PolyCUB Mechanics Spotlight | Protocol-Controlled Value

leofinance (77)in LeoFinance • 3 years ago (edited)

PolyCUB has shaken up the LeoFinance ecosystem (in all the great ways we expected it to). Building on the lessons learned - successes and failures - of all of LeoFinance's prior launches, we're aiming to do this one much better than the past.

Our launches are typically incredible events. Go back to the launch of CUB or the launch of WLEO or LeoFinance.io... we've got a history of doing launches that drive incredible attention and value to the LeoFinance ecosystem. With that in mind, improvement and evolution is a constant focus for us.

Over the coming days, we'll be releasing a number of spotlight articles like this one you're reading now. These will highlight some of the key mechanics and features of PolyCUB as we approach the launch. Our goal is to bring as much awareness and understanding to these features as possible before we even reach launch day.

PolyCUB is a pretty incredible platform. We've been building it for nearly 4 1/2 months now and the design and development has been quite a journey all on its own. PolyCUB introduces some radical new DeFi features to our community that are all aimed at driving value from each other. We believe the designed mechanics will all feed off one another and create exponential value generation for the platform and our community.

One of the main questions we've been seeing are related to the $1,000,000+ PolyCUB token airdrop to CUB 💎🐾s (no surprise there). The airdrop details and participation instructions will be featured in one of these spotlight posts.

Today, we'll be talking about another feature that is the source of many questions: Protocol-Controlled Value.

In This Post:

Protocol-Controlled Value
Risk-Free Value
Growing PCV
Locked Liquidity
Deflationary Future

Protocol-Controlled Value

Protocol-controlled value, protocol owned liquidity, PCV, PoL - whatever you want to call it - is referring to a DeFi 2.0 concept that projects like OHM have pioneered. This has led to a new generation of yield platforms being developed. Even Thorchain is planning to integrate their own version of Protocol Owned Liquidity.

PolyCUB is launching with this DeFi 2.0 mechanism built-in to the platform. There are multiple ways that Protocol-Controlled Value (PCV) grows on PolyCUB. We'll dive into the launch mechanisms and future plans in the 3rd section of this post.

What Exactly is PCV On PolyCUB?

Protocol-Controlled Value on PolyCUB is held in a few different ways by the protocol:

PolyCUB-USDC LP
PolyCUB-WETH LP
Diverse Kingdoms Liquidity

The protocol will control value in the 3 above places. The PolyCUB LPs are generated through the initial donation of liquidity by the LeoFinance team and the Kingdoms Liquidity will be generated via a few mechanisms: namely, the core 10% management fee generated by Kingdoms TVL.

As PCV is generated, it is moved into one of these locations. This creates a few key bullish aspects for PolyCUB as a DeFi platform:

Ever-Expanding Locked TVL (the TVL on PolyCUB will continue to expand as the PCV expands and continues to lock liquidity in PolyCub vaults)
Deep & Locked PolyCUB Liquidity (the actual PolyCUB pools will have a deepening locked liquidity value which will create less price/liquidity volatility as the PCV expands)
PolyCUB Risk-Free Value - a.k.a. Deterministic Value (more on this below)
...

How is PCV Utilized?

PCV creates a few key utility mechanisms for PolyCUB. The primary usage of PCV is to self-sustain the platform and continually deepen TVL. Outside of that, the PCV can also burn POLYCUB and expand it's own "balance sheet"

Since PolyCUB has a max cap on the total supply (26M POLYCUB) and the emissions rate of new POLYCUB tokens halvens every single month, growing the PCV in the early life of the platform will create a fundamentally bullish future for PolyCub as a Polygon-based DeFi platform.

More on this in "A Deflationary Future"

Risk-Free Value

Risk Free Value (RFV) is an interesting mechanism that has also been pioneered by platforms like OHM. They use this mechanism primarily to price bonds for LP tokens (where users can stake OHM-___ LP tokens into bonds and get discounted OHM in return).

A similar bonding mechanism is built into PolyCUB (and is also being ported over into CUB on Binance Smart Chain):

Users can bond LP tokens
Users earn vested POLYCUB (or CUB on BSC) at a slight discount
Bonded LP tokens are added to the PCV as permanently locked liquidity

PolyCUB's usage of the "RFV" term is primarly to discuss the value of POLYCUB's market cap against the total value in the PolyCUB PCV.

PolyCUB's PCV grows in value forever - since it earns the 10% management fee on all Kingdoms + LP Bonding + LP Reward Compounding in it's own Kingdoms Positions.

This forever-growing PCV gives us a deterministic value or a Risk-Free Value of POLYCUB tokens.

i.e. 1 POLYCUB token can theoretically be valued at 1 share in PolyCUB's protocol-controlled value.

This concept is one of the core mechanisms of DeFi 2.0. When you combine the concept of RFV with PCV-growing mechanics (like Kingdoms Management Fees, Kingdoms Yield and LP Bonding) + monthly halvenings on POLYCUB emissions + max cap on POLYCUB tokens + xPOLYCUB staking mechanics (based on the xSUSHI contracts), POLYCUB becomes incredibly attractive as a long-term utility asset within it's own ecosystem on Polygon.

As PCV grows, POLYCUB RFV grows.

Think of it similarly to Thorchain (RUNE)'s Deterministic Value: as liquidity deepens on the Thorchain protocol, the fundamental base value of RUNE deepens as well (since the amount of RUNE needed to secure the ecosystem grows proportionally to the TVL in the ecosystem).

As the protocol-controlled value grows, the fundamental value of 1 POLYCUB against the total current supply of POLYCUB tokens grows as well.

Add a speculative multiplier on top (just like RUNE's current multiplier against current deterministic value) as new features are discussed, designed and launched and you get some interesting price extrapolations for the long-term and short-term.

In many ways, POLYCUB is sort of a love-child of all our favorite DeFi platforms. We've pulled inspiration via everything from Sushiswap to Pancakeswap to Autofarm to Olympus DAO to Thorchain.

With LEO, CUB and now POLYCUB, we're creating a diverse ecosystem of opportunities. As our community continues to scale, these opportunities will scale in both width and depth. Creating better incentives for those who are already here and drawing in new eyeballs for those who haven't yet become a 💎🐾🦁

Growing PCV

Now that you understand what PCV is and how it drives massive utility and RFV to POLYCUB, let's dive into some of the growth mechanics we've installed at launch:

Launch Liquidity Donation
10% Management Fees
LP Bonding
...

At launch, the LeoFinance team will donate $200,000 USD to the PolyCUB Protocol-Controlled Value in the form of:

50,000 POLYCUB and $50,000 USDC for the PolyCUB-USDC LP (Launch Liquidity)
50,000 POLYCUB and $50,000 WETH for the PolyCUB-WETH LP (Launch Liquidity)

Moving beyond launch day, PCV will grow forever through Management Fees on Kingdoms TVL.

For every $1 in Kingdoms TVL, there are Off-Platform LP Incentives generated. A 10% management fee is sent to the PCV during each Autocompounding Harvest for the PolyCUB Kingdoms Protocol.

With CUB (BSC), we've managed to continuously expand the Kingdoms TVL - currently at $7,600,000 USD.

With PolyCUB, we believe we can crush these numbers as we take on the untapped opportunities of the Polygon network and combine it with key farm partnerships at launch to generate massive awareness for the yield optimizing platform with deep community, the highest APYs on Polygon and incredibly bullish xPOLYCUB/PCV mechanics.

As the TVL in PolyCUB Kingdoms grows, we'll see the daily growth of PolyCUB's Protocol Controlled Value climb alongside it.

PCV growth is exponential. It feeds off itself and it grows in perpetuity.

LP Bonding is the mechanism pioneered by platforms like Olympus DAO which have managed to drive Billions of Dollars in value to their protocols.

As mentioned above, PolyCUB will have its own version of LP Bonding (which will also be ported over to CUB on BSC). This LP Bonding will have 2 bullish impacts on the protocol:

When users bond LP tokens, those LP tokens are locked in the PCV. This creates deeper liquidity pools for POLYCUB and CUB which creates less price/liquidity volatility
The LP tokens that get bonded to the protocol are autonomously added to the Protocol-Controlled Value - increasing the RFV of POLYCUB

Just as with every other platform and application built by LeoFinance, we approach development with a relentless vision of the future. Continuously researching other platforms and understanding the crypto & DeFi industry as it evolves.

PCV will be the core focus of PolyCUB and as we continue to design, develop and implement new features, they will be aimed at deepening PCV and scaling up RFV.

A deflationary future is coming for PolyCUB. It's an incredible design with a multi-year mindset around growing PCV and halvening the emissions rate of POLYCUB with each passing month. We couldn't be more bullish on all of these mechanics that we've built into PolyCUB between PCV, RFV, LP Bonding, xPOLYCUB staking, Harvest Penalties, Cross-Composable LP Kingdoms and more!

PolyCUB Mechanics Spotlight | Protocol-Controlled Value

In This Post:

Protocol-Controlled Value

Risk-Free Value

Growing PCV

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