A Primer on Potions
When it comes to DaaS platforms, sustainability and platform flexibility are often significant areas of weakness. One issue that stands out most is the unsustainable daily reward rate that projects initially launch.
Projects often realize that runway with current rates is unsustainable soon after launch, so they decide to reduce rewards. However, when trying to solve this retroactively by reducing rewards after, rather than before launch, many unintended consequences occur, including incentivizing old holders to cash out, penalizing recent holders who bought in before announcements of reductions are made and increasing the risk of the token price not holding at a floor where the majority of users can break even on a dollar cost basis.
As for flexibility, often, node projects are strict in the type of assets required to create a node, with most offering only the native token and sometimes a stablecoin or lp as options.
These are unsatisfactory.
While lp tokens and USDC bonds can help boost a treasury, alone, they don’t do much to bring value to the native token. Moreover, once the onboarding of new users slows, new money coming into the treasury begins to come to a halt. However, multiple asset types are needed for a truly derisked treasury, and multiple strategies need to be employed to ensure consistent streams of external revenue that bring backing to the token price.
Projects often try to solve the revenue dilemma by using monthly maintenance fees and other internal measures, but this ultimately depends on the willingness of existing users to maintain their nodes — so it still essentially follows a ponzinomic model.
We feel there is a much better approach to solve some of these issues.
Our approach uses yield vaults with active strategies that generate a consistent asset return on asset. These yield vaults are similar to yearns, running unique strategies designed to maximize the yield of deposited assets. These vaults are created by incentivizing users to create different “types” of nodes by contributing to pools of different tokens in specific ratios (in exchange for varying rewards). We then allow users to “combine” these nodes with other types of balancer-pool nodes for even greater rewards, incentivizing the creation of several multi-asset pools, all of which are employed with dedicated strategies in our yield vaults. This is done using balancer pools that users can zap into using USDC. What we are building can best be considered a cross between Strong + Cubo + Balancer. Simply, Potion’s idea is to use native tokens+balancer pools+lp tokens to zap potions into different yield-producing vaults, with gamified elements that encourage exploration of different combinations of assets in the search for maximum yield.
This allows external revenue to be consistently generated by the treasury, independent of internal measures such as fees, and incentivizes users to continue investing in the platform.