Spiral DAO: Vision and Use Cases
Unleashing the Power of the Spiral — DAO Revolution & the Future of Decentralized Finance
As we previously stated, Spiral DAO was designed to be the most efficient DAO in the space. In this article, we’d like to give a deeper understanding of our vision and views and discuss the best use cases and prospects of future DAO development.
Key use cases for the Spiral DAO:
1. New yield standard
We do believe that after some time, as Spiral DAO evolves, more and more users will be willing to get their yield in the form of SPR more than any other tokens for the following reasons:
- Higher yields. We will distribute higher yields APRs for most pools than any other yield optimizer APY.
- Always growing yields, as SPR backing should increase. No need to claim or do anything at all. It’s autocompounding through utilization.
- Maintaining exposure to the DeFi blue-chip basket.
Each SPR emitted in Spiral DAO pools is always backed by more value than the Treasury backing. It will be beneficial for the Treasury and will create an additional inflow.
The more users use Spiral DAO staking as their main entry point to yield farming — the higher the backing of SPR and the bigger the Treasury is.
2. Bribes market irrationality.
As we’ve discussed in our previous articles, bribes arbitrage is an important technique that lets Spiral DAO achieve higher bribe yields for the whole ecosystem while having a good source of discounted tokens due to the high POL amount.
This technique should bring a significant upside for the whole ecosystem, as much as a decent APR for the Treasury (Evaluated in discounted tokens).
Bribes market is a key tool for us to have the necessary exposure to assets without any buy or sell pressure on existing markets but only on future emission markets (bribes).
We expect that this should lead to an additional yield of ~$3–6mln annually at least.
3. Cartel of buyers
We think there is already a lot of infrastructure and protocols to solve many problems in DeFi. Sometimes, too many of them. And we believe there is a disparency of supply and demand that may lead to irrationalities.
We can utilize that irrationally low demand for some features and mechanisms and get special discounts/cheaper fees/yield and already too-cheap-terms for our own good. This point may look like point 2 with bribes inefficiencies, but it varies much broader.
It means that we, as a cartel of buyers, can be much more efficient and get better terms than any individual on their own. And that leads to even more yield and efficiency for the DAO.
4. Rates arbitrage.
It’s the nature of finances that small capital allows getting a higher yield than a big one. Spiral DAO’s Treasury is currently relatively small, and in case Spiral DAO gets access to “cheaper” capital, it can utilize it and arbitrage the rates.
There are many ways to do it. Let’s talk about the simplest one:
Let’s imagine that Spiral DAO’s Treasury managed to secure 40% APR in its Treasury, which is a reasonably achievable level. Besides, SpiralDAO managed to get listed by any Borrow/Loan or CDP protocol that lets the Spiral DAO community borrow up to 60–70% of the collateral value of the SPR for a fair annual rate of 3–8%. As a result, each user can take a loan for their SPR holdings and utilize their funds elsewhere.
In case the liquidation threshold for this loan is 10% below the Treasury backing ratio — this loan would be close to impossible to liquidate and self-repaying, as SPR tokens should be redeemable for 90% of the backing of the Treasury, and the price shouldn’t go below that level as SPR native backing is designed to grow.
The resulting effective APR for the position of someone utilizing the strategy described above in Spiral DAO would be:
Effective APR = (Treasury yields / (SPR Price / Backing_Price) — Loan APR * Loan Size) / (1 — Loan size)
Let’s calculate that APR for the case where SPR trades 10% above its backing; the loan is 6%, the collateral value is 70%, and the Treasury Yields 40%.
APR = (40% /(1.1/1) — 6% * 0.7) / (1–0.7) = 107%
It’s important to say that this yield will be allocated to the Treasury, and it will be an increase in internal value, not necessarily a price increase.
As a result, we can see that Spiral DAO can provide an extremely high capital efficiency for its users while maintaining a necessary exposure towards a balanced basket of assets.
Achieving access to this “cheap” capital loan is a significant prospect for the future work of Spiral DAO’s contributors and community.
5. BoostAggregator, or Convex over Convex
Currently, only about 50% of veCRV are properly utilized for boost farming. So while the maximum boost is around x2.5, around 20–40% of the total CRV emissions are not emitted, and the average boost for the whole ecosystem is around x1.75.
That leads to a huge possible upside for the whole ecosystem — the one who can utilize the remaining 50% can get a significant boost in overall APR for all participants.
The future of veTokenomics lies in the aggregators of veCRV boosts. This will encourage everyone to lock veCRV on their own and lead to a more decentralized ecosystem. And it can also reduce the diminishing of rewards.
We think that we can create the framework for this kind of aggregator in the foreseeable future. And by doing that, we will be able to effectively deliver the highest APR possible on the whole market.
6. Liquidity partnerships
Yield farming was always a key feature for protocols for two reasons:
- First, it’s a way to get more liquidity into their protocol.
- It’s a great way to onboard users and get token engagement.
We believe that a decent amount of protocols utilize their native tokens primarily for acquiring liquidity. And for those, we can propose partnership deals, which would look like the following:
Spiral DAO gets:
- Native tokens emission at a higher rate than for average Joe.
2. Token allocation/discounted tokens inflow
3. Marketing/network effect
The partner Protocol gets:
- Reliable and long-term liquidity providing commitment
2. No selling pressure on their protocol
3. Additional liquidity from adding to Spiral DAO staking yield aggregator
4. Marketing/network effect
This will lead to even more value acquisition for the Treasury and even more yield.
We invite everyone to join us, contribute to the development of all of the mentioned prospects, and participate in building our DAO. The future is brighter than you can imagine. 🌀
