Read on Twitter
My Chads, it& #39;s been a crazy day in which $ENCORE launched. 8618 ETH collected. A bot became a millionaire. Contracts paused. A buggy website. Before we talk about $ENCORE, we first need to understand $CORE and it& #39;s interesting features.
1/ $CORE has done a x100 and has taken the industry by storm. Why? Because it provided a twist to the Yield Farming craziness. Traditionally, in projects like SUSHI and CRV, LP holders were rewarded by minting tokens which resulted into sell pressure due to inflation. See charts.
2/ $CORE instead is non-inflationary and its yield for LP providers comes from REAL activities. Which ones?
A) Transaction fees
Each transaction of CORE token has a 1.1% transaction fee of which 91% goes to CORE LP holders.
A) Transaction fees
Each transaction of CORE token has a 1.1% transaction fee of which 91% goes to CORE LP holders.
3/ B) Yield from automated trading strategies
Like $YFI, $CORE will have Vaults in which people can deposit e.g. ETH, USDT, DAI. The funds will be used for automated trading strategies, which yield will be used to market-buy $CORE tokens.
Like $YFI, $CORE will have Vaults in which people can deposit e.g. ETH, USDT, DAI. The funds will be used for automated trading strategies, which yield will be used to market-buy $CORE tokens.
4/ The market-buy of $CORE by the Vaults will result in buy-pressure. However, one thing to note is that as a yield farmer you generally sell your yield (in this case $CORE) and this will likely result in similar sell-pressure as well, resulting in a net-zero effect. However:
5/ The subsequent selling of $CORE will result in transaction fees (see A above). Therefore even if all $CORE is immediately sold by the yield farmers of the Vaults, it will still result in transaction fees (and therefore value) for $CORE LP holders. Pretty cool feedback loop.
6/ Another interesting twist of $CORE is that once liquidity is provided, it cannot be withdrawn again. This will mean liquidity is locked forever. Only the LP tokens received for providing liquidity can be traded.
7/ The combination of liquidity locked and Vaults, can result in interesting trading strategies that Vaults can perform to generate yield. I talked with the core dev of $CORE and it& #39;s too detailed for a tweet, but here& #39;s a very short summary:
8/ A. One-sided liquidity provision
Pools (Core/cETH and in future more pools, e.g. Core/cUSDT) can function as on-chain oracles, users can deposit e.g. ETH, which will internally be paired with coins from other pools and e.g. provide liq to UNI pools without impermanent loss.**
Pools (Core/cETH and in future more pools, e.g. Core/cUSDT) can function as on-chain oracles, users can deposit e.g. ETH, which will internally be paired with coins from other pools and e.g. provide liq to UNI pools without impermanent loss.**
9/ B. Arbitrage/Flash loan strategies
Funds in the Vaults can be used for arbitrage using the the on-chain price oracle derived from the Pools and provide Flash loans.
Funds in the Vaults can be used for arbitrage using the the on-chain price oracle derived from the Pools and provide Flash loans.
10/ So ehm Chad, is this a ponzi? Yes and no. On the one hand, these feedback loops result in an upward price pressure which seems very ponzi-like. On the other hand, there are real activities underlying the fees and yield.
11/ The main thing that in my view will determine whether this has long-term perspective is how much yield the strategies in the Vaults will generate. The transaction fees are a by-product of the strategies yields and volume, and therefore cannot be the sole source of value.
12/ If the automated trading strategies are good high yield generating strategies, $CORE can have sustainable value. The combination of locked liquidity, the transaction fees, and Vaults is interesting, and I& #39;m excited to see how the trading strategies will look like and perform.
13/ So now that we understand $CORE, let& #39;s talk $ENCORE.
$ENCORE is a fork of $CORE and copies everything that $CORE does. Is this bad? Not necessarily, YFII did a x50.
$ENCORE is a fork of $CORE and copies everything that $CORE does. Is this bad? Not necessarily, YFII did a x50.
14/ $ENCORE has collected an incredible amount of 8619 ETH during its initial liquidity event. What& #39;s even more impressive, is the amount of FUD it has collected. We rarely see such FUD with a project. Chad impressed.
15/ Let& #39;s highlight a bit of the FUD.
- The main dev is a 14 year old person.
- The main dev has some questionable activities in the past:
https://github.com/1AndOnlyPika/EnCore/pull/1">https://github.com/1AndOnlyP...
- Main dev asked basic code questions on SO.
- There was some FUD regarding bugs in the contract, but seems fixed.
- The main dev is a 14 year old person.
- The main dev has some questionable activities in the past:
https://github.com/1AndOnlyPika/EnCore/pull/1">https://github.com/1AndOnlyP...
- Main dev asked basic code questions on SO.
- There was some FUD regarding bugs in the contract, but seems fixed.
16/ As far as I can tell, and $ENCORE dev confirmed, $ENCORE has no differentiating features from $CORE.
It& #39;s a fork.
Therefore, like with $CORE, the main thing which will determine the long-term success is how good the trading strategies will be of $ENCORE.
It& #39;s a fork.
Therefore, like with $CORE, the main thing which will determine the long-term success is how good the trading strategies will be of $ENCORE.
17/ Whether you believe $CORE or in $ENCORE will therefore be a bet in which team you believe will have the best ideas for trading strategies, execute the project, and gather a community.
Is it the original $CORE team?
Or the fork team?
Place your bets accordingly.
Is it the original $CORE team?
Or the fork team?
Place your bets accordingly.
18/ It will be interesting to see how $CORE / $ENCORE will evolve. $YFI started as a yield aggregator, but turned thanks to its incredible community into something greater, with many parts forming its ecosystem. Lets see if $CORE / $ENCORE develop similarly, or end up a ponzi.
19/ ** in 8/ Similarly Bancor V2 and Chainlink try to tackle the impermanent loss problem through amongst others oracles. See for an understanding: https://medium.com/@finematics/what-is-bancor-v2-chainlink-integration-and-dynamic-automated-market-maker-explained-2104049f7e73">https://medium.com/@finemati...
