*obligatory not financial advice*
What is DarkKnight?
DarkKnight is the sister project of the KnightSwap DEX on the Binance Smart Chain and is also a decentralized exchange but on the Fantom blockchain.
Fantom is a smart contract blockchain with a booming DeFi ecosystem. Because of its name, most dApps there are following a spooky or undead theme and DarkKnight does this too since its basically an evil version of KnightSwap.
The DEX works like most others do, with liquidity pools and an AMM. That means that people can provide their tokens to liquidity pools for the various trading pairs that are then offered to traders in exchange for a trading fee. The prices are set automatically based on the ratio of the two tokens in the pool. Each trade has a trading fee of only 0.2%, which is lower than on most exchanges, 0.17% are going directly to the liquidity providers as incentive and 0.03% are going to the Dark Knight Treasury.
Liquidity providers can also participate in yield farming by staking their share of the liquidity pools to earn the dKNIGHT token. One unique thing about the DEX is that such yield farming rewards for liquidity providers will continue indefinitely, while most other DEXes plan to eventually stop because their tokens have a max supply.
This token can be staked in "Raids" which are special pools of partnered projects that distribute their own tokens to the users of the Dark Knight DEX for free to promote their projects. So far there have been almost 30 different Raids and there are plenty available right now.
DarkKnight is also supporting Initial Undead Offerings (IUOs), which is really just a spooky name for Initial DEX Offerings where developers can sell their new tokens before they even launch on the DEX to raise the needed funds and investors can join a project extra early. So far only the dKNIGHT token itself was sold that way, but other projects can apply for this too.
DarkKnight is a solid exchange with over 6 million dollars’ worth of liquidity. However, there many other DEXes on Fantom that have even more liquidity and handle more transactions like SpookySwap for example.
The dKNIGHT Token
DarkKnight has its own governance token called dKNIGHT. Its holders are able to vote on various changes to the protocol and will have some control over the treasury that receives a share of the trading fees. There is no max supply and the token will keep being distributed to liquidity providers as incentive, this could be a risk for the value of the dKNIGHT token but it could also keep attracting liquidity providers since they will always earn an additional yield.
There was an initial supply of 5 million tokens. 1.2 million were sold in the Initial Undead Offering on the DarkKnight platform and 200K tokens were sold in a private sale, another 1.2 million tokens were used for the initial liquidity of the token and the rest was set aside to build the ecosystem further.
5 new dKNIGHT are minted with each new block on the Fantom blockchain, which means that 432,000 new tokens are created every day. With each new block 0.9 of the new tokens are sent to the developer address, which can be burned in the future to help stabilize the price if needed. Of the remaining new tokens, 75% are going to the liquidity providers and 25% are going to a special pool where holders of dKNIGHT can stake their tokens to receive more. The supply and also the ongoing distribution of the token does give the developers a lot of control, which could be a problem.
The value of the token depends on how much liquidity is in the DarkKnight protocol. If more funds are added and more trading is happening on DarkKnight, there will be more demand for the governance rights. However, there is no max supply and an ongoing inflation which is pushing the price down. That liquidity provider’s will indefinitely keep earning the governance token might be a good thing because they will always have an additional incentive unlike with most DEXes that plan to eventually stop, but the developers are also constantly earning more tokens and they control a lot of the initial supply, which is a risk. The DarkKnight protocol works great so far and is offering plenty of ways of earning cryptocurrencies, but there also plenty of competing projects on Fantom.
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