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My Thoughts on PolyGold

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Neal
@nealmcspadden
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2 min read

PolyGold, https://polygold.finance/, is an interesting new yield farm on the Polygon network.

I've been playing around on Polygon a lot lately. It's an ethereum-based chain, similar to Binance Smart Chain. Gas fees are really, really low. Like fractions of a cent low.

With gas so cheap, you can go into and out of contracts as much as you want and it won't even add up to a penny.

So, I've been experimenting with different platforms.

Shane turned me on to this one in the discord chat. It has a really interesting tokenomic model:

So the tokens are going to be printed for about a month. We're roughly 20% of the way into the token print:

After that, no more.

So what's the incentive to own it?

They are taking all the LP deposit fees (4%) and putting them to work on aave and curve. That will grow over time. Right now curve on polygon is paying about 21% annualized returns.

Once the supply cap is reached, each POLYGOLD token will have an equivalent NAV to 1/69420 of the portfolio value and its dividend-like cash flow. I'm not sure if dividends will be distributed to token holders or reinvested into NAV.

Regardless, there are no barriers to entry to placing funds in aave and curve. There are plenty of posts on leofinance.io showing you exactly how to do that.

Since there's no barrier to entry, the POLYGOLD token should be worth exactly its net asset value (NAV). Right now, my rough estimation is that the NAV of deposit fees is ~300k. If we divide that by 12949, that implies a fundamental value of 23.

But what that doesn't include is the future deposit fees that will be generated during the supply month. Those high APRs will attract capital, creating deposit fees, and growing the NAV. As I'm writing this, POLYGOLD is trading at $141, a 6x multiple on the NAV. That might be in the range of reasonable if polygold.finance can attract that TVL. And I'm open to the possibility that they can.

As the supply month progresses, the market value and the NAV should converge.

For me, that's worth a bit of a gamble.

DYOR and trade accordingly (or not).

Posted Using LeoFinance Beta

Edit: Sadly the dev rugged a couple days after this was published.