Collective Intelligence Protocol and the Dynamic Liquidity Protocol at the core of DEIP
NFTs (Non-Fungible Tokens) are at the core of the new blockchain-based creator economy. With NFTs and Fractionalized NFTs (F-NFTs) creators and intellectual property owners can monetize what they create and own in exciting new ways.
DEIP is at the forefront of advances in the creator economy. DEIP is a new Web 3.0 platform, complete with solutions, DeFi applications, and tools for creators and intellectual property owners.
At the core of DEIP are a Dynamic Liquidity Pool and Collective Intelligence Protocol. In this article, we explain what both of these mean, how they work, and why they matter?
What Is The DEIP Dynamic Liquidity Pool?
The world is changing. It never stops changing, of course. However, there are times when the overall pace of change accelerates. Humanity is living through one of those moments. A period in time when there are numerous fundamental shifts. Such as the accelerated shift towards remote work, opening up global talent pools.
One of those fundamental paradigm shifts, as far as creators are concerned, is the move from “value capture” to “value creation” economy. DEIP sits within this paradigm shift. Opening and democratizing access to new resources for creators, to ensure they can generate more value from the value they create. NFTs, Web 3, and blockchain-based technology make all of this possible.
And at the core of DEIP is the Dynamic Liquidity Pool. It gives creators and intellectual property/asset owners the ability to unlock extra liquidity mechanisms from intangible and tangible assets in and connected to the network. A particular asset is locked in as collateral, such as an NFT-based artwork, video, or other creative assets.
Using this asset as collateral, the Dynamic Liquidity Pool gives creators the ability to mint (create) or loan a stablecoin DX in exchange for that asset. A DX (also referenced as a dx) is a decentralized multi-collateral backed stablecoin with an NFT or F-NFT as the underlying asset, which is then soft-pegged to a fiat currency, such as the US$ Dollar. The price linkage to a fiat currency is provided through a price feed through Chainlink Oracles.
How does the Dynamic Liquidity Pool impact how DEIP Works?
Within the DEIP Network, anyone can mint a stable token dx. All you need is to own the underlying asset. A stable token dx can be soft-pegged to any mainstream fiat currency, such as dUSD, dEUR, dGBP, dCYN, and numerous others. All you need to do is collateralize the underlying asset and lock that into a smart contract, which is then locked in the DEIP Vault.
Minting X (however many you want, as the asset owner) number of stable tokens involves ensuring the smart contract is K*X.
What this means is the default minimum collateralization coefficient is K=2 (200% of the value of the locked underlying asset). So, if you want to mint 1 million dUSD stable tokens the underlying asset needs a minimum value of $2 million USD. Or, at minimum, $2 million USD worth of F-NFT value tied to the underlying asset needs to be locked into the Vault.
Underlying assets can be worth a lot less, of course. Otherwise, this wouldn’t be very democratic and open to creators at every level. The above was a simple example to outline how the collateralization coefficient is meant to work at the core of the Dynamic Liquidity Pool.
As the above was an example, when minting stable tokens, creators can adjust the collateralization coefficient dynamically, giving them complete control.
How do creators benefit from the Dynamic Liquidity Pool?
Creators benefit from this Dynamic Liquidity Pool because it gives them the ability to generate ongoing income dynamically from minting stable tokens using the assets they’ve created and locked into the Vault using a smart contract.
Collectors benefit too. Artworks and creations that would be too expensive for most people to own can be shared with thousands or millions of collectors, thanks to smart contracts and the Dynamic Liquidity Pool model.
If at any point a creator wants to withdraw an asset from the Vault, they need to pay out the value of stable token dx issued, plus a stability fee (the interest rate). Payments of stability fees are split 50/50 across the DEIP Network, with 50% going to yield farmers and the other 50% going into the ecosystem fund. The value of the stability fee is set using the DEIP Network governance mechanism, which means it can be changed and voted on.
As a creator, the Dynamic Liquidity Pool gives them the freedom to earn more from the work they create. Share this work with a worldwide audience. Generate ongoing income while an asset sits in a Vault; similar to an interest-earning savings account. Now we are going to take a closer look at the Collective Intelligence Protocol, another core feature at the heart of the DEIP Network.
What Is The Collective Intelligence Protocol?
Another core feature of DEIP is the Collective Intelligence Protocol. Intangible assets are the future of the creator economy. Some of these are incredibly valuable and will continue to accumulate value over time. Some are not, and will never accumulate value.
In the same way that some works of art can sell for many millions at auction houses and in art galleries. Whereas others sit in the homes of the artists, never seen by anyone, worth nothing, effectively.
Who gets to decide, and why is this important?
As much as the web, and now Web 3.0 has democratized art and creativity, there still needs to be a mutually agreed way to assess value. Otherwise, everything is valuable. Or nothing. Creating anything, such as intangible creative assets would be meaningless without a mutually agreed way to assess the value of assets that have been created.
Due to the nature of intangible assets, and as these are emerging creative mediums, it’s difficult to assess value. Especially compared to tangible artworks and assets, with centuries of experts weighing in on the value of old and new creations.
Therefore, we need to rely on the opinions and expertise of domain experts. Skilled people with the knowledge and training to accurately assess the value of intangible assets; effectively putting a price on relatively new creations, endowing them with value.
However, part of the problem with taking this approach is the trust factor. At DEIP, we believe we have overcome this challenge with the Collective Intelligence Protocol. Our Collective Intelligence Protocol leverages the value of domain experts, implementing this within the Decentralized Assessment System. This way, a collective group of experts can assign value — which everyone agrees to, using smart contracts to confirm valuation assessments — to intangible assets.
How does the Collective Intelligence Protocol impact how DEIP works?
The Collective Intelligence Protocol within the Decentralized Assessment System is a key element of the tools, frameworks, and protocols that DEIP will be launching. It will be implemented within the first 2-years following the Mainet launch of the DEIP Network.
At present, the Collective Intelligence Protocol — a crowd-sourced model for asset valuations — is being tested on a number of use cases, mainly in the education and scientific sectors.
How do creators benefit from the Collective Intelligence Protocol?
Creators will benefit from the Collective Intelligence Protocol in a number of ways. Primarily, this will ensure valuations are fair and accurate. Creative works will be assigned values that enough experts agree on to ensure collectors have confidence in what they’re buying.
Whether collectors are buying creative works through NFTs, F-NFTs, or through the sale of a stable token dx, they need confidence in the prices creators sell them for. Using the Collective Intelligence Protocol, these values can be independently verified. Proof of this collective verification can be attached to the sale of intangible creative works.
Giving collectors more confidence naturally benefits creators, as more people will be willing to invest in intangible creative works when they come with a collective valuation.
Key Takeaways
- The Collective Intelligence Protocol and Dynamic Liquidity Pool are at the core of how the DEIP Network will function, empowering collectors and creators alike.
- With the Dynamic Liquidity Pool, creative asset owners can leverage the value of an underlying asset, minting a stable token dx, generating a recurring F-NFT-based income from creative work, while locking it in the Vault using smart contracts.
- Alongside this, the Collective Intelligence Protocol ensures that collectively agreed valuations are assigned to intangible assets and creative works, thereby benefiting creators and collectors.
