Hey Guys, I wanted to see if we could get a pinned post about the ideas forming on token utility. I have a few of my own that I will begin posting below. We can use the “heart” to get a feel for what ideas really gain traction. I’d like to outline a few principals that the creators have expressed so far as guidance on where they envision their project going.
-A Focus on stable predictable interest rates
-We are looking for “sticky” money. We don’t want people to come and go only to suck incentives/$$ from the platform
-We are going for longevity (that means 30+ years), so in my mind we need ideas that will be appreciated in the bear and bullish cycles.
-Feel free to add any principals you believe we should acknowledge or that I’ve (likely) missed
I think an “insurance policy” for holding/staking JET may be a cool idea. This would drive up price in a bear market and would encourage users to hold/stake tokens based on their holdings/borrowings. I could see the amount of tokens held/staked would depend on total valuation of a portfolio.
I also think this along with possibly an interest rate boost would encourage holders in both bull/bear cycles-
More jet in bull market, better apr on deposits.
More jet in bear market, protect your level of liquidation (possibly up to a certain limit?)
Im excited to see what others think
Love to see new posts and ideas. Maybe you can expand more on the insurance idea - Are you saying that staking JET could give users the ability to have lower c-ratio before liquidation begins?
I definitely like thinking about ideas to stand out during both bull and bear cycles.
Id love to hear others ideas as well to flesh it out, but that would be the idea.
Durring normal (not underwater) deposits, the user would experience better interest rates possibly on both sides (earned/debt service).
My idea would be that the user would essentially lock up/stake jet based on the value of their collateral and as the c ratio is lopsided, the locked up jet would incur fees and interest in usdc and the user would not be able to retrieve their collateral as well as jet until the fees were paid in full.
I feel that this would keep a lot of assets within JET as well as sort of create a deflationary market for the token. We could then have a quarterly (or monthly?) “bad debt sale” where debts could be liquidated at a discount to keep the bad debt ratio low and under control.
-The debt liquidated could require the liquidators to also liquidate the JET and lock up a certain percentage of that JET (if thats even possible?)
Im sure with a certain level of debt and a valuable token liquidators would be waiting in line for the liquidation event.
-So to clarify, the c-ratio would not liquidate the user immediately, they would have more time for the opportunity to pay back their loan as well as fees incurred, but not indefinitely. They would also have a pretty good incentive not to let go of the collateral in addition to their JET.
i like the idea of staked JET utility, it’s no different than pledging more collateral, so it should by default improve a users c-ratio
perhaps you can choose to stake and lock your JET for longer periods of time, and the longer you lock the better benefits you get
also, staking JET should encompass a wide range of benefits, so you’re right in that staking is just like collateralizing, but perhaps only JET stakers should receive the rest of the benefits you listed (and perhaps more), what do you think of that?
I think that would be fair. In my mind, we would want to attract smart money (i.e. Sophisticated investors), as well as create smarter investors to our platform because that’s the money that sticks. The money that inflows and outflows quickly is usually from the yield farmers, reward seekers, short term gains seekers and that is what causes the wide fluctuation in interest rates across the cryptosphere. Just like a bank, the more money you deposit and hold in your bank over a rolling time period, typically the more reward multipliers get applied across your accounts and credit cards.
I think as a platform we should be rewarding the investors that decide to park their money with us (more so for the investors that invest into the platform via holding JET), and really aim to provide a platform for success. I haven’t seen that anywhere in the crypto space. What I do see is platforms offering ridiculous apr’s that go back down to single digits the next day. In my opinion, those are worse than actual rugs, as most of the kids trying to be successful don’t understand why their money still isn’t working for them. After that strategy fails them, they then decide to sell that asset and go and buy dogecoin right before it falls off a cliff.
I think the insurance benefit going to holders of jet would be an awesome benefit, giving investors an opportunity to create more opportunities for themselves by having their capital work for them as well as peace of mind and a “second chance” to resolve their debt (within a time frame) if whatever strategy they attempt goes the wrong way.
great point, one product we’re putting a lot of research into right now is fixed term deposits! with fixed terms it’s easier to calculate when liquidity potentially will exit the protocol, and if protocol entry and exits is managed properly this’ll create more stability in rates
a user can opt-in to time-lock their deposit for a specified duration (e.g. 7 days) at a minimum interest rate (e.g. 9%, think more sane, mature market interest rates), and that debt can rollover until the user opts out. to opt-out the user would indicate they want to exit within the 7 day window, and once that term matures the users funds are returned to a pool of funds they can withdraw from at any time, this would mean the user would then revert to whatever the floating interest rate is
liquidity incentivization would be appropriate here, as if liquidity on the protocol starts trending down, then fixed term deposits could be incentivized appropriately
I think this is great! I’m a big fan of the bond programs we are seeing in defi now as well. Maybe users would be required to stake a certain number of JET for a longer period of time based on the size of their stake, while buying into that CD? inherently as our tvl grows, this would reduce the float of JET and theoretically raise the value.
I was thinking last night about a few things and just thinking out loud, I do think it should be noted that most people as of now are attracted to crypto not only because of the freedom, but also the high interest rewards. I think it would be prudent to not only think of the end goal but also think about how the JET protocol is recepted in the market, how we are perceived moving forward, and how powerful and pervasive that perception lasts. As an example, I’m sure a lot of people can remember playing in the kids area jungle gym and ordering Happy meals at McDonalds as a kids, and although as an adult you would never (hopefully) go back to McDonalds to play in the kids area, there is a lasting feeling in many people’s minds about how it is a small “treat” to go to McDonalds.
As the crypto space matures and we get to a much higher level of participation (as of now we are still 1% of the global financial market) we would obviously want to be competitive within the space, but I think as a first mover strategy on Solana, we would want a lasting impression on users as well. I think most would agree that 9% is amazing compared to legacy markets, but within the cryptosphere, we would not be the most competitive.
I think the massive interest rate fluctuation leaves a lasting sour taste in a lot of users minds.
I think we should look at other platforms that investors tend to view as safe and predictable places to park their money, and along with the other differentiating products we can offer, we can really dominate our space and take a large chunk of the market share for our target demographic. When I think of a safe and predictable area to park stables, I think of Aave (10-14%) and Anchor (~20%).
I think as a strategy moving forwards we can’t forget about market share and the importance of being a first mover. As useless today as Etherium is, it was a first mover and has a huge user base that have not even considered parking capital on another platform. That parked capital has given those eth based platforms a huge set of tools to further their agendas.
I’d love to hear others opinions.
Quite some time ago I wrote a long post on my channel about token utility and gave 2 platforms as good example that are doing it right - WOO & NEXO. Here’s the full post (Telegram: Contact @CryptoWombat) in case anyone is interested, but I’ll provide a summary of my suggestion below:
- Create a tiered structure of 3-5 tiers, where there’s a minimum holding/staking requirement of JET tokens, with each tier providing certain benefits like:
a. better deposit rate
b. better borrow rate
c. better LTV ratio
d. preferential distro of the rewards (once this program starts)
e. participation in the protocol’s revenue
I am particularly interested in the last of those benefits (protocol revenue) and structuring it cascading terms. It seems like it would be quite compatible with the bond programs that could provide larger protocol revenue based on more stable terms.
@CryptoWombat my only question is whether there should be specific self-dealing protections built in.
It’s a good question mate and I’m not a securities lawyer, but given the lack of regulation in crypto in general and complete lack of even the basic idea/understanding if/how decentralised projects can/should be regulated - I would say we’re a good few years away from any reasonable answer to this question.
My personal view is that each project and individual involved in it should have their own integrity to disclose their interests & potential conflicts of interests. For example on my channel (Telegram: Contact @CryptoWombat), almost every post has a clear disclaimer that I’m investor/holder of the tokens and will derive a direct economic benefit from anyone buying these tokens.
I like it. If we could incentise this effectively the natural next progression, of longer term loans with fixed interest rates, might also be straght forward to implement.
I saw Su Zhu and Kyle Davies’ tweets recently, and immediately thought of this thread.
Don’t get me wrong, staking for yield can also be good, but it shouldn’t be the sole purpose of a token. Though it’s a different crypto subcategory(P2E), there’s a reason why Axie Infinity’s AXS token has been pretty solid despite being yield farmed like hell — the AXS token itself has other utilities for non yield farmers.
Hopefully we learn from the mistakes of older lending(or DeFi in general) protocols — whereas while their platform is good, their tokens are pretty much down-only. Let’s do better with Jet Protocol!