DEFO — Phase 2
DEFO is transitioning to Phase 2 as announced in January.
Return of Token
The first steps is compensating investors with return of the token (ROT), as outlined in our whitepaper.
The ROT is calculated based on how many DEFO tokens you have received, compared to the total DEFO cost (DAI not accounted) of each Yield Gem. As an example, if you have a Diamond Yield Gem that cost 80 DEFO and you have received 50 DEFO thus far, your ROT is 30 DEFO.
This ROT receives a boost if you have boosters (from our 2nd pre-sale). Delta boosters have a 10% increase, and Omega boosters have a 15% increase. This applies per booster/NFT, of the corresponding rewards of that NFT.
You will see your available ROT in the Phase 2 page: https://start.defo.app/p2
Starting on Monday 6th of February at 12 AM UTC 0, you can claim that ROT and then use it in two ways:
- 1) Lock that DEFO in our Vault for Phase 2
- 2) Cash out the ROT for DAI
This simulates the options that you would get even if Phase 1 would continue to operate, but you get all rewards in one batch. It’s not possible to both lock and cash out ROT, you have to pick one.
With the first option, all ROT will be sent to the Vault. It works in the same way as putting rewards into the Vault.
For the second option, the current liquidity pool will be drained. These funds will be available for those that want to exit and not participate in Phase 2. Your personal allocation will depend on how the total ROT for all users and your own personal ROT. The available liquidity will be split accordingly. If you have existing DEFO locked in the Vault, that will still move to Phase 2 even if you cash out ROT.
You have 1 month to choose Option 1 or Option 2 for the ROT claiming. Please make sure that by then you have used your pending rewards in the dApp and you have claimed and used your ROT.
On Monday, 6th March 5 AM UTC 0, a snapshot will be taken, and afterwards the protocol will move on to Phase 2.
Phase 2
It’s important to understand the Yield Gems will not transition to Phase 2, that was never the intent. What will transition to Phase 2 is your Vault Index, which works somewhat independently of the Yield Gems. Although of course, the more Yield Gems you had, the more DEFO you were able to generated and potentially lock up.
A new ERC-721 NFT collection will be created, called DEFO Vault. This NFT collection will represent one’s allocation in the Vault. Your allocation in the Vault is determined by your Vault Index, which is locked DEFO divided by the total DEFO locked across all users. So if you had 50 DEFO locked and in total there is 5000 DEFO, then your Vault Index is 1%.
There will be 4 types of NFTs. Each will represent a certain allocation of DEFO’s Vault:
- Sapphire Value — 0.25%
- Ruby Vault — 1%
- Diamond Vault — 1.5%
- Emerald Vault — 2%
Everyone will be automatically airdropped these NFTs according to their allocation. Starting the highest and going to the lowest to fill their needed allocation. For example, someone with a Vault Index of 3% will get 1 Emerald and 1 Ruby. Someone with 0.5% Vault Index will get 2 Sapphires.
If your Vault allocation is lower than 0.25% to warrant a Sapphire Vault airdrop, then you won’t be airdropped. However, you will be able to claim your corresponding Vault allocation by contacting us directly. This is required to make the Sapphire Vault NFTs still meaningfully valuable. Nevertheless, most people that have locked their DEFO did so with most of their generated rewards, thus very few people will be in this situation.
These NFTs will be tradable on any marketplace, with a royalty fee of 9%. You can sell them at anytime, and the new buyer will now own the corresponding Vault allocation.
Phase 1 investors will later receive an additional NFT, called DEFO Genesis. This NFT serves as label, identifying you as part of the original investors during DEFO’s early funding stage. DEFO Genesis will give you a 5% boost in profit-sharing in 2023, and this bonus decreases by 1% each following year, remaining at 1% forever after the 5th year.
Profit Sharing
The market conditions have improved compared a few months ago. However, it’s still prudent to be conservative. While we are transitioning to Phase 2, this is still not complete, and we don’t plan to redistribute profits until later in the year. Until then, the profits from the Vault will be compounded, as they have been so far.
However, once profit sharing starts, a governance vote will be carried out in order to determine the compounding strategy of the Vault. Four options will be available:
- 40% compounding and 60% profit
- 30% compounding and 70% profit
- 20% compounding and 80% profit
- 10% compounding and 90% profit
This vote will be repeated every 12 months.
The Vault’s profits will have the following allocation:
- 85% investors
- 5% team
- 5% expenses
- 5% donations
The profit distribution will be done automatically. The profits will be sent in DAI to the wallet of each NFT owner.
The distribution will not be done on a fixed schedule, it will be done periodically based on market conditions. We don’t want to be forced to exit positions just to share the profit earlier when it’s not in the interest of generating maximum profit.
We have been about long-term thinking and maximization since day 1, and we will forever remain so.
Investing
Our investing strategy will be dynamic and we will shift as needed to meet market opportunities. However, our investments thus far have been accumulating blue-chips in addition to buying tokens of promising projects. For instance we were early investors in $GMX, $GNS, $DXP, and others. We have several DeFi advisors which help guide the decision process.
So far we have made $13,417 in profit. However, this value will change often based on market performance, and it’s not an indicator of future returns.
Thank you for everyone in trusting our vision, and we’re excited for DEFO’s growth in 2023.
