Xend Finance Partners with Dafi Protocol to Implement a Sustainable $XEND Staking Model
Xend Finance has joined forces with Dafi to integrate Dafi’s protocol into the $XEND Staking model. This will solve the hyperinflation problems that usually accompany decentralized protocols which reward participants through native tokens.
$XEND, the native token of Xend Finance, is used to reward users for saving, investing and performing a variety of different operations on the network. $XEND tokens also generate interest for users, as the Xend Finance smart contract periodically invests user savings on DeFi lending protocols, which produces a second level of interest for $XEND holders.
As the Xend Finance platform is used by more DeFi investors worldwide and more $XEND tokens are circulated in the secondary markets, the balance between supply and demand might suffer, as we have seen in cases of other DeFi protocols. It is part of Xend Finance’s efforts to maintain this equilibrium by implementing a sustainable $XEND staking process.
The Problem of Hyperinflation
Decentralized economies often reward users and participants by offering tokens as a liquidity reward. As the circulating supply of the token keeps on increasing with time, it becomes difficult to maintain the equilibrium between token supply and demand. This leads to hyperinflation. Such inflation-based mechanisms are used in a range of decentralized applications, from staking in PoS-based blockchains to rewarding liquidity providers in DeFi platforms.
Dafi solves this problem simply by creating a unique inflation model which rewards users later instead of earlier. Dafi creates synthetic tokens (dTokens) for a blockchain or DeFi application, which are pegged to the native protocol/blockchain tokens. These synthetic tokens are released to users based on the dynamics between token inflation and protocol demand, ensuring that hyperinflation is avoided while simultaneously awarding early users as the adoption of the protocol increases.
Xend Finance x Dafi Protocol Partnership
Through this partnership, Dafi will introduce an entirely customized staking model for the Xend Finance platform through the creation of a synthetic flavour of $XEND token, or dXEND token. These dXEND tokens would be pegged to $XEND tokens in a 1:1 ratio, and integrated into Xend Finance’s staking model.
The issuance of dXEND token will lead to a sustainable staking model by limiting the excess supply of the native tokens in the economy, based on the following core-economic principles:
1. The initial issuance of network/staking rewards will be reduced, as demand then would be too low. This would avoid supply-shocks and risks such as single-user control of network value, and prevent hyperinflation.
2. The issuance of tokens would be increased as adoption increases. This will form a direct link between these two market-factors for a more sustained and healthy growth of the Xend Finance economy.
3. If there is a decline in the network demand, the token release would be restricted to prevent an over-release of tokens. Even during low demand periods, users would still be rewarded for participation later when demand rises.
By controlling the supply of the native tokens, Xend Finance would be able to balance market fluctuations and reward token holders without infusing excess supply. This will help us drive mainstream adoption and provide extensive value for Xend Finance platform users.
On this collaboration Zain Rana, Founder of Dafi, said,“Xend Finance is the first mover of DeFi adoption in the African landscape. Their innovative savings solutions could hold the power to transform the DeFi space and may lead to massive development. We believe that by integrating Dafi’s unique staking models & dXend, it will cause a new wave of transformation and drive long-term benefits to Xend Finance’s users.”
Speaking about the partnership, Ugochukwu Aronu, CEO of Xend Finance, said, “Our vision is not only to create a world-class DeFi platform for users all over the globe, but also to create value for our long term supporters. We have observed how other DeFi platforms have suffered from hyperinflation as the platforms have grown in popularity. Our partnership with Dafi will help us create a sustainable token staking model, which will reward the long term users and early supporters as the network usage continues to expand.”
About Dafi Protocol
Dafi is a blockchain protocol which incentivizes participants to stake tokens without using any hyperinflation mechanism. Dafi primarily aims to bridge the gap between the distribution of blockchain project rewards and token adoption, by limiting excess supply and enabling the creation of synthetics in a seamless manner. These synthetics can be employed for reward programs, bounties, staking, and project ecosystem requirements.
About Xend Finance
Xend Finance is the first DeFi protocol for Credit Union and Cooperatives, which allows users from any corner of the world to channel their capital into savings and earn high yields out of it. Xend Finance is the fastest growing blockchain startup out of Africa (headquartered in Enugu, Nigeria). The platform strengthens, optimizes, and enhances the core operations of credit unions all around the globe. Xend Finance houses the best and most experienced professionals, with deep knowledge of mathematics, finance, cryptography, and blockchain development, working for some of Africa’s largest employers like KPMG, Chevron, and Stanbic Bank.
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