DeFi 2.0 is a DeFi application based on the re-innovation of the first generation protocol. Its main purpose is to solve the unsustainable liquidity and make DeFi more sustainable
Recently, the representative project of DeFi 2.0, NodeDAO, announced that it would devote itself to building a DAO-oriented vault to help the investors of funds gain profits, and at the same time provide insurance support services for valuable projects to gain project profits.
Vault is the core of NodeDAO, a DeFi 2.0 repository to deposit various assets such as LPtoken, mainstream assets and stablecoins to gain revenues by investing in farming and supporting valuable projects. Such revenues will be distributed to NED holders by way of DAO governance.
The majority of the relatively popular yield farming projects previously rewarded their holders by issuing additional passes, which inevitably caused massive sell-offs, making it difficult to maintain a stable price and even leading to the premature collapse of the project. In contrast, NodeDAO has abandoned the traditional approach of incremental mining to incentivize liquidity and has adopted the incentive of selling NEDs at a discount to gain liquidity LPs. When the discounted sale of NEDs is enabled, users can purchase project passes at a discount through Liquidity LP. The liquidity LPtoken of the user will be deposited in the vault, increasing the liquidity while avoiding the econnoisseur and profit-taking dumping, thereby ensuring the sustainability of the protocol.
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Better liquidity can boost the confidence of users to continuously participate without the worries of liquidity disappearing due to the exodus of large investors, which is a circumvention of the drawbacks of the early DeFi farming era.
Furthermore, NodeDAO is owned by NED pass holders and is governed in a completely decentralized manner, meanwhile pass holders are responsible for providing the capital for insurance. As the asset maintaining the system, NED passes represent community membership rights, which allows users to purchase insurance, participate in claims assessment, risk assessment by way of pledging (staking) and participate in community governance, etc.
NED is a native pass of the NodeDAO insurance protocol, which can only be minted or destroyed by the protocol, and the holders have the right to vote on new developments and changes to the protocol, NED is backed by a basket of assets in the vault, and every 1 NED is backed by 1 USDT, without being hooked. Since each NED in the vault is backed by at least 1 USDT, when the price of the NED falls below 1 USDT, the protocol will buy back and destroy the NED. NED can always be traded at a price higher than 1 USDT, providing holders with huge space for appreciation, but of course the price of NED is still ultimately determined by the supply and demand of the market. No endorsement, no recommendation and no discussion will be made here.
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DeFi 2.0 Should Improve the Infrastructure Layer and Strengthen the “Decentralized” Feature
The core of DeFi 2.0 is to transform mobility into the infrastructure layer of DeFi, thereby making DeFi more sustainable. Such innovative incentive approach of NodeDAO has brought new thoughts to the sustainability of DeFi 2.0.
In addition, DeFi 2.0 should maintain and reinforce its “decentralized” nature. The founding team of the project has only provided a platform for users and should not have had the initial intention of controlling the platform and the price of the coin. Experience and lessons learnt over the past few years have proven that ICO is a wrong incentive mechanism. DeFi 2.0 should adopt a more reasonable token issuance mechanism, so as to significantly reduce the control of the founding team, provide users with a high degree of autonomy, and fully utilize the governance mechanism of DAO to ensure the orderly advancement of the project. The NodeDAO project is entirely governed by the NED users, with all decisions such as the percentage of fees charged and the determination of the parameters of the insurance pricing model being made by the NED users who vote on the DAO.
DeFi 2.0 itself represents the inevitable evolution of DeFi, and NodeDAO has both the innovative incentives and the “decentralized” features required for the development of DeFi 2.0, which will undoubtedly attract significant attention in the upcoming wave of DeFi 2.0.
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