FantOHM introduces proof-of-burn & a brand new way to generate income like no other other OHM fork

The OHM fork landscape will never be the same. A new way to put idle treasury assets to use has arrived. FantOHM curious? This is not an article you want to skip over.

The million dollar question

In the world of OHM forks, a project can have everything going for it — a world-class team, a devoted community, top notch marketing, a real use-case, the whole lot — but if the DAO cannot answer the million dollar question: “How does the treasury generate revenue?”, it’s unlikely the project will be around for very long.

All OHM forks have a certain portion of their treasury allocated to high-return investments, but very few have found a truly efficient and innovative way to generate income for the treasury while maintaining the stability that a decentralised reserve currency protocol needs.

All DAO treasury’s are filled with their native token and stablecoins that have a high intrinsic value but no real utility and are just sitting there, being stable, and not doing much else. Therein lies the main problem when it comes to generating enough income to grow as is required to be the go-to reserve asset as many OHM forks are striving to be.

Today, we couldn’t be more excited to unveil our first-of-its-kind strategy that answers the million dollar question of treasury revenue generation like no OHM fork has done before.

In this article, we’re going to cover:

• How FantOHM’s new stablecoin & proof-of-burn mechanism gives real utility to both the FHM and stablecoins in the operating account and treasury
• How we plan to unlock the value and potential of our FHM token & treasury’s stablecoins without affecting the market price of FHM
• What this new income generating strategy means for the future of FantOHM

The problem at hand

As FantOHM has expanded successfully to a second blockchain (Moonriver), there has been an increasing need for us to expand and diversify our treasury assets. Primarily our focus has been gathering stablecoins like DAI and MIM. These stablecoins allow the treasury to hold its value, however, they are also idle and have no utility besides maintaining the platform’s backing. This means that when people bond, the value that they add to the treasury goes to the treasury and sits there, representing a one-time addition of value but no other utility.

But what if we could use these stablecoins to generate income and at the same time still maintain intrinsic value of the treasury (and their Risk Free Value)? What if every stablecoin that goes into the treasury via bonding becomes a moving part in a large efficient machine — a machine that puts as much of our backing assets as possible to work for us.

Introducing FHUD

The FHM token in the DAO operating account and the stablecoins in the treasury share a similar problem: they have high intrinsic value but no real utility. The difference between the FHM token and a stablecoin is that FHM fluctuates with its market value, whereas stablecoins stay relative to their peg of $1.

We need FHM in the DAO operating account to have a fixed value so it can be used at any given time as a safe haven for assets. How we attack this problem is by creating a peg via FHUD. Yep, you heard us. Fantohm’s stablecoin is going to be FHUD, or FantOHM-USD.

FHUD, a stablecoin that puts idle assets to work

FHUD is a proprietary stablecoin that is untradeable after minting and cannot be bought. It serves the use case of unlocking the full value and potential of the treasury and the DAO operating account while maintaining stability in the treasury.

The amount of FHUD created at a given point in time is the burnt market value of FHM at a specific point in time. This is called the proof-of-burn mechanism, and it lies at the heart of how we will unlock otherwise idle assets in our treasury.

Proof-of-burn

Proof-of-burn is a consensus mechanism that ensures there will be no double spending of an asset. Once an FHM token is burned, the value (at the time of burn) is locked and recorded on-chain. That means burning an amount of FHM from the DAO operating account would mint the same dollar value in FHUD. $1 in FHM to $1 FHUD.

Example: Say we need to unlock 1 million dollars worth of FHM. We would burn 1-million-dollar worth of FHM (the amount of FHM will depend on the current market price), while minting 1 million FHUD tokens. This gives 1 FHUD a value of $1. The intrinsic value will remain equivalent to 1 million dollars in FHM as that is how much was burnt/minted at a specific time.

You can think of FHUD as a kind of receipt that guarantees a value of $1. By keeping this in the treasury it effectively frees up the existing stablecoins to be used for immediate use, as opposed to being idle in the treasury.

Understanding FHUD

Currently there are two main reasons why we need FHUD:

• To unlock the value of the illiquid supply of FHM in the DAO operating account without affecting market price.
• To utilize stablecoins in the treasury, that would otherwise just hold value, to achieve utility and/or growth through asset purchases

Sounds good right? A common question we get asked is, “ Wait, won’t this proof-of-burn mechanism raise the amount of FHM on the market or volatility?”

The answer is no. We’re PERMANENTLY removing the FHM to do this. So neither will change. This is removing from the total supply NOT the circulating supply as our DAO Account assets don’t circulate.

FHUD is obtained by burning FHM at its market value, akin to stablecoins such as UST (minted by burning LUNA). The burnt FHM is not withdrawable/retrievable, hence there is no double spend and we are not making more FHM or money. No tricks here.

Note: It should be noted that there will not be a ‘floating balance’ of FHUD. This means that we will only burn FHM to mint FHUD when we need to free up the assets in the treasury and operating account for promising investment opportunities.

Okay, but how does it work?

We thought you might ask. Basically, it’s a 2-step process.

In Step 1, we will remove the FHM from the DAO Account via a smart contract that will burn it (permanently) and return to the treasury a “receipt” of the same VALUE of FHUD. Upon deposit, we will transfer that SAME VALUE of DAI to the DAO Account for Step 2.

In Step 2, we will use that DAI to go out on to exchanges, get a carefully selected group of assets and deposit them BACK INTO THE TREASURY. This will all be audited and a dashboard will be made to track the purchases over time.

Confused? Don’t worry this is a new concept, which is why it’s going to be such a game-changer for us. For those of you who are visual learners, there’s a diagram below.

How we will use the money

• 80% of the FHM Burnt (now as DAI) will be used on the purchase of various assets for the Treasury
• 15% of FHM burnt (now as DAI) will be kept in the DAO operating account as a price stabilizer in case we hit any bumps in the future.
• 5% of the FHM Burnt (now as DAI) will be allocated towards the general dollar expenses of the DAO.

The use-case for FHUD

It should hopefully be apparent that the $1 FHUD can replace the $1 stablecoin in the treasury, becoming a placeholder and proof of the transaction. This allows the one dollar stable to be set “free” for immediate use.Otherwise, it is just sitting in the treasury, with no other purpose but to hold its intrinsic value.

What can we do with the value of our stable that has been replaced by FHUD? We can add value to the treasury by allocating funds to buy certain assets and thus increase value to FHM holders.

This will grow our treasury backing, increase value, and keep investors happy with the extra runway we provide. This is a huge step forwards in creating a machine that operates as a financial instrument that creates wealth for our holders while maintaining the stability we need.

And it’s only the beginning. We have many more things incoming in Phase 2, which will be released soon.

What this means for the future of FantOHM

There are big things on the horizon. As one of the first forks to go cross chain we are now taking it a step further by being one of the first to develop a unique method of using its own assets to lift up its treasury for the benefit of all. And the sky’s the limit.

By solving the problem of idle assets in a treasury, our income generation will be supercharged, allowing us to grow and expand at the rate required to be a truly robust and sustainable decentralised reserve currency protocol of both Fantom and Moonriver.

In a nutshell, we want FHM to be a safe place to store assets during times of volatility that can also generate income in the form of compound interest for all holders. This is the goal shared by most OHM forks, but the vast majority have been held back by vanilla treasury management schemes and poor income generation prospects — which is why FHUD is a game changer for FantOHM.

We also have a LOT of ideas about what we can all do with FHUD to further grow the treasury and add more layers of utility to our Fantohm holders. The use-case of FHUD will evolve as time goes on and we are working hard to figure out the best way to optimise our assets to generate as much income for the treasury as possible. There will be more info about this soon and insightful discussions are always happening in our Discord.

Wrap up

An incredible opportunity lies ahead. Our project has had an amazing start but there is still a lot to be done. As always we’ll continue to listen to your suggestions as they inform every conversation we have over where we should take FantOHM next. We’re glad to have you with us. Spread the word and stay tuned for phase 2 and more exciting updates.

FantOHM DAO is a spooky investment ecosystem operating on Fantom and Moonriver. We deliver spectral transparency and undying vigilance on the market through the efforts of a dedicated tech and business development team. Be sure to visit on the Internet, in Discord, or Telegram. Share you story with us on Twitter.