Lodge Letter #49

Community AMA with the Elk Team — the next batch of answers.

As alluded to last week, Lodge Letter #49 will cover some more answers from our in-depth AMA.

Question: The utility of the token is one of the factors that gives credibility to a project. So what is the utility and role of the $ELK token in the ecosystem?

ELK is indeed, or will be once decentralization is realized, the governance token for Elk Finance. As well as providing governance rights, ELK also is important to the ecosystem for the following reasons:

• ElkNet fees are all paid in ELK.
• BaaS fees, cross-chain swap fees, etc., again, all paid in ELK.
• Stablecoin minting fees. When CHFT arises, ELK will be part of the process.
• ElkNet nodes — if you want to run a node then have your ELK ready.
• ELK will be needed for new chain launches — there is only a limited supply!

Further to the above, we are discussing and considering deflationary tokenomic adjustments to ensure platform revenue (fees) is equally distributed to ELK holders. Elk Finance, the people’s bridge!

Question: Many projects have issues with the UI/UX and this hinders new users. How do you plan to improve interaction with new users and users outside of the crypto space?

• Our new dApp UI is one of the best out there. Initial development of the redesign started following feedback from the community and team. Further improvements are data-based and our designer uses industry best practices and a wealth of experience in UX workflows to continually enhance the user experience.
• Next steps to improve UX involve more intuitive wallet interactions, integrations within other apps, and more information displayed to users.
• Cross chain swaps are also on the horizon, and these will help to streamline the ElkNet’s bridging process.

There is a lot of work to be done, but we have some of the best people in the world working on it, and our community is always willing to make suggestions. All of which are noted and considered — often these ideas lead to action!

Question: Why hodl $ELK? Why accumulate $ELK? Wen Moon?

• As with crypto in general, and interoperability protocols, at this point, ELK price is mostly speculative. We have seen problems with bridges and security breaches since cross-chain became both a necessity and an opportunity for DeFi users. It is worth noting that the ElkNet remains exploit free.
• With ElkNet progress, moving from speculation to utility will change with nodes and paranodes. The token already has a purpose for moving value, but running nodes adds the need to lock up and stake ELK.
• It’s difficult to say when things will pick up for crypto: at this point ELK is heavily correlated with the market (no surprise really, considering we’re paired with every chain coin on nineteen chains!) Decorrelation may happen before the next crypto cycle or hopefully during the next bull run, whenever that is. Currently, our focus is on delivering on the Elk Finance tech stack without worrying too much about the price (as a small cap, we have little hope of changing that ourselves).

Question: Any updates on elk moose holders running nodes for ElkNet?

• Moose holders will not be running ElkNet nodes using the NFT, they may be used in running paranodes however, or they can use the Moose for BaaS. For BaaS use, Moose will probably become pretty popular in the next few months. Paranodes are still further away, so it is hard to tell when they can be used or even how much interest there is for paranodes.
• Overall, Moose are really interesting at this point if you are a developer, or if you are buying it speculatively.

Looking to the future, let’s finish this week with questions about BaaS and, because it’s unavoidable, ELK price.

Question: BaaS — how is this going to work if right now swapping 2k gives you around 1% price impact? Who will want to use Elk vs, say, Multichain? Also, will BaaS transparently buy and sell Elk in the background to move a given token across networks?

• Firstly, and quite simply, BaaS is for moving non-ELK tokens. Proxy tokens do not bridge through ELK. They become their “own ELK”, native to the chains they are deployed on. They will have a reservoir system like ELK all of their own. Mint and burn is also available if desired.
• BaaS doesn’t rely on ELK liquidity, so protocols will be bridging their own tokens 1:1, meaning they will need to manage their own liquidity pools. This will already be the case usually, as the BaaS tokens will have established LP on the chains they support.
• That said, discussions and arrangements can be made by projects and teams to provide incentives to also support ELK liquidity for their token.

Question: Elk price — what are the plans to increase price, given that it is crucial to the usability of the bridge? As I say above, right now swapping 100 AVAX for Elk will get you 1.2% price impact. This looks like a slippery slope situation where lower prices lead to less usage, which leads to lower prices etc. Any thoughts on this?

• Elk price. It is not a major issue. Honestly. Because the ElkNet is not intended for stablecoin bridging. Right now, if we can increase the number of transfers by 10x, half the ELK in circulation will be paid in fees over the next year (assuming fees stay the same). These fees are held for community decision-making once governance is in place — they are effectively locked and not in circulation right now. The collected ELK could be used for:
• Protocol-owned liquidity, New chains, Promotional campaigns, Emissions, Profit-sharing

Things to remember, and consider

$ELK price indexes the market somewhat, so when tokens we are paired to increase in value, so does ELK.

As previously mentioned, there are deflationary economic changes being discussed…what would you like to see?