Model
Demether's B2B2C model aligns the interests of both blockchain foundations we partner with and on-chain users that interact with the ecosystem.
How is Demether's yield generated?
Demether's products capture yield from multiple sources. The general structure is that users deposit an underlying asset and generates yield from that asset, typically paid in kind (i.e. yield is compounded in the value of the underlying asset).
Demether's products are reward-bearing meaning that the value of the tokens should grow as yield accumulates. Users can sell the token to capture and lock-in the value of the yield and the initial deposit.
A withdrawal mechanism will also be implemented to allow users to decompose Demether's products and return the original token deposited to the user, plus the yield accumulated over the time period since mint.
How do I use Demether as a user?
There are two ways for users to generate passive yield using the Demether protocol:
Participate in Demether's native yield bridging campaigns and mint Demether's products. Initially, users will be invited to deposit $ETH in order to mint $demETH products directly on a partner chain. Holding $demETH for seven days will make the wallet eligible for a loyalty bonus.
The second is to purchase Demether's tokens on the secondary market. Liquidity will be made available initially on decentralised exchanges, followed by centralised exchanges.
How do Blockchain Foundations use Demether?
Blockchain foundations are invited to deposit collateral or their own native governance/gas tokens into a vault (an audited smart contract) residing on the blockchain itself. A lock-up period is negotiated with Demether in advance to soft-lock the tokens belonging to the Foundation - typically 2-3 months.
The number of governance tokens made available as a loyalty yield bonus to eligible wallets is decided by the pro-rata share of governance tokens staked on that target chain relative to the total amount staked across all chains. Thus, blockchain foundations are therefore incentivised to acquire and deposit more governance tokens in the vault on their chain (and/or encourage the community to make deposits) to ensure the highest proportion of emissions is available for wallets on that chain, and more liquidity flows into the ecosystem.
As the campaign period ends, the blockchain foundation's tokens are unlocked. At this stage, we anticipate governance tokens will be withdrawn by the Foundation and the position exited. If they were lent to the blockchain foundation from the Demether Treasury, the tokens will be returned accordingly. The share of protocol fees accrued over the period will be made available for claim by the blockchain foundation.
The blockchain foundation may decide to continue staking tokens on a rolling weekly basis. It is also highly probable that the community has staked its tokens in the vault to continue to propagate the emissions to holders on the chain, reducing the impact of the blockchain foundation's withdrawal.
What is Demether's business model and how does Demether make money?
Demether's Treasury receives 10% of the yields it generates for its users.
Part of Demether's protocol fees are paid out to users staking its governance token while the remainder is used for operating expenses, primarily incentivising node operators.
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