Introduction
Last updated
Last updated
Introduction
LIFE, A new crypto asset-class
LifeDAO is a decentralised, reserve currency protocol built on the Avalanche network by the LifeDAO team. The LF (Also sometimes called LIFE) token is our protocol's main asset. LifeDAO expands upon OHM in multiple ways, straying away from the 'decentralised central bank' concept in order to build a reserve currency from scratch. The prominentadvantage LifeDAO offers is stability. Whereas other OHM forks rely on over-reaching bond terms to push APY and price up, LifeDAO manages to do so through rudimentary and safe steps. This in turn offers a consistently high APY with little risk of tokenomic breakdown.
LifeDAO ensures this by rolling out bonds incrementally, this ensures a treasury can be equipped with enough liquidity to bootstrap new upcoming bonds. Another way LifeDAO ensures stability is the clear incentivization of LP Bonds, constantly putting mint-pressure on these bonds allows liquidity to expand as the protocol gets more popular, in turn creating a self-scaling bootstrapping cycle.
Adding to these strengths, LifeDAO will seek to implement additional safeguards:
A 'cooldown' period after unstaking to prevent gaming the rebase schedule
In Crypto there are stablecoins, which are a digital currency that are pegged to “stable” reserve assets such as the U.S. dollar or gold. Given this value, these sets of coins have become the primary trading pairs in crypto markets and one of the most popular assets in DeFi. So much so that there are currently $111 billion USD worth of stablecoins in circulation. This is why you see retail and institutional investors use stablecoins such as USDT to hedge against Bitcoin.
But there is a better option, LIFE, which isn’t a stablecoin. It is a new and exciting crypto asset class that has advantages that stablecoins do not. It is a ‘Goldie Locks’ or Lego piece in the crypto ecosystem because it mitigates the risk profile between volatile assets such as bitcoin and pegged stablecoins. You see, functional stablecoins can achieve the stability and value of USD, but that does not necessarily mean they are stable in purchasing power and/or have the ability to grow in value.
For instance, if you introduce one asset with a risk profile (i.e., a volatile asset like bitcoin) into your portfolio, you would be adding systemic risk. If you add LIFE to your portfolio, it can be a tool to hedge high profile assets (i.e., BTC, ETH, BNB) like USDT. LIFE’s game changing difference is that it breaks away from having to be pegged by the USD.
You may be asking yourselves, “aren’t stablecoins already doing that?”
And the answer would be yes, but remember that most stablecoins are centralized and offer very little or no interest or rewards. Again, because LIFE is not a stablecoin and is not pegged to USD, it is safer than stablecoins. LIFE is seen as an even better option because:
· it earns interest
· is always backed by $1 USD (i.e. USDT, DAI, BUSD, USDC)
· is fully decentralized with community-driven governance
· offers competitive incentives to users.
So, let’s break down the basics.
Each LIFE token is backed by 1 USD (i.e. USDT, DAI, BUSD, USDC) in the treasury.
We will initially start with USDT as our treasury asset. After launch, we will be adding other stablecoins to balance our treasury. This will include DAI, BUSD, USDC etc.
Tokens cannot be minted or burned by anyone except the protocol.
The protocol only mints or burns in response to price.
LIFE does not rebase. Instead, a 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, i.e., USD.
These basically translates to:
When LIFE trades below ↓ 1 USDT, the protocol buys it back and burns LIFE.
When LIFE trades above ↑ 1 USDT, the protocol mints and sells new LIFE.
This is because the treasury must hold 1 USDT and only 1 USDT for each LIFE every time it is bought or sold so it makes a profit. That means the protocol either gets more than 1 USDT for the sale side or spends less than 1 USDT on the purchase side.
The fact that the protocol holds USDT for each token allows us to say with certainty that LIFE will not trade below its intrinsic value in the long term.
Investments can then be made with defined risk because 1 USDT is the guaranteed long-term price floor. And because of this, the protocol can (and will) buy indefinitely below 1 USDT until no sellers remain, even if the supply is reduced to 0. In this example this event would reward those who did not sell immensely because they would end up with a chunk of every token that was burned!
Holding stablecoins to back tokens also creates a yield generation opportunity.
Locking away stablecoins in a vault would then be a waste. Given that the protocol never needs more than a few percent of reserves, even on the largest of down days, means you are free to utilize the rest to plug into yield aggregators and add those proceeds onto profits from buying and selling LIFE.
LIFE’s initial profit distribution
90% to stakers
10% to the decentralized autonomous organization or DAO (these allocations will be changed, if necessary, as decided by the DAO).
All rewards are paid in LIFE backed by stablecoins.
This system maintains a stable intrinsic value and reduces the incentive role of appreciation in favor of accumulation. As with real currency, you try to accumulate more dollars and you do not have to wish upon a star that your dollars become worth more. Although both can happen.
What is the best play with LIFE?
Buy LIFE as close to or just below 1 USDT as you can.
Remember the distance from 1 is the risk you take on (actually it is negative below 1!).
Regardless of where you buy you can then stake your LIFE or provide it to the Trader Joe pool as liquidity and bond the LP token.
In both cases, you will earn more LIFE over time!
Conclusion
LIFE’s aim is to offer a new class asset token that can be a part of any portfolio. It can be used to hedge risky assets while offering safer and better incentives than stablecoins.
