ProtoFi ($PROTO + $ELCT)

ProtoFi ($PROTO + $ELCT)

 
ARTICLES
VIDEOS
TWITTER POSTS
LINKS

WHAT IS IT

ProtoFi is the first community-driven, user-owned AMM (automated market maker) on the Fantom network. The protocol focuses on long-term sustainability and value creation for its shareholders (token holders) by giving them the ability to own a piece of the protocol itself and share in the profits it generates. They achieve this through a dual token system $PROTO (proton) and $ELCT (electron) which we will cover in more detail below.
 
ProtoFi has implemented a number of unique features that make its protocol and tokenomics stand out from other AMM DEX’s (decentralized exchange). These are Quantum Supply, ProtoShield, a Dual Token System, and ChronoLock all of which we will cover below.
 
notion image

HOW DOES IT WORK

ProtoFi works just like any other AMM DEXs in which users can swap between a number of different tokens inside of the platform.
 
notion image
notion image
DEXs need to find ways to incentivize their liquidity providers through fees and extra farming rewards in order to build and attract TVL (total value locked) in their protocols. They do this because that allows for lower slippage on token swaps which attracts users to their platforms.
 
Traditional AMM DEXs allow you to stake their native coin on the protocol in order to receive a share of the revenue collected from users swapping fees. However, this method over a long period of time has proven quite detrimental to the tokens overall sustainability.
 
ProtoFi has innovated on this traditional strategy and taken things further in order to further incentivize liquidity providers, and provide long-term sustainability. There are 2 tokens on ProtoFi both of which are necessary in order to earn the dividend/revenue share from the protocol.
 
First off users must stake tokens whether they are stablecoin pairs or other LP pairs inside of the Fusion farms in the ProtoFi app. Users are in turn rewarded and paid out in the $PROTO token for providing liquidity at the given APRs specified per pool. So nothing new here this is the same operation as other AMMs.
 
notion image
 
Here is where the dual token system of ProtoFi takes shape. Users must now stake their $PROTO in either the Nucleus farms or the Particle farm in order to earn $ELCT at the APRs on the specified pools. $ELCT again is the token that allows users to actually own a part of the protocol and receive dividends from the revenue generated.
 
notion image
notion image
 
Once users start earning $ELCT they go to the Fission pool in which they can stake their $ELCT and be paid out in either $DAI which is a stablecoin. Before $DKNIGHT the protocol also paid out in $wFTM for a while.
 
Earning $DAI through staking your $ELCT is how you earn dividends with the protocol. These dividends are generated as a result of the swap fees, deposit fees, and any other revenue-generating activities the protocol pursues in the future.
 
notion image

QUANTUM SUPPLY

Quantum Supply is essentially an elastic supply system that adjusts the $PROTO emission rate according to current market conditions. This allows for emissions to be sustained at different paces throughout different market cycles to ensure sustainability. This also protects users from bad actors, and market manipulators, and supports the token's price.
 
This is calculated by a ratio between the MC (market cap) and the TVL (total value locked) in the protocol (seen below in the red box). The quantum supply is triggered every 3 days (can be changed depending on market conditions).
 
notion image
 
Here is the example they give of what this looks like in action
 
notion image

PROTOSHIELD + CHRONOLOCK

ProtoFi has also introduced a number of investor protection mechanisms which are ProtoShield and ChronoLock.

Protoshield

In order to prevent market control and manipulation by large holders (whales) who have large holdings of tokens ProtoFi has implemented a transaction monitoring system. This limits the number of $PROTO tokens that can be transferred in any single transaction.
notion image

ChronoLock

This is a protective mechanism that limits the frequency of harvesting $PROTO that is allowed. This prevents arbitrage by bots and users looking to exploit APRs by harvesting and dumping $PROTO frequently which results in a negative impact on the token value.
 
notion image

GAUGES AND BRIBES

ProtoFi announced recently that they will be introducing gauge votes and bribing into their ecosystem. We have seen this played out successfully on other protocols specifically (Curve + Convex). This mechanism is another innovative way to incentivize long lock-ups for TVL and sustainability for the protocol. It also incentivizes other protocols to bribe users on their pools to build up large liquidity through ProtoFi further benefiting both the protocol itself and the users. It essentially builds a flywheel for the protocol if all works out as planned.
 
Traditionally yield farming rewards (APR’s) for LP pools are determined by the weight or multiplier of each pool. These rewards are based on the emission of the reward tokens or the platform tokens ($PROTO + $ELCT) which are split between all the different farming pools based on those said multipliers/weights.

Gauge Votes

With gauge votes basically what happens is instead of that number being determined by pools multipliers/weights it is directly voted on by the actual LP providers themselves. The LP providers vote on which pools should receive a larger share of the emissions giving more incentive to provide TVL and to receive rewards based on the communities/tokenholders decisions.
 
Users need to acquire voting power in order to do this. To acquire voting power users will have to lock up their $PROTO or $ELCT tokens and in return receive $veELCT. The ve stands for voting escrow. The longer users lock up sometimes even 4 years the more voting power they receive.
 
This incentives long lock-ups of tokens which boosts the TVL and in turn gives the user the ability to vote on which pools emissions should be sent to further boost their yield farming.

Bribes

Bribes are used to incentive users to vote for other pools than their own. New protocols can come along and because they are wanting to build up their liquidity on ProtoFi for their native token they can incentivize or bribe $veELCT holders to vote on their pool by offering additional rewards.
 
Here is a full breakdown from ProtoFi on their gauges and bribes - https://medium.com/@protofi.app/introduction-to-protofis-gauge-bribe-system-ad72057cdd25
 

TOKENOMICS

There are 2 tokens in the ProtoFI ecosystem $PROTO and $ELCT. These stand for proton and electron.
 
$PROTO is the native token and can be bought or sold. It allows investors to participate in the protocol and stake in their pools. $PROTO is the ONLY way to acquire $ELCT.
 
notion image
 
$ELCT is the token that represents a share in the ProtoFi protocol and rewards holders with dividends. It also is the governance token allowing investors/holders full control over the protocol's future and its assets. $ELCT can’t be bought or sold the only way to obtain it is through staking $PROTO. $ELCT can also be swapped for $PROTO at a 1-1 rate however there is a 3-day delay from unstaking which provides swap penalties. This is to reduce the selling of $ELCT to $PROTO. This can be done through their Swapper.

TEAM

Here is a link to the team's information and previous history building in DeFi, traditional finance, Crypto, and more - https://protofi.gitbook.io/protofi-docs/team
 
Built with Potion.so