DegenVC in March 2021
By: Fraser Brown - Degen Vc
Tags: Solidity, Defi, Ethereum, Liquid Vault, Degenvc

Where we are are. And a look at where we are headed.

The DegenVC ecosystem currently consists of projects with tokens that fall into four categories:

Recognition Revenue Governance DeFi

DegenVC is evolving towards a decentralized and autonomous venture finance model. In the near term, projects will be able to launch on top of DegenVC’s infrastructure without “permission”. While we enjoy the above taxonomy of token category, we are very open to new ideas and categories.

In this article;

We demonstrate the power of Liquid Vault technology applied to each of the four token categories using DegenVC’s ecosystem tokens as examples.

In doing so, we set the scene for projects considering non-VC venture finance options.

Finally, we present a concept for the fully decentralized and autonomous DegenVC system.

But first a note on “VC” (venture capital). Sentiment is increasingly and aggressively shifting against the VC model and its goal of monopolizing alpha. Multiple notable projects have launched and are flourishing outside of the VC model. People know that the alternative exists. Tokens are fundamentally different than equity- of course an alternative will rise.

DegenVC lives and breathes the mission to provide structure to this through an entirely decentralized solution. DegenVC has “airdropped” over $15,000,000 in alpha completely free of charge to those people holding DGVC LP tokens. This is nothing less than the emergence of a new discrete asset class embodied in our LP token. Thanks to its decentralized basis, the DegenVC opportunity cannot be captured or controlled by any party, ever. Be under no illusion — it completely breaks the mould. The analysis is here.

Recognition tokens

DGVC is a recognition token. Having it in some form qualifies the holder for some benefit. It is distinct from a utility token as discussed previously here. We are currently actively co-creating the design for DGVC version 2.

This is how the DGVC-V2 design could interplay with a Liquid Vault:

The FOT (fee on transfer) token disincentivises leaving the DGVC LP. When people do a benefit is transferred to those with a longer term view of the DGVC LP asset via the Liquid Vault. A portion of the ETH sent to the Liquid Vault benefits Degen VC. The discount on the LP remains substantial.

HARDCORE is also a recognition token. Staking $HCORE recognises the users entry into the HARDCORE game and their right to the winnings should they choose the best ball position in the spot the ball game.

Revenue tokens

Liquid vaults can be used to convert revenues from a smart contract based business into benefits for project token holders.

For example, this is how the implementation for RAUX could look:

A portion of the ETH sent to the Liquid Vault sustains the ERCAU business. The discount on the LP remains substantial.

Think forward to when on-chain subscriptions are the norm and revenues and profits flow in tokens. The underlying business can simply tokenise using the above model. This is not equity. It is something new and it means that the business can finance itself outside of models designed for equity, principally venture capital. So many ICO “tokens” had no use whatsoever. The idea was basically to put some business on blockchain. Actually, the above liquid vault scheme would have enabled their “useless” tokens to act as reward instruments, however, Uniswap did no exist back then.

Governance tokens

The value of governance tokens on DEXs is relative to the volume of trade. In the case of Behodler, a liquid vault can incentivise adding liquidity in order to obtain SCX and therefore secure discounted LP tokens. In its most basic form it looks like this, but Behodler’s liquidity event will build on this substantially pushing the boundaries of the innovation.

DeFi tokens

Decentralized Finance has become quite a broad term. Liquid Vault technology is itself a DeFi tool. Rock3t (variable levers) is a pure blood DeFi token because it set out to use smart contracts to create economic levers that encourage their adoption as a store of value as follows:

DegenVC concept

Core to DegenVC is the #alphadrop. Projects airdrop part of their supply to the DGVC LP and our community stimulates the Uniswap market by adding liquidity. The project also keeps some of the token supply and locks it for project purposes.

Adding a liquid vault shortly after the alphadrop incentivizes liquidity, allows buyers to take a larger position without bumping the price to the same degree as a swap on Uniswap would. It can also enable the project to raise some ETH.

How?

LP from Liquid Vaults are discounted 50% unless the liquid vault is programmed to require additional ETH. Part of this additional ETH can form a capital raise for projects and be sent to their project wallet.

The “extra” ETH can also be used to buy tokens to continuously replenish the liquid vault. We call this a Accelerator Vault because of the price acceleration effect. It was first implemented in the Rock3t project.