end of the return period. For the successful investment, the investor will be displayed in the exhibition area. Here the investment institution can edit its name and logo, and all this data will be saved to the chain.
DAOs Community
The investment starts at 1,000 BUSD, able to receive earnings from transaction tax (BUSD+BHO)3% until the investment doubles. The earning will stop at the end of the return period. The successful investment makes the investor become a DAOs community advocate by default. The successful investor will be authorized with a corresponding invitation link, and by sharing this link can build his or her own DAO community. The DAOs community will receive the return of 10% of the DAO pool + 5% of the transaction tax, while the community name and logo will appear in the official exhibition area. The DAOs community can get the unsecured credit loan from VC Pool according to its own final credit value. The investor of the DAOs community can edit his or her name and logo, with all this data saved to the chain.
Individuals
The investment starts at 100 BUSD, able to receive earnings from transaction tax (BUSD+BHO)2% until the investment doubles. The earning will stop at the end of the return period. For the successful investment, the investor will be displayed in the exhibition area.
5.0 Black Hole Reactor
The nature of the Black Hole Reactor looks like the prize pool set by the project at different stages. To meet a certain condition, the prize pool will be opened. The funds are mainly from 60% of the tax. By default, when the market circulation reaches 10 billion BHO and the reactor amount reaches 100 million BUSD, the reactor will be opened. It is certain that the amount varies depending on the stage of the reactor, and the amount of the reactor in the second stage may be 1 billion BUSD.
For special reasons, there are exceptions for opening the reactor
● The reactor will be opened when the market circulation triggers the Blackhole Protocol mechanism with a final deflation to 10 billion BHO and the reactor amount reaches 100 million BUSD
● Regardless of the result, the Black Hole Reactor will be opened after 3 years.
● During the minting process, upon up to 100 million BUSD, it will open the Black Hole Reactor and stop minting.
6.0 Conclusion
Generally speaking, the design of the BlackHoleDAO Protocol is actually linked through the economic system between different business modules. Such concepts as VC Pool and Black Hole Reactor in BHDP are very outstanding. The most important one is the extreme deflation model based on BHDP, as well as the Stake and Bond deflation models. Cutting-edge and universal in the entire DeFi field, they manage to solve the ever-present problems of high inflation, insufficient liquidity, and user churn. However, it still needs the market to verify whether progress can be made in this field.
Note: The above are purely personal opinions. Don't take it as investment advice.
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