This is exactly right. POLYCUB is the base asset of the whole platform which means that accruing value into POLYCUB should be the #1 goal of everyone using the platform.
Imagine that all vaults on the platform (outside of pHBD-USDC) are paired against POLYCUB. Let’s say that these are 5 vaults - pHIVE, pSPS, pRUNE and pLUNA.
All 5 of these vaults are paired against POLYCUB which means that when you LP one of these 5 assets, you need to also have POLYCUB to match it. For some, this will be a turn off - that is, until the POLYCUB price begins to reverse its current trend. As the price rises, it will be a no brainer.
As these 5 vaults gain deposits - let’s say they each get just $100k in deposits, for simplicity - the POLYCUB protocol Owned Liquidity will be accruing value.
As the PoL accrues value, the deterministic price (based on the risk-free value of POLYCUB which is calculated as the current amount in Protocol Liquidity divided by the total supply of POLYCUB) rises. This has two important impacts on the value of POLYCUB:
- It backstops the value of POLYCUB - the higher their $ in PoL, the higher Risk-Free Value of POLYCUB
- Yield generated from PoL buys POLYCUB and deposits those POLYCUBs into the daily rewards pool for all platform vaults to share
Kingdoms only accrued value in 1 way - a 10% management fee. Outside of this fee, we were paying people to dump POLYCUB on the market. Paying people to deposit their assets on the platform while earning less money than we paid for those deposits in terms of yield.
Edicted talked about this a lot and really changed my thinking on everything.
Instead of paying to lose money, we need a closed loop ecosystem. We need to create an environment where ever single $ that is paid by POLYCUB needs to accrue more value for the collective ecosystem than it is worth.
In a zero-sum environment, this is impossible. However, we can create something that is far from zero-sum. How do we do that?
- Value accrual through the 5 means described in this post
- Combine this massive value accrual with future methods of generating value beyond even the deposited amounts - for example, collateralized loans which can effectively turn PolyCUB Protocol into a bank that lends out extra $$ on top of what it actually owns in reserves = more yield
This is starting to give me ideas for a post. I’ll cut myself short here in this comment.
I believe that this path forward - creating a closed loop system where POLYCUB is paid only to the vaults that generate the most value for POLYCUB as an ecosystem is going to moon the price of POLYCUB slowly and steadily in the long-term.
Combine all of this utility with deep scarcity - only 7M POLYCUB will ever exist - and we have the potential to create the first truly sustainable DeFi platform. That’s always been the mission of PolyCUB.
Posted Using LeoFinance Beta
