An introduction to Empyrean DAO

DeFi on Aurora: An introduction to Empyrean DAO, The Decentralized Reserve Currency on Aurora

Empyrean DAO is the first project to bring a decentralized reserve currency–EMPYR to the Aurora ecosystem. In this article, we are going to discuss Empyrean DAO focusing on its mission, development, and what the introduction of a reserve currency means for Aurora. The article will begin with a short introduction to Decentralized Reserve Currency Protocols to give the reader an understanding of Empyrean’s makeup and mission.

A Short Introduction To Decentralized Reserve Currency Protocols

The idea of a Decentralized Reserve Currency Protocol or Algorithmic Currency Protocol was introduced for the first time by Olympus in February 2021. Since then, the interest for decentralized reserves for cryptocurrencies has grown exponentially and various projects in different blockchains have started to arise. But what is a Decentralized Reserve Currency? Why should we care for it? In this short introduction, I will try to give an outline of the value proposition of DRC Protocols that will help you better understand Empyrean DAO and its mission. If you are already familiar with DRC Protocols, you might skip this section and dive directly into Empyrean DAO.

Mission and Value Proposition

Although dollar-pegged stablecoins were introduced to counterbalance the high volatility of un-pegged tokens like Bitcoin and Ethereum and introduce stability, their dependency on the Federal Reserve and US government does not insulate them from hyperinflation.

Decentralized Reserve Currency Protocols are trying to address this issue and bring to the fore a more independent currency that would stand inflation. Their main objective is then to create an independently valued digital currency that would hold its purchasing power, and provide a stable foundation for financial planning, and other economic activities. The introduction of such currencies is a huge advancement for DeFi and a promising solution to a problem that is crushing people’s lives.

Understanding the difference between Pegged and Backed Currencies

To understand the difference between stablecoins and Decentralized Reserve Currency one needs to understand the difference between pegged and backed currencies. In simple terms, a pegged currency is a currency whose value is fixed to that of another currency that benefits from more stability. Establishing this dependency on a stronger and stable currency like the USD is what allows stablecoins to avoid volatility and be an advantageous currency for trading.

Backed currencies on the other hand, instead of being fixed to a more stable currency, retain their stability through being backed by a commodity or asset. This is the same principle behind gold-backed currencies. However, DRCs instead of being backed by a particular asset, are backed by different decentralized assets. So, similarly to the idea of the gold standard most DRCs provide free-floating value its users can fall back on, as the fractional treasury reserves draw their intrinsic value from it.

Empyrean DAO: The Decentralized Reserve Currency on Aurora

Empyrean DAO is a project that is heavily inspired by the work of OlympusDAO and that is going to bring the same services to Aurora. Like Olympus DAO, Empyrean’s objective is that of building a policy-controlled currency system in which the behavior of the Protocol’s token –EMPYR– is controlled at a high level by the DAO. The implementation of such a system will in the short term, promote growth and wealth creation, and in the long term, become the perfect medium of exchange currency due to its optimized stability.

How Does Empyrean Work?

Empyrean will begin bootstrapping its treasuring (that will back EMPYR) by implementing the following strategies:

• Selling EMPYR bonds at a high discount
• Offering high APYs to stake EMPYR and earn good returns by auto-compounding yields
• Selling bonds in exchange for productive, yield-bearing assets to bring more value to the treasury and increase its backing passively

Once Empyrean reaches a high enough backing it will start deploying its treasury actively into different strategies that will help generate more yield and that will be shared with the users

Empyrean DAO Core Features

Staking: Staking allows users to earn EMPYR passively via auto-compounding. By staking EMPYR you receive sEMPYR, and the balance will increase every epoch.

Bonding: Bonding allows Empyrean to acquire its own liquidity and other reserve assets by selling EMPYR at a discount in exchange for these assets. The protocol quotes the bonder with terms such as the bond price, the amount of EMPYR tokens entitled to the bonder, and the vesting term. After that, the bonder can claim some of the rewards as they vest, and at the end of the vesting term, the full amount becomes claimable.

Protocol Owned Liquidity as a Service: Protocol Owned Liquidity or POL, is an approach to provide liquidity to DEXs. Instead of relying on providing incentives to the market to provide liquidity to LPs, the POL uses a “bonding mechanism”. These bonding mechanisms consist in selling the protocol’s tokens at a discount to buyers who in return will provide another token that will become part of the protocol’s treasury. The treasury will then be used to provide liquidity directly to DEXs (earning trading fees) and can be invested to generate returns. This functionality will be particularly useful for projects on Aurora’s ecosystem that are going multi-chain and that suffer from a lack of liquidity to deploy on new chains.

What’s Coming Next?

On the 26th of December Empyrean had its initial token offering for $EMPYR which resulted in the raising of $1,524,204. The Empyrean team is now working on creating its DAO structure that will be adding support to new assets like bonds and also working towards the launching of new products.

For more information about Empyrean follow them on Twitter, Medium, or join them on Discord.