DeFi has seen a surge in novel uses of liquidity mining and rewards through protocols like Uniswap and PancakeSwap. More recently, a new crop of DeFi 2.0 protocols are exploring the alternatives of operating to make their ecosystem more sustainable. We have come across a DeFi 2.0 protocol with a strong plan and development of a sustainable ecosystem with plenty of utilities, HunnyDAO.
Bringing sustainability is the key to success in the long run. For $HUNNY token, achieving deflation is always a priority for the team, which is why they have made the decision to cap their supply to 100M $HUNNY instead of an uncapped supply last month. They are still constantly burning $HUNNY through the various burning mechanisms. To date, they have burned a total of 2.7M $HUNNY, and the burn will carry on until the community decides that it is enough.
HunnyDAO is a newly added extension of the Hunny Ecosystem, scaling up the DeFi Game as they aim to be the best yield aggregator on BSC, thus moving towards a more promising future for users and the Hunny team.
What is HunnyDAO?
HunnyDAO re-invent a technique used by the old central banks to peg its own LOVE token with a basket of decentralized assets (e.g: BUSD, BNB, HUNNY) which is stored in the HunnyDAO treasury. By having a basket of multiple assets, HunnyDAO is able to give its LOVE an intrinsic value (IV) that it cannot fall below and at the same time allow the LOVE to float above the value of the backed assets.
What makes HunnyDAO different from other forks of OlympusDAO
A differentiating factor of HunnyDAO as compared to others is that HunnyDAO will introduce a secondary treasury that is backed by profits of the Hunny Ecosystem which includes HunnyPlay, HunnyPoker, and others. Their established products have been revenue-generating since their launch. They are not only able to back HunnyDAO with assets received in the treasury but they are also able to ensure longevity with the constant growth of Hunny’s entire ecosystem.
HunnyDAO also introduces unique economic and game-theoretic dynamics into the market through staking and bonding. There are two main ways to start earning from HunnyDAO: Staking LOVE, and Buying Bonds at a discounted rate.
Staking in HunnyDAO
Staking is the primary value accrual strategy of HunnyDAO. Stakers stake their LOVE on HunnyDAO to earn rebase rewards. The rebase rewards come from the proceeds from bond sales, and can vary based on the number of LOVE staked in the protocol and the reward rate set by monetary policy.
Staking is a passive, long-term strategy. The increase in your stake of LOVE translates into a constantly falling cost basis converging on zero. This means even if the market price of LOVE drops below your initial purchase price, given a long enough staking period, the increase in your staked LOVE balance should eventually outpace the fall in price.
When you stake, you lock LOVE and receive an equal amount of KISS. Your KISS balance will rebase automatically at the end of every interlude period. KISS is transferable and therefore composable with other DeFi protocols.
When you unstake, you burn KISS and receive an equal amount of LOVE. Unstaking means the user will forfeit the upcoming rebase reward. Note that the forfeited reward is only applicable to the unstaked amount; the remaining staked LOVE (if any) will continue to receive rebased rewards.
Bonding in HunnyDAO
Bonding is the secondary value accrual strategy of HunnyDAO. It allows HunnyDAO to acquire its own liquidity and other reserve assets such as BUSD by selling LOVE at a discount in exchange for these assets. The protocol quotes the bonder with terms such as the bond price, the amount of LOVE entitled to the bonder, and the vesting period. The bonder can claim some of the rewards (in LOVE) as they vest, and at the end of the vesting period, the full amount will be claimable.
Bonding is an active, short-term strategy. The price discovery mechanism of the secondary bond market renders bond discounts more or less unpredictable. Therefore, bonding is considered a more active investment strategy that has to be monitored constantly to be more profitable than staking.
Bonding allows HunnyDAO to accumulate its own liquidity. More POL ensures there is always locked exit liquidity in their trading pools to facilitate market operations and protect token holders. Since HunnyDAO becomes its own market, on top of additional certainty for HunnyDAO investors, the protocol accrues more and more revenue from LP rewards bolstering their treasury.
STAKE OR BOND?
In HunnyDAO, to achieve the most desirable outcome where every player stands to get the most gain, players need to cooperate with each other.
Staking and bonding are considered beneficial to HunnyDAO, while selling is considered detrimental. Staking and selling will also cause a price move, while bonding does not (buying LOVE from the market as a pre-requisite of staking, thus causing a price movement). If both actions are beneficial, the actor who moves price also gets half of the benefit (+1). If both actions are contradictory, the bad actor who moves price gets half of the benefit (+1), while the good actor who moves price gets half of the downside (-1). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (-1). Thus, given two actors, all scenarios of what they could do and the effect on the protocol are shown here:
Benefits to Hunny Ecosystem
Improve Sustainability and Capital Efficiency
Protocol Controlled Value (PCV) and Protocol Owned Liquidity (POL) are two crucial elements in HunnyDAO.
As HunnyDAO controls the funds in its treasuries, LOVE can only be minted or burned by the protocol. This also ensures that the protocol can at least be able to back 1 LOVE with 1 BUSD. You can easily define the risk of your investment because you can be confident that the protocol will buy LOVE below 1 BUSD with the treasuries assets until no one is left to sell.
As HunnyDAO accumulates more PCV, stakers can be confident that the current staking APY can be sustained for a longer term because more funds are available in the treasuries. This is one of the main reasons why having a secondary treasury in HunnyDAO is crucial for the sustainability of the protocol.
HunnyDAO owns most of its liquidity thanks to its bond mechanism. Liquidity is issued as bonds so that liquidity is bound to HunnyDAO in the long term which can maximize liquidity and improve capital efficiency.
HunnyDAO does not have to pay out high farming rewards to incentivize liquidity providers a.k.a renting liquidity. HunnyDAO guarantees the market that liquidity is always there to facilitate sell or buy transactions. By being the largest LP (liquidity provider), it earns most of the LP fees which represents another source of income to the treasury. All POL can be used to back LOVE. The LP tokens are marked down to their risk-free value for this purpose.
Attractive discounts and higher rewards for $HUNNY holders
This can drive more people to stake and buy bonds from HunnyDAO.
For Stakers:
The main benefit for stakers comes from supply growth. HunnyDAO mints new LOVE tokens from the treasury, the majority of which are distributed to the stakers. Thus, the gain for stakers will come from their auto-compounding balances, though price exposure remains an important consideration. That is, if the increase in token balance outpaces the potential drop in price (due to inflation), stakers would make a profit.
For Bonders:
The main benefit for bonders comes from price consistency. Bonders commit capital upfront and are promised a fixed ROI at a set point in time with varying price discounts; that return is in LOVE and thus the bonder’s profit would depend on LOVE price when the bond matures. Bonders will benefit from a rising or static LOVE price.
Higher rewards will be given to $HUNNY holders as HunnyDAO gains performance fees from bonds.
Driving price growth of $LOVE and $HUNNY
In order for LOVE and HUNNY to grow together, they will be including HUNNY and HUNNY LPs to its treasury.
The burning mechanism and the capped supply of $HUNNY will reduce the circulating supply of HUNNY in the long run, thus driving up the value of $HUNNY in the future. Therefore, by including $HUNNY, HunnyDAO will ensure that the value of its treasury will go up as well.
This will benefit both the holders of LOVE and HUNNY in the long term, resulting in a win-win situation.
Launch Details
HunnyDAO is owned and run by its contributors.
The offering price will be $14 per LOVE
Token Name: Hunny LOVE (LOVE)
Trading will start on 19th Nov at 0800 UTC.
Contract Address for $LOVE ♥️ 0x9505dbd77dacd1f6c89f101b98522d4b871d88c5
Bonds available:
LOVE-BUSD LP
BUSD
BNB
HUNNY
HUNNY-BNB LP (coming soon)
HUNNY-USDT LP (coming soon)
HunnyDAO Conclusion
The creation of HunnyDAO will definitely take them one step closer to our goal of becoming the most engaging and fun DeFi destination built on BSC. Team Hunny is determined to be here for the long term with all our Hunny Supporters to witness the grand development of a sustainable ecosystem with plenty of utilities.
HunnyDAO website: https://dao.hunny.finance/
Read more about HunnyDAO: https://docs-dao.hunny.finance/
About Hunny Finance
? Hunny aims to be the most engaging and fun DeFi destination built on Binance Smart Chain (BSC). On top of that, they are developing a brand new and unprecedented gamified farming playground ♠️♥️♣️♦️?? where every user can enjoy high yields and exciting games at the same time.
? Website: https://hunny.finance/
? Telegram: https://t.me/hunnyfinance
? Telegram: https://t.me/hunnyplay
? Telegram ANN: https://t.me/HunnyFinanceNews
? Twitter: https://twitter.com/HunnyFinance
? Reddit: https://www.reddit.com/r/HunnyFinance/
? Medium: https://medium.com/HunnyFinance
? Whitepaper: https://docs.hunny.finance/
?? GitHub: https://github.com/hunnyfinance
? Email: marketing@hunny.finance
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