Greetings Publish0x community, today I want to introduce you to an EOS-chain-based DeFi protocol, Defibox, and its reform plans created by the community members named as ''satellite protocols''. Defibox is the leader DeFi protocol running on EOS-chain. It leads ongoing DeFi implementations to the EOS-chain with over 2000 weekly active users, 40m$ worth TVL, and over 40m $worth 7-day trading volume according to DappRadar data. Defibox has 3 major components: Swap, USN Stablecoin, and the Decentralized Lending Protocol. After a brief introduction, let's start with understanding the basics of Defibox.
What is Defibox, briefly?
Defibox is an AMM-based DEX built on the EOS chain and includes 3 main features; Swap, USN Stablecoin, and Decentralized Lending. On the 21st of July, 2020, Defibox is launched by Defibox Foundation and funded by Newdex, another DEX running on the EOS chain. Lately, the Ethereum and Binance Smart Chain-based DeFi protocols got so much hype but almost all of them have only 1 single feature within them. Oppositely, Defibox composes 3 different features within the same protocol. I will explain all the 3 features separately but please note that the Defibox Foundation was in the driver seat for only a limited time. About 3 weeks after launch, the Defibox governance mechanism has launched on the 12th of August, 2020. So the decentralization way has opened.
According to the WhitePaper of Defibox, we understand that the Defibox Foundation and team have been established for a fair, secure, and successful launch of the project. The Defibox team is the members who are responsible for reaching the core aims of the Defibox Foundation. Nowadays, BOX DAO has been established already. Users can vote to participate in defining the next step of the Defibox protocol but still don't have the right to make a direct proposal into DAO. So, it may be marked as the first problem to reach a decentralized world in EOS-chain.
As a professional one-stop DeFi application platform on EOS and with the mission of improving the efficiency of global value circulation, Defibox uses the power of decentralization to combine the features of DeFi, which is more transparent, fairer and more convenient.
What are the 3 Main Components of Defibox?
Defibox identifies itself the sum of ''Uniswap + MakerDAO + AAVE'' established on EOS-chain. As you can understand from the formula, Defibox provides decentralized trading options to EOS-chain users as well as providing a lending market and issuing a stablecoin. Let's check all the features one-by-one.
1. Automatic Market Maker. Defibox has become the leading DEX on EOS-chain after surpassing its funder Newdex back in 2020. Nowadays, over 125 million dollars have added to separate liquidity pools created on Defibox and over 50 million dollars trading volume surpassed. Trading fees earned from the relevant liquidity pool will be reflected in your EOS account is proportional to the provided liquidity amount.
You can execute a trade of over 500,000$ worth EOS with 1.43% slippage, only. If you compare it Uniswap, it creates 0.92% slippage for a 500,000$ worth ETH swap into USDT. Even though the Uniswap V3 launched for a liquidity optimization method, Defibox provides a more fair price in comparison with its lower liquidity. So, if you compare Uniswap and Defibox AMM, you can put a positive mark for Defibox in terms of TVL/slippage ratio. The fee ratio is as same as Uniswap, 0.3% for each executed swap.
2. USN Stablecoin Minting. In January 2020, Danchor protocol was launched and it's acquired by Defibox. After the acquisition, the Danchor protocol is used to issue a 1 dollar-pegged stablecoin on the EOS chain. After a successful work, USN is created. You can mint USN tokens after EOS staking on Defibox. The lowest amount of staking ratio, or in other terms, the maximum amount of USN created is 150%. On the other hand, you can collateralize as high as 550% to generate USN. For example, at the time of writing, you can generate 18 USN after staking 5 EOS with liquidation price is more than 50% lower than the current EOS/USN ratio. After that, you will enjoy USN minting rewards (I'll explain later) as well as generating income with minted USNs. For more information about how to mint/use USN, please refer to the relevant Defibox guide.
3. Decentralized Lending Market. The decentralized lending market idea is the latest component of Defibox. It is launched on the 27th of March, 2021. Users have the right to deposit 8 different tokens and 7 different LP tokens to lend and earn passive income. On the other hand, borrowers can only take single assets, not the LP tokens. Also, to promote the lending market use, Defibox has implemented the mining rewards into the lending market yesterday. The picture below shows the latest statistics of the lending market ratios.
The BOX DAO and Native Token, $BOX
As I'm trying to say that the Defibox Foundation's role on the project's roadmap is getting less and less exposure. By that way, users gain more power to determine the next wave of improvements. On the 12th of August, 2020, BOX DAO was launched and the first steps of decentralized governance were taken. Up to now, users voted for 26 different proposals and 25 of them have already executed successfully. But BOX DAO is limited to voting, only. In other words, you can't make any proposal directly. As a consequence of that feature, decentralization is not achieved totally.
Users can participate in voting with 2 different mechanisms. First of all, if you stake 1 BOX, it equals 1 voting power in proposals. The other option is adding liquidity to the BOX/EOS pair. Every single BOX added to the EOS/BOX pool will generate 1 voting power for you. Please check the BOX DAO page to get the details. If you have no idea how decentralized governance works and what DAO is, please refer to my previous article about DAOs.
$BOX is the governance token of the Defibox platform. It is created on the EOS chain with a maximum supply of 5 million BOX tokens. It can be obtained through the main swap page or you can generate some BOX tokens as a reward because of using Defibox components. It's named BOX Mining Rewards. If you're a liquidity provider, lender, USN generator, or even you completed a swap on Defibox, you are rewarded with some $BOX tokens. To compare with its competitors, to receive BOX mining rewards you don't have to stake LP tokens or lending money. It always accumulates and you have the right to claim them any time you want.
As I said previously, the $BOX token maximum supply is limited to 5,000,000 units. At the time of writing, more than 35% of the total supply is already in circulation and the remaining almost 65% of the total supply will be unlocked linearly in time. Most importantly, 70% of all issued BOX tokens will go to BOX mining rewards or in other words, more than two-thirds of BOX generated is for the community! The picture below shows and explains how total BOX tokens will be allocated.
How Was 2020 for Defibox and What Comes Next in 2021?
In a 6-month period after launch in mid-summer of 2020, Defibox became the leading DeFi protocol of the EOS chain in terms of Total Value Locked and Daily Transaction Volume. On the 30th of September, Defibox has reached its ATH with over 26 million EOS tokens added to liquidity pools and over 6.6 million EOS worth of transactions in one single day. DIP-13 and DIP-20 lie behind that success. DIP is the name of proposals voted in BOX DAO. DIP-13 has voted on the 13th of September, 2020, and activated. After DIP-13, the total supply of BOX tokens is reduced to 5,000,000 from 1 billion units. With the activation of DIP-20 on the 17th of November, 2020, the staking action and corresponding rewards are deactivated because the staking feature has no positive value for the future of the Defibox protocol. After these 2 confirmations, total liquidity added into Defibox pools has surged to 950,000 EOS from 100,000 EOS worth tokens.
For 2021, Defibox announced a roadmap on its website. According to that, there are 4 separate goals to be reached in 2021. Those are Defibox Eco-Development Foundation, Multi-Chain Exploration, Marketing Operations, and Function Upgrades, respectively. When you go back and check my title for that article, it says ''reforming Defibox protocol with satellite protocols''. As I have explained before, Defibox has 3 main components to function. With satellite protocols, they aim to improve the current status of any of these three components.
Satellites are human-made utility vehicles sent to space from the ground. Thanks to the satellites, we have access to mobile communication, network services, GPS tools and etc... Now please focus on the EOS chain and Defibox to think about how to implement a satellite-like protocol on it. At first, we must state the current problems and after all, we provide solutions for each. I think some of the main problems are 1-asset backed USN minting, not a complete DAO formation, and the need for an oracle to see exact prices different than executed swaps on Defibox. I'll try to show my solutions to these 3 problems but please comment on your solutions/problems you see in the comment section below.
- One-Asset Backed USN Minting. As I said before, you can generate USN by only staking EOS on Defibox. There is no other option! But are you ok with that? I don't think so. And I'm sure that most of you think like me. So we need more options to generate USN. EOS is the native token of the underlying chain so it's useful to generate USN but why BOX token is not added to the list of USN generator tokens? Or there are 2 other platforms that Defibox has announced partnerships with already, Organix and Pizza Finance. These 2 are the concomitant DeFi protocols on the same chain as Defibox runs. Maybe another partnership could be established to promote crypto users as well as bringing some incentives to both protocol users.
- Incomplete BOX DAO. I have introduced the DAO model of Defibox in this article. At the time of writing that article, you have the right to vote ''FOR'' or ''AGAINST''. But you can't write or even edit the underlying text regarding the proposal. So, it results in a loss of interest while participating in DAO discussions. And it may lead to a more centralized world of users. We don't want this! So the most basic solution is completing the DAO either by Defibox and EOS chain specific solutions or using a satellite to bring the existing DAOs into the EOS chain and Defibox. I hope it'll be completed as soon as possible.
The picture below represents the screenshot of the latest proposal voted in BOX DAO. It's written by the Foundation, voted by the community, executed by again the Foundation. 1/3 is not enough!
- An Oracle to See on-Chain Price Data. If you have a wallet, you should experience price differences when you check different exchanges, wallet data, CoinMarketCap, and CoinGecko. It's due to the absence of an oracle. If there is an oracle established on the EOS chain, we will not suffer price differences and potential asset loss. Again an oracle could be created within the underlying chain or a satellite could be created to receive on-chain data from the most liquid markets. It will help users while swapping their tokens.
How to Contribute to Defibox Reforms?
In the 2020 Annual Yearly Report, Defibox announced 5 different activated DAO proposals. Those are named ''reforms''. But again it came from the Foundation, not from the community members! If you want to participate in reforms/improvements/upgrades about Defibox, the available options are as follows:
- Excellent Suggestion: You are not allowed to create a proposal right now but if your idea is well enough, you're rewarded with 150 USN and you'll be represented as ''Contributor''.
- Cooperative Contribution: If you are ready to bring third-party organizations to Defibox for future collaborations, you're again rewarded with 150 USN.
- ''Play DeFi Build Block'' Contest: Share and publish your ideas to different platforms and get a chance to win up to 888 USN rewards.
*This article is created to spread the awareness of Defibox and its features by utilizing my own experiences, the Whitepaper, and the Defibox Blog. None of the words above contain any kind of investment advice! Please DYOR (Do Your Own Research) before investing.*
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