Good Vibes Ohmly

Life is unique, just like the ERC-721 token. Introducing Degen Vibes, an innovative NFT auction system that operates on the LayerEro network and allows for the bidding of a single Degen NFT at a time. Bidders can submit their bids in WETH and the minimum bid amount (reserve price) is currently set at 0.05 WETH, subject to change. The bidding period lasts anywhere from 2 hours to 24 hours, with the aim of settling at a 24-hour cadence after the first 50 Degens. However, the auction frequency can be altered by the DAO if members vote to do so.

The auction proceeds are instantly invested in DeFi through the Best Yield vault on Idle Finance, currently invested 100% in Aave V2 (Polygon). The invested WETH generates yield for Degen owners and distributes 50% for the past and 50% for the future, with 33% going to past Degen collectors and artists, 33% for protocol-owned liquidity, and 1% for the team. The remaining 33% is controlled by the DAO through the treasury. This allocation ensures a solid backing price at launch.

The goal is Streaming Rewards that consist of real yield, generated from protocol-owned liquidity acquired through bonds. POL is a new liquidity model, whereby protocols issue their tokens at a discount in exchange for other tokens (e.g. DAI, ETH) which form part of the protocol's treasury (the "bonding" process). The treasury can then be deployed to provide liquidity to the token's trading pair on DEX, addressing the mercenary liquidity problem in the process. Yieldbox unlocks support for NFTs so that def a logic we explore, to deploy a portion of treasury for real yield.

$GVO acts as the backbone of the protocol. GVO can be compared to Curve’s CRV in that its true power (and juicy yields) are not unleashed till locked. GVO is not emitted at all – no liquidity mining, rewards, nothing. GVO also has very strong utility when locked. While the FDV or “Fully Diluted Valuation” could appear high and potentially harm its rise, we believe degens will see the mechanics and sustainable inflation and buy-in.

• GVO ERC-20 utility token of the protocol. (Rewarding liquidity providers through emissions).

• veGVO ERC-721 governance token in the form of an NFT.

• Any GVO holder can vote-escrow their tokens and receive veGVO.

Observing emissions as capital expenditures, fee generation as revenue, and liquidity in the treasury as assets on a balance sheet, we quickly noted the majority of DeFi protocols expenditures (emissions) far outweighed their revenues (fees), on-hand assets (treasuries), and tangible user base increases. Generally, participants who are loyal to the system get the short end of the stick, as mercenary capital providers reap all of the benefits. Protocols become highly dependent on token value to stabilize their ecosystem, and thus are fragile- being easily affected by external factors like market sentiment. Capturing POL would enable GVO to be stabilized by itself, resilient from these external factors.

A by-product of the protocol-owned liquidity model is that because the GVO protocol now holds valuable tokens in its treasury, the protocol can be now seen as being “backed” by assets. This can in theory create a price floor for the token (e.g., if the treasury owns 10 million USD of ETH, the minimum market capitalization of the protocol should be 10 million USD) and allows the treasury to “defend” the price of their token through buying their tokens on-market (pushing the price up).

This argument should be viewed with caution, as the protocol will still be providing liquidity to their token’s liquidity pools on DEXs. If there is sustained selling of their token, this will drain the treasury of their reserve assets (as the protocol would contribute more of the reserves assets in the trading pair), in turn reducing the price floor. This can result in a negative feedback loop, with selling reducing the price floor and encouraging further selling. Olympus DAO has in part implemented measures to reduce this risk by offering large staking APYs to reduce the incentive to sell (utilizing the classic prisoner's dilemma argument in game theory). Perhaps a more enduring legacy of Olympus DAO is the concept of LaaS (Liquidity-as-a-service), launched through the Bond Protocol. Long-term, the biggest risk is a loss of confidence (if the project is not providing a clear value proposition) leading to a sustained sell-off draining the value of the treasury. Today, users demand real yield. Laughably high emissions are increasingly short-lived in relevancy.

Eventually, yield farmers who controlled the majority of the OHM supply felt they had extracted as much value as they could, exited, and the price of OHM entered a death spiral. Olympus panicked and offered inverse bonding. Inverse bonding allowed users to sell their OHM tokens back for the POL assets. This lost OHM’s POL (the only real value it created), undiversified the treasury, and lowered investor confidence. Redacted was the only winning participant of Olympus, as it pivoted once the dilution got too high, keeping the POL. GVO will seek to acquire as much POL as possible during carefully pre-calculated inflation. The fees and yield on POL could flywheel itself (Obtain POL > Create Yield on POL > Acquire More POL > Rinse & Repeat). The longer the liquidity is locked, the more total yield will be generated, thus the more revenue is generated for the protocol, the more POL is created, and the better the DAO’s balance sheet looks. We do feel inflation must end at some point. If inflation does not stimulate enough economic growth and value in the system (POL) by the time the incentives run out, the system will have failed- no safety nets. If POL was not captured, GVO would not be issued. With bonding being the most well-known mechanism for creating POL, bonds set no predictable price floor for the incentive, or an estimable trade of the capital provided for the expenditure of the incentives, as it’s a constant discount against the incentives’ market price.

How do we issue GVO to create POL if not with bonding? Let's explore the reward token mechanism - call options. Call options are the right, but not the obligation, to purchase the underlying asset at a specified price (strike price = market price - discount) within a specified duration (one week in our case). If the market price of GVO were to fall from sufficient sell pressure, the call options would become OTM or out of the money (unprofitable) and would be left to expire. This minimizes the negative impacts of incentivization of economic growth. Call options also create intrinsic value when exercised. Airdropping call options may offer loyal community members an appreciable and estimable reward. In contrast, Liquidity Mining can be looked at as a call option with a 100% discount, and an infinite expiry. With call options, they set an estimable price floor, as TAP Price Floor = TWAP - Average Discount % per Epoch.

We first set two boundaries, a minimum discount of 5%, and a maximum discount of 50%. twGVO, or time-weighted escrowed GVO, employs AML (Average Magnitude Lock). The boundaries are not 0.05 to 0.50, as in the maximum and minimum discounts seen in oGVO, but 0.10 and 1.0. This is the ratio of twGVO received for an input. twGVO Output = AML (GVO Amount + Time Duration). In short, what if users were willing to lock longer because there was so much value in the system? Or, what if there was so little value in the system that these fixed values were unattractive? This elasticity would beget higher economic efficiency.

twGVO would also be transferable and represented by a LayerZero ONFT-721. This allows for the creation of secondary markets to trade lock positions but forces the underlying GVO to remain illiquid for its escrow duration. This system additionally offers voting power for loyalty, the more loyal you are to GVO (in lock time), the more voting power you receive.

twGVO also offers a constant balance, in that a user’s twGVO share will not diminish over time like ve, or increase like ve3,3. At the end of the lock, the NFT will burn, and the user will receive the original GVO balance back.

In Curve’s Vote Escrowing (ve), if a user locks CRV for 4 years, they’ll receive 1 veCRV for each CRV locked. If the user instead locks for 1 year, they’ll instead receive 0.25 veCRV for each CRV input. The user’s veCRV balance decays linearly until the completion of the lock, at which point they will have zero veCRV. Curve’s veCRV allows users to receive shares of fees, and participate in multiple forms of governance, such as Gauge voting and Snapshot voting.

Applying AML instead of fixed values may offer much higher efficiency for twGVO. Thus, If the protocol revenue was high, users would be incentivized to lock GVO, in turn steering AML to the lower boundary of 0.10 twGVO per GVO locked. If protocol revenue was low, users would be incentivized to lock as AML would be steered to the maximum boundary of 1.0 twGVO per GVO.

ve, or “vote escrowing” was pioneered by Curve with veCRV. Curve paid close attention to protocol loyalty, and required lockup of their liquidity rewards in order for prospective liquidity providers to maximize their returns from their liquidity incentive program. Curve essentially created a tiered incentive structure; the more loyal you are to Curve, the more rewards you will receive.

Now imagine a LayerZero omnichain NFT market across 12 EVM networks. LayerZero allows users to seamlessly interact with blockchains with no intermediaries and asset wrappers. With LayerZero’s guarantee of valid delivery, the token is burned on the source chain and minted on the destination chain directly through the token contract. OFTs token supply is actually elastic between all supported chains.

To support a new chain, GVO only needs to deploy small proxy contracts that send and receive messages to GVO’s smart contracts on Arbitrum. This allows GVO to support hundreds of chains with little development, nor any inherent security risks. This alone is extremely innovative and gives GVO a lead on its competition in quickly supporting the hottest networks, like Solana, Polygon, Optimism, Cosmos, and last but not least Berachain.

Summary

In a nutshell, Degen Vibes is more than just an NFT auction - it's a unique blend of NFT ownership POL, Bond Discount, and yield farming. All bidders receive VIBES tokens, with the ratio of 1000:1 based on the bid submitted. Degen Vibes owners are members of the DAO with one Degen equal to one vote. The DAO governs the treasury and decides the future of Degen Vibes, with a goal to provide NFT ownership with real yield. Members can propose ideas on the Discord forum and vote on proposals through the DAO.

The first three proposals include modernizing the current contracts with Thirdweb deploy, reserving a portion of the treasury for adding liquidity to the VIBES/OHM pair, and incentivizing liquidity through NFT and GVO rewards. The Degen Vibes team is comprised of OG community members who facilitate off-chain processes and work towards realizing the community's vision for Degen Vibes.

Degen Vibes is an NFT auction system that allows for the bidding of a single NFT at a time. In the MVP on Testnet, the auction proceeds are invested in DeFi through the Best Yield vault on Idle Finance to generate yield for Degen owners and distribute rewards among past and future Degen collectors, artists, and the team, as well as the treasury controlled by the DAO.

VIBES tokens are issued to all bidders and the amount of VIBES received is based on the bid submitted. Degen Vibes owners are also members of the DAO, a group that decides the future of Degen Vibes through voting. The community can create proposals for the DAO to vote on, such as updating the technology or using a portion of the treasury for liquidity.

The goal is to stream real yield, generated from protocol-owned liquidity acquired through bonds. The ERC-20 utility token of the protocol rewards liquidity providers through emissions, while veVIBES is the ERC-721 governance token in the form of an NFT.

The protocol's treasury is seen as being "backed" by assets, which can create a price floor for the token and defend its price. However, sustained selling can drain the treasury and reduce the price floor, leading to a negative feedback loop. The biggest risk is a loss of confidence in the project, causing a sustained sell-off and draining the value of the treasury.

GVO aims to acquire as much protocol-owned liquidity (POL) as possible through carefully calculated inflation, generate more revenue and yield on POL, and eventually end inflation.

The goal of Degen Vibes is to provide NFT governance and ownership with real yield. GVO utilizes Guild to create & collaborate with its community. We run a Mirror Magazine which is on-chain and found here: https://mirror.xyz/gvo33.eth

1. Generate POL

2. Provide Real Yield

3. Sustainable Inflation