Proposal: Whitelist DAPP Network (DAPP) w/ 500k Co-Investment and External IL Protection

DAPP Network (DAPP) Whitelist and 500k Co-Investment Proposal

Outlined below is the initial draft of our proposal to the Bancor community. We would appreciate all of your your commentary, questions, and feedback as we iterate towards a final proposal.

Voting Instructions

  • Vote FOR to whitelist DAPP token with a co-investment of 500k BNT.
  • Vote AGAINST to deny DAPP from whitelisting and co-investment.

TL;DR

  • Proposal to whitelist DAPP token on Bancor
  • Proposed co-investment is 500k BNT
  • DAPP LPs will be rewarded with DAPP token rewards to incentivize the deep liquidity needed to make Bancor its liquidity hub on Ethereum.
  • DAPP tokens have been allocated from its supply to fund an IL protection pool that will be used to cover impermanent loss when DAPP price increases in relation to BNT, which significantly minimizes the risk to BNT holders.
  • As was previously published, the DAPP Network bridging framework will be used by Bancor for their Polkadot bridge.

Project Website: https://www.liquidapps.io

ERC20 Token Address: https://etherscan.io/token/0x0e14dd85e20af249e8182caf868f1a658e3aa2e9

EOS Token Address:
https://www.bloks.io/account/dappservices

Market and Trading Data

  • The DAPP token price at the time of writing is $0.025
  • All-time high: $0.09 (2nd September 2020)
  • All-time low: $0.002 (6th November, 2020)
  • Price 90 days ago: $0.02 (30th March, 2021)
  • 1,056,939,327 tokens in circulation
  • The current market capitalization is $26m
  • The DAPP token is available on HitBTC, NewDex, Hoo, DefiBox, and Bitfinex

Project Information

Invented by LiquidApps and enhanced by its community members, the DAPP Network sits on top of base-layer protocols and serves as a universal bridging framework and middleware for powerful services essential to blockchain interoperability and the scalability of modern decentralized applications (dApps).

DAPP Network’s bridging framework is a combination of decentralized services that enable cross-blockchain transfers of any type of data or asset with customizable consensus and incentive structures. It can empower developers to interoperate between EVM or EOSIO blockchains, including cross-chain smart contract execution.

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EdgeOS

EdgeOS, a new operating system for WASM, is the latest innovation for the DAPP Network that is specifically tailored for decentralized applications. The EdgeOS kernel includes features like processing, asynchronous callbacks, a forkable filesystem and more, without relying on centralized infrastructure from the front to back-end of decentralized applications.

With EdgeOS, any DAPP token holder has the potential to spawn and provision processes on any node in the network, while maintaining compatibility with non-contract code. For example, a developer could run SQL, microservices, and many other Portable Operating System Interface (POSIX) compatible executables with EdgeOS.

EdgeOS could very well be an ideal platform for Layer-2 solutions, oracles, p2p apps, and even new blockchains. At the same time, EdgeOS applications go even beyond blockchain-related services.

EdgeOS is blockchain agnostic and can potentially be utilized for any smart contract chain, and enables interoperability also between EVM compatible chains such as Ethereum, Matic, and Binance Smart Chain (BSC). Bancor itself has made public their plans for utilizing EdgeOS for its upcoming Polkadot bridge implementation.

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Bancor Polkadot Bridge Will Use Cross-Chain DAPP Network Technology Powered by the DAPP Token

The DAPP token and underlying DAPP Network technology may be considered trusted and reputable, with the network being now live for over 2 years without any interruption. Many DAPP-powered working products and bridges are currently in production and are being utilized by third parties on multiple blockchains, while millions of dollars of value have crossed bridges utilizing DAPP Network technology. As mentioned in a Bancor blog update in February, DAPP Network and EdgeOS will be used by Bancor itself as its cross-chain interoperability solution connecting it’s well known liquidity network to Polkadot.

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Founding Team

LiquidApps CEO, Beni Hakak, is a blockchain veteran with vast operational and strategy experience having led teams at notable companies such as Bancor and LiquidEOS. Prior to blockchain, Beni consulted on M&A and business strategy as part of the transaction advisory services consulting team at Ernst & Young.

Tal Muskal (CTO), has co-founded numerous start-ups and brings over 30 years of experience in software development. Tal is an entrepreneur and advisor at the forefront of bleeding edge technologies from hardware and embedded systems to deep learning and cryptography. He is often cited as one of the most well regarded technology developers in the blockchain ecosystem.

Beni Hakak (CEO) and Tal Muskal (CTO) previously served as the Director of Operations and Senior Technical Advisor at Bancor, before turning their focus in February 2019 towards solving the scaling limitations of dApp development through the launch of LiquidApps and the DAPP Network. As a senior advisor to Bancor, Tal Muskal led the architecture and development of BancorX.

As longtime entrepreneurs, Bancor’s four co-founders, Guy Benartzi, Galia Benartzi, Eyal Hertzog and Yudi Levi, recognized and supported Beni and Tal’s ingenuity and drive, and joined Beni and Tal as non-operational co-founders and advisors. They have been active advisors and champions of the team and products since.

Tokenomics

The DAPP Network’s native token, DAPP, is a utility token which must be staked to access DAPP Network services. Developers stake DAPP to DAPP Service Providers (DSPs) on the network for maintaining infrastructure and providing a variety of DAPP services such as oracles, cross-chain bridging and IPFS. Token inflation is used to reward DSPs based on the percentage of the total staked DAPP tokens that are being staked to them.

Staked Tokens

455.160m / 1.06b (45.24% of supply) staked to DSP service packages. This level of staking indicates a high engagement with the actual DAPP Network services and utility.

Token Distribution

  • 50% of the token supply was distributed during a 1 year long reverse dutch auction.
  • As of today, 45% of tokens are staked for DSP service packages, and there are 8,733 unique holders on EOS.
  • 10% of the token supply was distributed among the EOS community in an “Air-HODL” (vested airdrop).
  • 10% of the token supply was distributed among launch partners, design partners, engagement partners and advisors. All tokens have already been vested and are part of the circulating supply.
  • 10% of the token supply was designated towards the Grants and Bounties program. Some of the challenges have been successfully completed, including a global Hackathon, while others are still open.
  • 20% of the token supply was distributed to the company and its Founders.

Source: https://www.bloks.io/tokens/DAPP-eos-dappservices

The Ethereum Frontier

Since the DAPP Network launch in 2019 until recently, DAPP tokens were only available on the EOS blockchain, which severely limited its liquidity and availability to new users and developers from other ecosystems. As the utility token powering a blockchain agnostic development framework and middleware, it is now time to make the DAPP token just as multi-chain as the underlying technology itself.

Using its own DAPP Network bridging technology, a wrapped DAPP ERC20 token was created and recognized as the official ERC20 version of the token by the DAPP Network community through a governance proposal. All DAPP tokens on Ethereum are backed 1:1 by a locked token on its originating chain when a new token is minted on a destination chain.

The liquidity and available supply on the Ethereum blockchain for the DAPP ERC20 is currently limited because there has not yet been a compelling enough incentive for current holders to bridge their DAPP tokens to the Ethereum ecosystem. Bancor is a uniquely suited platform on which DAPP tokens can reside on Ethereum and where holders will be offered DAPP liquidity incentives for bringing their tokens to Ethereum and staking them into Bancor. This will be a very important milestone for the DAPP Network as it expands its focus on the utility and use cases for Ethereum projects, developers, and end users. Liquidity is a key component for DAPP Network adoption to take place on Ethereum and Bancor is the ideal partner to help make this happen as both an early adopter of the technology and as its primary liquidity source.

If approved by Bancor governance for a single sided liquidity pool, we expect liquidity incentives to drive a large portion of the DAPP token supply to Ethereum and we would like for Bancor to be the liquidity hub for accessing those tokens. Bancor is uniquely suited to hold the majority of the initial DAPP supply on Ethereum as it is the only AMM that allows for early holders to lock their tokens for liquidity mining, without risking their long positions on the project they are trying to support.

The reason for a co-investment ask of 500k BNT co-investment is because at its current market rate, this will be enough to match nearly 10% of the DAPP token supply as a way to bootstrap its initial liquidity on Ethereum. We anticipate that the entire BNT co-investment will be quickly matched to bootstrap DAPP ERC20 liquidity and that market volatility may cause the pool to shift and become heavier in BNT as it replaces the DAPP being removed from the pool by market participants who previously did not have access to acquire DAPP due to it being limited to another blockchain with less-than-ideal liquidity. As this is happening, DAPP Network governance will be working quickly to establish its second incentivized AMM pool on Ethereum with a stablecoin pair to attract arbitrage against the main pool on Bancor, which will generate trading volume and fee collection for BNT holders. This incentivized pool will also offer DAPP holders an additional way to earn liquidity rewards after the Bancor pool quickly reaches its capacity if they do not wish to hold two volatile tokens as an LP.

Benefits to Bancor Network

Bancor as the DAPP Liquidity Hub

As more utility for the DAPP token is realized on Ethereum and developer adoption increases, Bancor will be the go-to source for DAPP which will generate trading fees for Bancor. Bancor will also serve as the liquidity hub which will be used for arbitrage against all other liquidity sources present and future. Pending decisions made through decentralized governance and independent bridge operators, DAPPBNT LP positions could even potentially serve as bridging collateral in the future.

DAPP Liquidy Mining Rewards for DAPP LPs

Liquidity incentives will be offered to DAPP liquidity providers to encourage them to bridge their tokens to Ethereum and make Bancor the top liquidity source for DAPP tokens on Ethereum. This will drive all DAPP volume and fees on Ethereum to BNT token holders. As DAPP becomes more widely used by Ethereum developers and projects, they will need to come to Bancor to acquire their DAPP tokens and we would like for it to have the deepest liquidity there.

Impermanent Loss Insurance Covered using DAPP Tokens

Typically whitelisted pool IL insurance is covered by the protocol, which may potentially create some risk for whitelisting tokens with lower market caps that have a lot of potential to increase in price compared to BNT initially. When this volatility occurs and an LP withdraws, BNT must be minted to cover the impermanent loss that is paid out to the LP. If this LP wants to remain 100% long on their original token, they may then swap their extra BNT for that other token, thereby causing even more impermanent loss for the rest of the liquidity still staked into the pool.

To offset this risk, an innovative smart contract has been developed that will cover all impermanent loss incurred by LPs when the value of DAPP goes in relation to BNT. Meaning that every time DAPP is unstaked from Bancor, and impermanent loss insurance is due to the LP - the insurance amount will be paid in DAPP instead of BNT, which makes this an attractive proposal for Bancor Network stakeholders.

Earning DAPP token rewards will require LPs to stake their LP tokens to a reward contract. This contract will burn any BNT that is used to pay for IL when the price of DAPP goes up against BNT, and replace it with DAPP tokens of equal value. BNT will continue to be used to cover any IL to the downside. This sharing of risk greatly benefits BNT holders due to the downside risk for IL protection being limited while the upside risk is potentially unlimited.

The contract for providing IL protection was developed by Bancor and LiquidApps co-founder Eyal Hertzog and more information on it can be found in the BBS whitelist proposal. The team and founders continue to innovate on aligning healthy liquidity incentives and we are excited to see the DAPP Network follow in these footsteps.

This sharing of the burden of IL protection significantly reduces the risk being taken by Bancor for co-investing 500k BNT. We also hope that by providing our own IL protection, that it will set a new precedent for future projects whitelisting on Bancor, which would lead to even more cost and risk savings to the network.

vBNT Voter Incentive DeFi NFT

vBNT holders voting on this proposal will be incentivized with an NFT which may have a future utility that allows it to be staked by DAPP LPs to amplify their mining rewards on Bancor. This will give the NFT inherent value for DAPP LPs who wish to maximize yield and the code to enable it will be open sourced to allow for other liquidity pools on Bancor to adopt it for creating their own DeFi NFT incentives to drive even more liquidity and engagement.

Every voter is to be rewarded regardless of their vote.

NFT Rewards will only be distributed if the proposal reaches the quorum.

Token Security

The DAPP token contract is a standard ERC20 token from the OpenZeppelin library. Neither the DAPP token contract on its originating chain, nor any token bridge contracts utilizing the DAPP token, have permissions that grant administrators unrestricted mint/burn capabilities.

DAPP Token Bridge

DAPP is a multi-chain token with token contracts on both Ethereum and EOS. It utilizes a bi-directional cross-chain token bridge built using its own DAPP Network technology to move the DAPP token between chains. The bridge contracts are located at 0xce9b04bE4e87548D34B8a2180b85310424c84518 on Ethereum and ‘dadethbridge’ on EOS. The DAPP token contract on Ethereum is a standard OpenZepplin contract that utilizes a mint/burn functionality whereby it can only mint DAPP ERC20 tokens after confirmation that the token on the originating chain is locked into a smart contract. DAPP ERC20 tokens are burned when sending the token to another blockchain using the bridge. The contract can’t burn tokens that are owned by other users.

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Decentralized Governance

All of the DAPP Network smart contracts were handed over to the control of its token holders using a decentralized governance model. All decision making and consensus is reached through a proposal and voting process. All passing proposals are then executed on chain by a group of 21 DAPP guardians/custodians on the smart contract multi-sig. The MSIG includes trusted project contributors, community members, as well as several Bancor co-founders.

The community recently proposed changes to the network’s reward structure with the explicit goal of providing incentives to drive the majority of DAPP token liquidity to Ethereum.

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Community and Communication

6 Likes

Very excited for this proposal. As others in the community have mentioned, Bancor is in a good position to provide “liquidity as a service” (with external IL live, this can soon be an area of focus for our platform) due to the nature of the dynamic BNT token. Essentially, with external IL protection we can provide single sided staking while letting the projects cover any impermanent loss experienced by their LPs. This is truly a game changer as it covers LPs that are betting on their project succeeding as compared to the current alternative that punishes them when this happens.

This is a great idea:

and is something that all BNT holders should support. What this means is that any current DAPP LPs that might be interested in providing liquidity on Bancor, have a financial incentive to acquire BNT (and locking it for vBNT) or vBNT directly to vote for this proposal to receive their NFT (could boost their rewards in the future). This could potentially have the effect of bringing in new LPs on the BNT side that might be attracted to our other liquidity mining campaigns as they are navigating through the process of staking or locking vBNT in the governance contract.

This proposal has my full support and I will be voting in favor.

4 Likes

All around a very good proposal, and DAPP would be an excellent addition to our collection. It has my support.

4 Likes

This is an outstanding, well researched and highly innovative proposal. It has some very interesting ideas that have the potential to be applied for future early-stage white listing of tokens. It’s a yes from me!

3 Likes

This is quite interesting. I think this is great for a number of reasons:

  1. Bancor will be their main Ethereum DEX
  2. New users from EOS
  3. 3rd PTY IL protection

let’s try it, might be a model for later projects to follow

1 Like

It is very encouraging to see a second proposal utilizing the joint IL protection paradigm introduced by BBS.

The overall depth for DAPP on centralized exchanges (KuCoin and MXC) is pretty low. This could be an opportunity for Bancor to become the default exchange for the DAPP token - something we are becoming increasingly good at.

Moreover, the project is very much likely to be here for the long-term. I have every confidence in the team’s ability to deliver on its ambitions. As pointed out, Bancor uses the LiquidApps product already, we know the team well, and I am looking forward to continued collaboration.

4 Likes

Agree with this. Also what an outstanding proposal, the people from liquidapps don’t mess around. We should really corner the market on this and take part of this new External IL is proving to be a great opportunity for us.

4 Likes