At its core, Defly is a tool for handling digital assets. You could say it is a starship to navigate the crypto quadrant, but we digress. More to the point, Defly is an app and a token. Think of this as a project which has its own kickstart funding built-in.
Similarly to crowdfunding, this token-backed approach is a vehicle to make products happen. But it goes beyond this. Even after the product is done it continues to facilitate broad community engagement. Everybody can put skin in the game and partake in pushing the app and help elevate it to a central tool on Algorand and in the crypto space. Many outside the core team have done so.
This is a journey and you are invited! On both the app and token front we are open to feedback from our backers. Numerous features have been added to the app based on community feedback. Many suggestions have been incorporated on the tokenomics side, with the most exciting one rolling out as we speak.
We have started paying out rewards to the Defly community through various mechanisms. This way of participating is intended to be significant and sustained. As we move forward we want everybody to grow with us.
Why are we spending a large part of our budget on rewards? Our strategy is to boost participation. This is where TVL comes from. We think having the best app and the most rewarding token will achieve this.
Where do the rewards come from? The rewards get allocated on a monthly basis from the internal Defly budget. The Defly project has a revenue model (app fees and liquidity pool rewards) and therefore a budget. We do not have to liquidate any DEFLY tokens for this to work.
What are the mechanisms to get rewards? We offer three ways to participate: yield farming, staking, and liquidity mining. Some are already live and you can participate in them now on Algofi. Some will go live within a week of this writing. Soon you will also be able to use them directly through Defly.
Algofi staking: DEFLY ➜ DEFLY (live, then boosted on April 3)
Algofi high-yield liquidity mining (.75%): DEFLY-ALGO Pool ➜ DEFLY, ALGO (live)
Algofi yield farming: DEFLY-STBL-LP ➜ DEFLY, ALGO (live)
Defly app is a self-custody Algorand wallet that lets you use decentralized exchanges (DEXs) from the comfort of your mobile device. It supports multiple DEXs at the same time (aggregator) and helps finding the best rates (arbitrage). There is more to this than just incrementally improving on centralized trading. It's primarily about redundancy, resilience, independence and self-determination. In short, we are saying there is a fundamentally better way than fragile centralized systems.
The use cases are not limited to crypto asset trading either. DeFi is increasingly becoming Web3. What used to be a handful of finance use cases is now art and content production in the NFT space. In general, every aspect of our culture is being experimented on with the paradigm of decentralized crypto. This makes sense because nature is decentralized, non-monolithic and large parts of our culture are centralized only because of technical limitations.
We don't mean to add every crazy experiment to the Defly app but want to make sure to look in the right direction. When a use case solidifies we want to be ready to implement or interface it. Maybe we will also invent some new use cases along the way. One area of interest is governance. We are involved in revamping Algorand governance (as an Algorand Foundation partner) and research in on-chain voting in general. Let's see where this takes us.
What does this mean for us in the next 12 months? Everything is moving very quickly, ripe with moving targets. That being said, we have fairly concrete ideas of what we will be adding next:
Tinyman (already added)
Algofi (already added)
Algorand Governance (user-side)
Hardware Ledger support
Additional security features (e.g. biometrics)
Beta to Production
For some time, Defly app has been distributed through the beta channels of App Store (iOS) and Play Store (Android). This is great for testing but most people will find this enough of a reason to wait for the official launch. This means the real fun is yet to start when we move the app to the main distribution channels. To make this happen we will use the following course of action:
The app will be in the main channels of App and Play Store within a week of this writing. This is a soft launch with some features still marked as beta. By default all the beta features will be enabled. This simply means we are still scheduling a few more weeks for testing and the security audit to finalize.
Why do we call them beta features and what about the security audit? We are slotted for a security audit by Kudelski Security but expect a few more weeks for this to get done. This is an important piece in achieving the highest level of security for our app users. This is not the be-all and end-all step. Additional internal code review, threat modeling and real-world testing is crucial for ensuring the security of the app as well.
All of this takes time. The more transactions we have under our belt and the more time we take analyzing possible threats the closer we are to removing the beta label. In short, with beta features we want to communicate that we are in the testing phase of a fully implemented product. You are invited to test with us but use caution. As time goes by less caution will be indicated.
The project's primary goal is to generate revenue through app use and LP rewards. Selling tokens is not central to funding the project. Any token dilution is done with an aim at increasing TVL and volume. One example for driving TVL and volume is providing liquidity for trading pools. Additionally, we incentivize holding DEFLY long-term through liquidity mining, yield farming, staking, and decreased trading fees.
Token Presale 30%
Back in January we launched this project with a token presale. For this we allocated 300M DEFLY and sold out in 2h. These tokens will be unlocked over a period of 5 months starting on April 4, 2022. As promised, we will unlock the first 20% on April 4 and over the course of each following month we will release another 20%. After April 4, we will release tokens on a daily basis for a slow and steady distribution. The exact schedule is 20.09% of the presale tokens on April 4, then 0.655% for every day thereafter until August 4, 2022 (122 days). For details see the DEFLY presale release schedule.
Right when presale tokens unlock we will start our reward programs. Through liquidity mining, yield farming, and staking our early backers will be incentivized to voluntarily keep "locking" their tokens long-term.
Liquidity Pools 30%
The presale ALGO payments were matched 1:1000 with 300M DEFLY to start our DEFLY/ALGO liquidity pool on Tinyman (January 19, 2022). With more DEXs coming to Algorand this liquidity will be strategically used to fund swapping pools and keep price impacts to a minimum. Currently, we have pools on Tinyman, Algofi, and Pact. A Humble swapping pool is in the works.
Development Fund 15%
This is the budget to fund the development of the app. Initially the team committed to locking these funds for 6 months with a 6 months taper. To further communicate our team's long-term commitment we are happy to announce that we decided to extend this to 12 months (starting January 4, 2023) with a 12 months taper (~0.28% of dev fund per day). This means the earliest these funds will be fully unlocked is January 4, 2024.
Marketing Fund 5%
The marketing fund is intended for running the various communication channels, both externally and within the ecosystem. We primarily use this for partners and advisors who help us get our message out in an effective and cohesive way. Design work and websites are also funded with this. We generally work with people who have a vested interest and share our long term commitment to holding DEFLY.
Expansion Fund 20%
Expansion is about increasing the utility of the app and the token. As the Algorand ecosystem grows we may provide liquidity to new use cases out of this fund. This specifically happens when starting new swapping pools on additional DEXs. Similarly to the other funds we focus on uses that do not require us to liquidate any tokens.
One thing we are keeping an eye on is expanding to other protocols. Technically we could support Uniswap, Raydium, or PancakeSwap. The missing link here are solid bridges. As soon as we can effectively route a trade from a Binance or Ethereum token to an Algorand token this will be a brilliantly disruptive feature.
The specific technology we are very excited about are Algorand's state proofs. This will make it possible to go cross-chain in a trust- and permissionless way. They will make bridges more secure and remove regulatory burden.
Particularly the use case of on-chain wrapping and unwrapping of any foreign token will be a game changer and may well establish Algorand in the center of the cryptoverse. Let's see how quickly the core protocol devs can roll this out. We will be waiting to interface it!
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