DarumaDAO, spotlight by Nervos

DarumaDAO is a reserve currency protocol, with the $DRM token as the main representative. This protocol is inspired by OlympusDAO and its reserve currency, $OHM.

DarumaDAO aims to create a financial tool that is backed by different assets, that can be used to stake in the protocol in order to get voting power over the changes that could happen in the future of the DAO.

DarumaDAO

Q: Who creates $DRM?
A: $DRM is created by the protocol itself (DarumaDAO) whenever a user deposits certain tokens in the Main Treasury (at the moment CKB, USDC, and some liquidity pool tokens that CONTAIN $DRM like DRM-CKB and DRM-USDC)

Q: What is $DRM as a reserve currency?
A: Each $DRM is backed in the Main Treasury. It is a volatile asset that has a lower limit that will never be breached. At the moment of writing, the price of $DRM is about 11$, but the reserve is 7$/DRM. This means that each DRM has at least 7 $ worth of assets backing it up, and this means that the price will not go lower than 7$.

So, $DRM has the features of a stablecoin (because it cannot go lower than a certain point) but at the same time, it can be used for high APY staking (yes, you can stake it), creating more DRM, and thus, over time, more money.

The treasury is owned by the protocol and has a VITAL role. It is issuing $DRM.

There are a few ways of obtaining $DRM. You can buy it on YokaiSwap in exchange for another token (that has a liquidity pair) or you can simply MINT $DRM on DarumaDAO. Minting is very convenient, because you have great Discounts and No Slippage, giving you much more value for the same tokens.

The only drawback to the minting process is the fact that you have to give your cryptocurrency (CKB for example) to the protocol, and even though you will pay less for the same quantity of $DRM than the market price, you will have to WAIT 5 days in order to get your $DRM. This is called the Vesting Period.

Minting is the equivalent of bonds in the OlympusDAO if you are more familiar with that term.

Q: What is the ZAP function?
A: The Zap function is using YokaiSwap`s ability to instantly move funds in a swap by going through the best liquidity pairs. This means that you will be able to MINT $DRM using any coin. That coin will be sent through different liquidity pools so, at the end, the protocol will have 1 or more assets that are accepted in the treasury, which will then be changed for the equivalent amount (at a discounted price) of $DRM.

Q: What is token economics (tokenomics)?
A: The initial supply is 28k $DRM, which consists of 3 funds. A 20k fund that went to the YokaiSwap IDO at 15$/DRM, 4k DRM that goes in the initial liquidity pairs, and 4k that were bought by the developers at the price of 18$.

Q: I saw (⚫,⚫). What does it mean?
A: This sign signifies the best possibility for everyone in the protocol. This is the key concept in DarumaDAO.

 

There are 3 possible use cases for people that hold DRM. Mint DRM (through bonding), Stake DRM, and Sell DRM, as shown in this picture, taken from the DarumaDAO website. 



Staking is the black ball ⚫, minting through bonding is the red ball 🔴, and the ❌ is selling.  In short, they represent the actions of every one of us.

As you can see, the green color is in the far left corner, while the red corner is in the bottom right corner. The green color is the BEST outcome for everyone, the holders, and the protocols. Why? Because when the vast majority is staking DRM, they are doing 2 things.

  1. They are believing in the project and securing it.
  2. They are lowering the circulation of DRM, thus increasing the price drastically, making it a WIN-WIN situation for everyone.
When the vast majority is Minting DRM, it is still a great outcome for everyone, but not as good as the first scenario. Why? Because even though the vast majority believes in the project and is minting new DRM tokens by providing assets to the treasury, it also creates more DRM, thus lowering the value over a low period of time. Of course, that new DRM can then be staked.

The worst outcome for everyone (holders and protocol) is when the vast majority is selling. Selling DRM injects new DRM into the market, making it drop in price.

The staking represents the best outcome for everyone, especially when using the auto compounding because all your newly obtained DRM are Restaked automatically, and the high APY applies to a bigger number.

DarumaDAO, as a reserve currency protocol, has its value-based, especially on the assets found in the treasury, and it can be heavily influenced by the way the holders behave in the market.

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