Behaviors that the Dracula Protocol economically incentivizes

Behaviors that the Dracula Protocol economically incentivizes

By Moma | Long term defi | 4 May 2021


The Dracula Protocol is a powerful tool that every Defi Farmer could find useful in rewarding and strategic ways.

The Dracula Protocol incentivizes all to participate with its core innovations (ie "DONE FOR YOU"):

  • automated harvesting : users no longer have to manually claim their rewards
  • regular harvesting : users need not spend gas per harvest tx
  • ^harvest sold for ETH which earns %APY% : users claim rewards whenever they want to, without missing any compounding.

Consider 3 roles played in a decentralized finance ecosystem: the small fish (or whale) lp farmer, the buy hodl investor, and the cash flow investor.

The small fish LP farmer (bag < 1e7) is incentivized to participate with reduced tx costs, reduced manual effort, and larger yields thanks to compounding. These LP farmers add TVL to the Protocol, driving up the value of the protocol as we will see below. 

The buy hodl investor is incentivized to participate with an undervalued fully diluted market cap of $DRC. Suppose the Protocol attracts 2.5% of TVL from the underlying "victim" protocols, and the mature market cap to TVL ratio is one-to-one. The math shows a 25x from the current market cap:

sum(victim protocol) = $10b TVL

2.5% * $10b TVL = $250m TVL

$250m TVL : 1 :: 1: $250m FDMC

$250m FDMC/$10m current = 25x 

The cash flow investor is incentivized to participate and stake DRC on the Dracula Protocol to enjoy passive income to the tune of 3.75% of protocol revenue. Extending the scenario above, with $250m TVL suppose the average APY across TVL is 15%. The math shows a ~19% passive cash-on-cash annual return on a bag of 10k DRC bought at $0.75:

3.75% * average(APY) * TVL

3.75% * 15% * $250m = ~$1.5m rewards for DRC pool

Suppose Total DRC Staked = 10m tokens

Investor has bag of 10k or .1% of Total DRC Staked

~$1.5m * .1% = $1406 

10k DRC * $0.75 = $7500

$1406/$7500 = 18.75%

The Protocol also offers farmers to claim rewards in DRC token, where the ETH is swapped for DRC on the open market (buy pressure).

The Protocol also boasts sound tokenomics, where the token is neither inflationary nor deflationary.

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In mathematics we trust

Long term defi
Long term defi

Analysis on crypto projects with asymmetric upside. Based on tokenomics, value proposition and user experience.

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