An Introduction to RiceQuant. The DeFi industry has experienced rapid…
Tags: Governance, Defi, Uniswap, Blockchain, Dao

NOTE:

We Rebrand Recently. New brand is RiceQuant and Old Brand is ifarm.finance

The DeFi industry has experienced rapid evolution in 2020. We have seen Governance Tokens(aka GT) burst out this year, and high-quality projects such as ResetDAO and Powerpool have also conducted profound experiments around meta-governance. However, ifarm.finance is not about solving core issues related to meta-governance. We observe that the capital utilization of governance tokens in the market is very low, the degree of capitalization also is very shallow. Most people just deposit governance tokens in their wallets. There are some notable phenomena that can indicate those who prefer investment attributes lack the derivative investment income ways of governance tokens and who prefer governance attributes have lost their enthusiasm for community governance because of being trapped by capital. ifarm.finance is a processing farm for the capitalization of governance tokens, hoping to deepen the degree of capitalization of governance tokens in the DeFi industry through the hierarchical lending model(a unique lending model designed in ifarm.finance) and the (common ownership self-assessed tax, COST) mechanism mentioned in “radical market”, and let the governance power really flow into the hands of those who want to truly participate in project governance.

About the meaning of project naming.ifarm.finance — Governance Token capitalization processing farm.

In the DeFi industry, Yield Farming has almost become the three meals a day for DeFi workers. In it, we invariably joked about ourselves as farmers. Therefore, ifarm hopes to become a popular Yield Farming farm among DeFi farmers.

As for capitalization processing, we can explain our ideas from the perspective of industrial capital in the DeFi industry. In this specific context, industrial capital can still describe the deepening process of its capitalization processing from its three functional forms.

The functional form of currency capitalization of GT(Governance Token)

Existing mainstream DeFi projects mainly use governance tokens as currency attributes to pay for operating expenses and purchase labor from community members. In ifarm.finance, governance tokens can also be invested in Seed-Lending(The first level in the hierarchical lending model), and completing a GTAS(Governance Token Attribute Split, a collateral loan type order) order in Seed-Lending will generate iMT(Governance Token Money Attribute Token) and iPT(Governance Token Governance-Power Attribute Token). The iMT, which is one of the two, can be invested in ifarm.finance’s Money Market(The second level in the hierarchical lending model). In this process, we deepened the degree of capitalization of governance token currency.

The functional form of production capitalization of GT

DeFi projects revolve around their core business and carry the value of community members’ surplus labor by issuing native Governance Tokens. We use this as a context prerequisite to the production capitalization of Governance Token.

We usually purchase or collateralize our BTC, ETH, USDT and other circulating currencies to hold various Governance Tokens to support long-term governance and operation of DeFi DAO projects to earn forward income. This long-term process can be regarded as asset purchase. At the same time, we also believe that participation in governance is an intangible asset for the study of the future development of the project, and the value of such assets is carried by governance tokens. Although for community members, most people will not actually participate in the project development tasks. However, in the entire process of participating in governance, all stakeholders have paid actual labor to promote the sound development of the project. The labor here mainly refers to research. Research is a creative and planned investigation to gain scientific and technological knowledge and understanding for their usually work. For example, in the community governance of a certain DAO project, community members will spontaneously study the knowledge in the field, study the knowledge of competing products or their industrial upstream and downstream products, and then transform them into actual production candidate results in the form of proposals.

In the existing DAO, its Governance Tokens are mainly used to obtain future income or amplify future income (such as $CRV) in the form of collateral as expenses or production investments, which will reduce the liquidity of Governance Tokens. In the capitalization processing of ifarm.finance, GT holders can earn benefits without further reducing its liquidity or reducing the value of intangible assets such as research and contribution to the community as production activities. And it is foreseeable that the benefits will be higher than those obtained simply by staking in the governance system of the original project. Even, we can imagine that after you have participated in the ifarm.finance, the future income generated by contributing the production research and labor to the original project will be higher, which will be reflected in the future GT market price. More specific answers are also available from ifarm.finance’s hierarchical lending model. As mentioned above, when you collateralize the GT(eg, $UNI) to generate the GTAS order from the Seed-Lending, you will recieve the iMT and iPT. iMT can be further invested in the ifarm.finance Money Market to earn income, and can also sell it as your will on Dex such as Uniswap and Balancer. iPT can help you better participate in the research and production of the DAOs community, because you may own more governance power against a small amount of iPT without being trapped by capital. At the same time, because Seed-Lending can split the Governance-Power attribute from GT, which can attract a large number of intelligent, creative, and enthusiastic people who are enthusiastic about research and participation in governance. And you will see there are more informations and more frequent dynamic updates of governance. Management of these informations is also more convenient(Especially in an open system, the various protocols are intertwined and complicated, and the black swan of the associated protocol will produce a chain effect. In this case, investors or governors will no longer just focus on a single agreement or project. Therefore, efficient management of information and governance clusters are both effective ways to effectively improve governance). The above list will become the intangible Added Value of the GTs you hold. So, in this process, we deepened the degree of production capitalization of GT.

The functional form of commodity capitalization of GT

In the DeFi industry, commodities are presented in the form of providing services to users and charging for provided services. However, mostly, the profits earned by DAO projects from externally providing services are often injected into value by buying back and GTs. Of course, this is just a simple example. All in all, many times, we will reflect the profit and value of the service provided in the market price of GTs, although it is not always the case. In the DAO project, the quality of the goods and services mainly depends on the development of the project itself, which is closely related to the quality of the community, the governance capacity, and the intensity of production investment. This just represents the impact of the two functional form described above on the functional form of commodity capitalization of GT. Therefore, we also believe that the entire processing process will also deepen the degree of commodity capitalization(Mainly reflected in the overall business of the project) of GT.

How it works?

ifarm.finance Hierarchical Lending Model

ifarm Hierarchical Lending is divided into Seed-Lending(The first level lending platform with fixed Rate) and Money Market(The second lending platform with floating rate) .

Seed-Lending

Stake GTs(eg, $SNX, $SUSHI) or LPs to farming IFA(ifarm.finance native governance token). And you can further choose to lock the GTs or LPs to create a GTAS order, then iMTs and iPTs will be synchronously received in your wallet. Actually this is a loan transaction, and the borrowed iMT can be suppied in ifarm Money Market, sold in Bounce, Uniswap and Balancer, etc.

Early in the product launch, We will issue the iToken series, which also follow the rules we described, except that it cannot be attribute split. It’s worth explaining that there are privileges for iTokens applied in ifarm’s Hierarchical Lending. For example,in the Money Market, enjoy the supply of iToken to obtain higher interest rates and the borrowing of iToken to pay lower interest rates.

Money Market for GT

The money market is based on the demand relationship of various GT assets, and a floating interest rate GT asset pool is obtained through algorithms.

The money market is divided into supply market and lending market. The market will support the supply and lending of assets such as iMT, iToken and other mainstream assets, DAI, ETH, wBTC, etc. And more asset will continue to be supported.

Governance Power applied in COST(Common Ownership Self-Assessed Tax)

ifarm.finance realizes the separation of GT money attribute and GT Governance-Power attribute in Seed-Lending.

We split the GT into two fungible tokens, iMT and iPT, which represent the money attribute and governance-power attribute respectively through Seed-Lending. Many items have public value and private value. The same is true for GT. Some people hold GT as monetary capital to expect added value, while others prefer to owns much governance power to participate in project governance to expect long-term added value. Seed-Lending with GTAS is a new paradigm in GT design. It brings together familiar concepts into a never before seen protocol:

P（m*GT）=P(x*iPT) + P(y*iMT/R)

GT: Governance token. UNI, YFI.

iMT: GT money attribute token.

iPT: GT governance power attribute token

P: Oracle price.

R: Collateral ratio.

m, x, y: token amount.

Since GT have different value recognition for everyone, ifarm.finance will provide farmers in the Seed-Lending to create GTAS orders to freely choose their approved valuation models according to the above definition.

Split GTs into iMTS and iPTs

After the farmers split the GT into iMT and iMT by creating GTAS order, iMT can freely arbitrage in the market to earn greater benefits. At the same time, iPT also can be circulated freely in the market. iPT is a measurement of Governance Power, and it represents the capital of Governance Power of investors who are keen to participate in governance.

C = P * H(iPT) / S(iPT)

C: Delegated Governance Power

P: Pooled Governance Power

H(iPT): amount of iPT your hold

S(iPT): iPT Current Total Supply

When a project needs to vote, such as UNI, You will have the governance power C(UNI) = P(UNI) * H(iPT-UNI) / S(iPT-UNI) from ifarm.finance. Then you can apply for C amount of UNI from the GT Staking Pool to delegate participation in uniswap governance.

Apply delegation from the Staking Pool for governance

Negative Rebase in iPTs

We hope that the Governance Power can be in the hands of those who are keen to participate in community governance. Therefore, the iPT that was split in ifarm.finance has a negative Rebase mechanism, which has a very similar idea to the COST system in the radical market. .

Different commodities have different private values ​​to different people. If they have a preference for a certain attribute, their private value is high, which means that the valuation model has changed. And when you want to keep your favorite commodity as your own, you will pump a higher price in the market to prevent being easily bought by others, or when the commodity is at a lower market price, you will choose not to sell. However, in order to avoid monopolies and malicious price hikes, we encourage the free circulation of Governance Power in the market and will pay taxes on Governance Power in a rebase mechanism, with a Daily Rebase Ratio of 0.08%. Therefore, people who do not want to have Governance Power will sell iPTs to the market as soon as possible, and even choose higher-weight iMT when creating GTAS order in Seed-Lending, but those who want to have it are willing Pay high prices and pay taxes to get Governance Power.

Tax Management

In the Seed-Lending of ifarm.finance, paying taxes through the rebase mechanism will directly change the total supply of iPTs. When a user owning a GTAS order wants to redeem, he will need to buy a certain amount of iPT from the market, so that the balance of iPT in his wallet is consistent with the amount of iPT of the original GTAS order, only in this way can he redeem successfully the GT that was initially collateralized. Of course, in addition, if his GTAS order contains a certain amount of iMT, then he also needs to pay a daily interest rate of 0.05%.

In order to satisfy the market that can fully redeem iPT to repay the GTAS order and to prevent maliciously pump up the market price of iPT, we have set up a tax administration, which will mint iPTs every 24 hours. The minted iPTs are equal to the negative rebase. Users can purchase iPTs from the tax administration to make up the balance to redeem GT.

Redeem GTs

Conclusion

ifarm.finance is a processing farm for GT capitalization. It mainly solves:

Governance tokens utilize their money attribute to invest in a single income method — — Provide diversified derivative investment methods for GTs. Governance is trapped by capital — — Let governance power flow to users who are really keen to participate in the governance of community projects.

Website: ricequant.fi

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