Since I wrote my last article about the need for utility in DeFi projects, I’ve been monitoring developments at several of these, as they seem to have woken up to the crucial role that utility plays in the success or failure of their efforts. Today, I’m going to provide a summary of recent events at Titano, which seems to be making a concerted push in developing utility.
As a quick re-cap, Titano is a DeFi protocol paying out a fixed APY of 102,483%. In order to secure this alluring payout, you need to buy and hold the TITANO token, with the resulting rewards being paid out in further TITANO tokens. The protocol earns its income in the form of fees, which it levies on both the purchase and sale of tokens. It resides on the Binance Smart Chain.
Having launched in November 2021, Titano experienced a period of dramatic growth in both token holders and market cap. It still has a lot of token holders (75,000+) but it sadly no longer enjoys such a stellar market cap, having dropped substantially in the past couple of months, and is currently hovering around the $30million mark.
As I’ve discussed previously, I believe the underlying problem a protocol like Titano faces, and the reason for its fall from grace is a lack of utility in the token. You buy some, you make some profits and then what? Er, not a lot really, except you can sell them. And that’s exactly what people started doing. The result, despite regular token burns by the team, was a falling price.
Well, you might ask, can’t this problem be addressed by bringing in more buyers? Well, yes, it could, for a time. But sooner or later the same problem would emerge. Buyers would once again start outstripping sellers and down would go the price.
No, the only real solution here is to give people some other reason to hold or use their tokens. In other words, they need utility. All the better still if, in the process of doing this, you also generate more income for the protocol (increases profits and, potentially, liquidity) and create room for more token burns (reduces selling pressure).
Utility Heading this Way
Now, to be fair to the project team, they did try to offer some limited utility earlier in the year in the shape of their PLAY protocol. Unfortunately, the first attempt suffered at the hands of some bad actors, who hacked PLAY and ran off with some of the loot. Having addressed this, the team relaunched PLAY, which offers token holders the chance to win in a regular prize draw in return for accepting a lower rate of interest on their tokens.
A step up from this, in terms of the token holder’s commitment, is the more recently launched Titano Lottery. With this, you buy a ticket with some of your TITANO for a chance to win big in a regular lottery. In other words, you are spending your tokens, unlike with PLAY, where you keep them but accept a lower interest rate.
Titano has also now partnered with BetSwirl to give TITANO token holders the chance to try their luck at two games, Dice and Coin Toss, where they might win two or three times their stake or lose it altogether.
The eagle-eyed amongst you might have noticed there’s something of a theme emerging here in the form of betting-related activities. I’m not opposed to this sort of thing in principle, but I do hope this isn’t all the team are going to do as they seek to offer token-holders utility, not least of all because it won’t appeal one jot to a good many people.
I will add that the team have also launched their own DEX, Swych, which is a notable development in itself and all the more so as it should drive more income into the treasury by avoiding the need to hand over part of the buy and sell fees to Pancake Swap.
Onwards and Upwards?
This brings us to the question, will all this be enough to revive a project that has been struggling for the last couple of months? It’s definitely a shift in the right direction since these moves do provide some sort of utility for Titano tokens. Likewise, the push to increase the rate of burn should help to reduce selling pressure on the token and the additional income should help with liquidity provision. However, until we can see a solid track record from the new initiatives, which will take time to build up, I will remain sceptical about the impact these moves will have.
Remember too, that every minute the protocol is operating new tokens are being created, so it’s not as if we’re in a situation where the number of tokens is stable. This in itself drives up the need for real utility, otherwise, we face a growing stream of tokens being sold into the market.
So, credit to the team for acknowledging the need for utility and for getting out there and doing something about this. However, we need to see more of this sort of thing being added to the ecosystem and we also need to see a solid and sustainable track record emerge from these new initiatives before we can say they have this one sorted.
Until next time…
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The Usual Disclaimer
Please don’t take any of the above as financial or investment advice. It is intended to be nothing other than a little entertainment and information sharing. Always, but always, do your own research before committing your money to anything.