As the whole industry moves forward different parts of it continue to evolve as well. Farming, in particular, has been a bit stagnant in 2021 but this year will bring a lot of changes with the introduction of FaaS or Farming as a service.

At first glance, you can't really say that this is an innovation since money management as a service has been around for quite some time now. The main difference however is the complexity of the DeFi landscape and time limitations most investors need to put up with. As an answer to this FaaS is slowly emerging but we need to ask the right questions to get the right idea about this new phenomenon in DeFi.

What?

I can't say who came up with the idea first but the project that got me interested was surely Alpha Brain Capital DAO. It is by no means a reputable or well-known organization in the space, just the first of this kind that caught my attention.

Their idea is simple - investors buy their token and receive passive rewards based on the income generated by the DAO. A simple concept in theory but it does raise a few questions regarding the stability of the token and the long-term potential of farming in current market conditions.

The blueprint makes sense on paper but I'm not a big fan of reflection tokens and I'm sure a lot of you are on the same page. Paying a 5-10% fee on trades just doesn't make sense because you are bound to lose some value on buys and sells alike. If you wanted to sell your stocks and the company wanted to take a 10% cut on that sale I'm sure you would have an objection at least.

How?

The general idea is outlined in the chart above but there is a lot more going on behind the scenes. If such a project would succeed at attracting the vast majority of inactive DeFi investors it would have a lot of capital at their disposal along with an ever-growing community.

While the main goal is to turn that capital to profit through investments and farming activity the end game could be so much more. With so much capital on your hands and so many people behind the project, you can also offer liquidity-as-a-service.

Projects that want immediate attention and market action can pay a fee to get their liquidity set up. If they also want some community engagement ABC DAO could provide such a service.

A lot of possibilities with rather questionable bootstrapping imo. We will need to give this one some time before we can draw any conclusions regarding the business model and idea behind it.

Why?

As I already mentioned, there is a market for both investors and project managers here but the final execution will determine the success of FaaS. A lot of us feel like we are missing out on some great farming opportunities that only VC funds and well-informed individuals can spot early enough.

With ABC DAO and many more FaaS projects that will surely emerge in 2022 there is hope that DeFi profit sharing will be distributed much better in the years to come. I would certainly invest in such projects but the initial idea is not appealing enough.

After all, there are some similar models here on Hive that provide better tokenomics and exposure to specific markets. The ones that come to mind are CubLife and the 1UP Cartel token but there are many more similar options to be found on LeoDex. Once again, Hive has pioneered the concept that is yet to be explored by the rest of the industry.

Conclusion

FaaS has potential, I will give it that. Handing over your responsibility for a monthly or yearly fee is an attractive concept as long as it can bring consistent results in the long term.

My personal opinion is that it can't be based on reflection tokens. At best it could work with 1% fees or lower. Forcing people to give away 10% of their investment both when selling and buying is a huge disadvantage for investors. They have to make at least 15% profits after they get in to be in the green and then they also have to account for the sale tax...

Not so attractive when you look at it from this angle.

Posted Using LeoFinance ^Beta