A partner-project of the Hundred Finance platform
Cryptocurrency users have had the ability to purchase HND at a discounted rate in exchange by buying bonds minted by Rome DAO from Solarbeam’s HND-MOVR liquidity tokens on Moonriver. Participation in this program not only allowed the public to acquire a stake in the Hundred Finance protocol at a cheaper-than-market rate, it also assisted the project in overcoming some of the issues that impact DeFi bootstrapping programs more broadly. These include:
- Sell Pressure: Protocol-owned liquidity reduces the impact of mercenary liquidity providers carrying out short-term farming practices. No longer competing solely with other LPs, the sell pressure of these actors is reduced and the ability of a protocol to expand organically increased.
- Impermanent Loss (IL): The success of a protocol inevitably causes price appreciation in its native token, potentially leading to significant impermanent loss for liquidity providers. Protocol-held liquidity shifts IL to the largest holder of the native token, the protocol itself.
- Goal Misalignment between the Protocol and Hodlers: As the protocol acquires more permanently locked liquidity, the liquidity pools can support larger trades and achieve greater price stability when large sells occur. This better incentivizes hodlers as they no longer need to fear the removal of their ability to reduce or exit a position. This better aligns hodlers with the long-term vision of the project, encouraging them to participate in the community and contribute to its growth.
- Lack of Revenue Streams: Every swap transaction in a pool contributes a fee to the liquidity providers. As liquidity is permanently locked in the project treasury, these fees provide a constant source of revenue for the protocol. Furthermore, project-owned liquidity could hypothetically be used to farm in and of itself, generating further income.
Rome DAO is an “official” fork of Olympus DAO, the project behind the issuers of our Arbitrum and Fantom bonds. Similar to OHM, its mission is to become the reserve currency of the Kusama and Polkadot networks. As such, it is deployed on Moonriver, the EVM-compatible layer-one blockchain of Polkadot. At the same time as Rome DAO offers the protocol-owned liquidity mechanism of Olympus, it also emphasizes a gamification of the process under the theme of military campaigns conducted during the Roman era. Stakers commit “soldiers” (capital) to earn the “spoils” (NFTs) of war, while “houses” (community groups) have been set up that focus on particular tasks. This adds a community-focused edge to the project that has allowed it to quickly establish itself as a big player in the DeFi ecosystem of Moonriver.