Rapid innovation was sparked during Q4 2021 in due part to the energy directed by Tetranode and his alt accounts. Attention on the curve wars was bubbling as the metaverse narrative was at its peak and Luna was on a monster tear.
Once the hype had died down a little, the hungry degens of L1 land were sniffing for a new narrative to pounce on, and they weren’t disappointed.
The curve wars emerged from the dust of UST peg fud and debris of the liquidated Ohmies.
Many articles had been written about the battle between the top TVL protocols on Ethereum vying for control over liquidity, for their stablecoins.
This contest ignited the other DeFi protocols regarding their tokenomics.
With a new glimmer in their eye, they began ideating on a multitude of ways to capture the essence of what the curve wars had done for the CurveDAO.
Within the sprawling excitement that is DeFi, a narrowed focus is brought to Fief Guild, Trader Joe, and Balancer.
Fief Guild: Magna Carta per the Metaverse
Building off the momentum instigated by Olympus, in offering bonds as an effective method of building treasuries, Fief Guild adapted this mechanism and decided to become a banking guild to the metaverse gaming arena forming on-chain.
In true gaming fashion, they gamified their token launch but instead of offering tokens exclusively, they distinguished the tokens a user would gain by the tier and faction of an NFT.
Only purchasable directly from the guild, these NFTs are a version of bonds.
Factions are Merchants, bishops, alchemists, craftsmen, and farmers.
Each NFT offers a unique experience for engaging with their game and this experience is also related to the tier of a users’ NFT.
Merchants: Receive fee revenues from all primary and secondary marketplace buying & selling
Bishops: Benefit from transaction activity related to $FIEF, Fief Guild Resources, and third-party fungible tokens.
Alchemists: The more passive participants are required to experiment with the fief token in various ways in the fief ecosystem and contribute to the transmutation of value between other elements within Fief.
Craftsmen: Tasked with driving value appreciation of in-game NFTs and coordinating with the merchant faction and core team to preside over asset acquisitions.
You can get a deeper look at Fief here Fief — Medium
Trader Joe: A Farmer’s Triplets
Why would a farmer want triplets?
Because, quite simply, they’re a blessing — to anyone.
Whilst it would be interesting to see how the game theory regarding their tokenomics overhaul plays out, Trader Joe stands to gain a huge amount from experimenting with this initiative — a quad-token model.
veJOE, sJOE, and rJOE are all derivatives of the JOE token, and offer their holders different incentives for playing varying roles in their ecosystem, and contributing to platform growth:
veJOE is the governance token for Trader Joe - it DOES NOT share in the fees of the platform.
You might ask why that is.
Surely those governing the direction of the protocol should be compensated for their efforts, right?
What Trader Joe has done, is offer them a yield boost of up to 150% for one of the preselected farms.
In addition to voting on proposals, governance token holders will also be able to accrue veJOE faster by depositing a threshold amount every 15 days.
They want to accrue veJOE because the boost on their farm is equivalent to their share of the governance votes. A user’s full veJOE deposit isn’t available instantly, they have to accumulate though participation.
sJOE represents the fee revenue-sharing token and directly replaces the xJOE model by paying out dividends in stablecoins. The only fee associated with the tokens is with this derivative, and it fluctuates to a maximum of 3% depending on demand for sJOE.
rJOE.
Up Up and Away!
The rJOE token, is the gateway to the platform’s launchpad — Rocket Joe — that releases new projects to pedestrians of the Avalanche network.
Holding the rJOE token gives a user access to the prelaunch of the projects’ tokens on the launchpad.
The required amount of rJOE will be burned upon participation in a presale.
See more information regarding their tokenomics here
Balancer: Liquidity Providing Governooors
Fernando Martinelli and a few other members of Balancer Labs had been discussing an overhaul of their token BAL for a while. With the veCRV model as a source of inspiration, they decided to apply it in a novel way which not only benefitted their token (supply shrinkage) but also deepened their liquidity.
veBAL was introduced as a governance token minted to stakers of the 80/20 BAL-ETH BPT.
The governance token, comes with a gauge mechanism that is used to decide where emissions go. A portion is for the LM committee (for partnerships), veBAL holders, and the liquidity pools on the chains Balancer is present.
Using this subtle tweak of the veCRV model, Balancer has managed to accomplish three things:
- Demand for their token.
- Secure deeper liquidity for their token.
- Unlock value for the gov token holders with the prospect of ‘Balancer wars’. They unlocked a trifecta of value capture.
As the clashes of code on EVMs like swords on the battlefield commence and the spoils of mini-wars are enjoyed, there lives a cohort of dukes and generals carefully planning their next moves at the quarters.
Tough soldiers wielding solidity, creativity, and first principle thought attempting to harness the power of a token.
Whilst the models above demonstrate a portion of the innovation we have seen in tokenomics to this point, there is vast land to be discovered.
Underlying Trader Joe’s model is extracting the power of different incentives that serve as an indicator to what processes DeFi natives care most about, it offers an insight into what areas should be further optimised.
Both Fief guild and Balancer are looking to secure liquidity encouraging efficient price discovery for their tokens. The launch method of the Fief guild is novel, but with the recent success of DFK, it may be that future protocols find it worth mirroring this technique of gamification. Gamifying a whole ecosystem is more fun and (provenly) attracts users en masse.
Motivating creativity from the space through a team’s innovation is characteristic of Convex, Olympus, and Yearn and is also a recurring facet of DeFi. Granting opportunities by way of inspiration and verifying these approaches with math, code, and programming is one of many ways DeFi has sustained itself for this long and will continue to do so in the future.
Tokenomics could be beginning to enter a twilight zone but knowing for sure is difficult, for now, what can be done is getting some yield, grabbing some popcorn, and enjoying the ride.
Thanks for reading this article, I hope it helped you in some way. You can catch me on Twitter @tengekisho
