CORE Meets World
Not So Humble Beginnings
Phase 0, the liquidity gathering stage, is now complete raising >$40m in liquidity, with >$20m of that permanently locked.
This liquidity was provided in the form of investors contributing to liquidity gathering events (LGEs) and in exchange receiving liquidity pool (LP) tokens for the corresponding liquidity pool.
By design, these LP tokens can not be unwrapped back into their native assets, ensuring liquidity will always remain in the pool, whilst also accruing uniswap fees to continuously add to the ever growing liquidity inside the pool.
The Core token itself has an innovative Fee on Transfer (FoT) built into the token, which is paid everytime someone sends/sells Core. These fees are distributed amongst LP stakers, who are the backbone and main beneficiaries of the Core protocol.
Perhaps you may have already heard of Core’s innovative tokenomics, and watched as hundreds of Core copycats have tried to launch, some more successfully than others, but all ultimately failing.
Why did they fail? After gathering the liquidity, they had no plans for what to do next with it. But Core devs do have a plan. A DeFiabolical plan, to completely change the landscape of the current DeFi scene, and put themselves right at the Core of it.
Ambitious
The 2 main devs building this ambitious project go by the pseudonyms 0xRevert and X3. They have hinted at previous experience in Crypto and developing, as well as trading derivatives on Wall Street. Quite the perfect trifecta of experience for building something that hopes to completely shake up the buzzing DeFi space. They have a strong focus on safety, understanding the importance of protecting the millions of dollars locked inside the protocol, and are meticulous yet relentless in shipping new code.
Over the last months Core devs have proven themselves to be completely trustworthy, always putting Core community first, as well as saving hundreds of investors from failed Core copycats when they absorbed 10,000 ETH, and distributed new Core LP tokens so them.
They are quickly amassing a war chest of dev funds, which they aren’t afraid to spend to help further build out the protocol in a timely and safe manner. Several other devs have been brought on board, receiving high salaries for the important work they do. Arcadia (one of the highly reputable auditing firms in the space) has twice been called on to carry out audits, to further ensure the safety of the protocol and put investors minds at ease. In addition to this there is the ever continuing bug bounty program, and soon the new emergency stop feature, which I discuss in further detail later on in this article.
The devs have been working non stop, barely 2 weeks goes by without a major update being released. A solid community base is being built out, highlighted by the fact that a Core fanny pack was once selling for over $6000. They are clearly in this for the long haul, have a long term vision for where Core is going, and I think they have more than earned the trust and patience of the community by the work they have done thus far.
Generating Value
It has been stated by devs that their number one priority is rewarding LP stakers. Whilst Core devs are keen to keep fully detailed plans close to their chest, a wise and understandable move considering the amount of copycats that have already sprung up, they do however share vague plans of where Core is heading. But before we look at where we are going, lets take a second to look at where we are.
Current Value Generation
This is what we know for definite and what is CURRENTLY bringing value.
1) FoT will continue to contribute to APY for LP stakers, meaning the more trading volume Core has, the more rewards stakers accrue. Put simply, volume goes up — rewards go up. Buying or selling, it doesnt matter, Lp stakers are getting paid.
2) Dev’s impressive self made arbitrage suite will continue to bring more rewards to stakers, with these numbers potentially due for a massive increase with the addition of the core/dai pool. To put it simply again, volatility goes up — rewards go up. The more liquidity in the pools, the more profits can be made from arb strategies.
3) $Fanny pool was a huge hit with the community, and the multipliers you could get for locking up or even burning your Core introduced a fun game theory. Although designed as something fun for the community, almost 100 core have been burned forever, as well as thousands more locked up for anywhere between 1 and 12 month. This provides further scarcity of the 10,000 max supply Core token.
4) Price floor. That’s right, a price floor that can never be reached. Because of the extra locked liquidity in the pools, core can NEVER drop to zero. It’s current floor I believe is roughly 2ETH. For a more detailed explanation, please read Goran Karampe’s detailed article here.
Future Growth
Core devs have repeatedly stated that fees from trading volumes will almost become insignificant after Phase 1 and the value that generates. So, what exactly happens next? No one but the devs know for sure, but these are some things that have been mentioned or hinted at by them, as well as my own speculation on how they might perform.
1) Collateralized loans. Cores unique price floor means people can stake their Core tokens and LP tokens, and receive a loan in return at the value of the price floor, with minimal risk of liquidation. This loan is provided from unused liquidity within the LPs. Any interest to be paid on the loans or any liquidation fees should they occur will be distributed to LP stakers.
If you’re holding Core token for the long run, locking it up and taking a near risk free loan makes perfect sense. You will be able to convert your loan into Core LP tokens. The APY generated from staking these will eclipse the loan interest payments, meaning over time your loan can be fully repaid purely from the rewards your LP token generates.
I forecast that because of this, when Core begins to accept other forms of collateral, it will be able to provide lenders with some of the highest, if not the highest, sustainable APY, in the DeFi space.
Also, this could see a big decrease of Core for sale on the market. Afterall, who doesnt want to hold an asset with a forever growing price floor, that they can use to make more money as it sits idly.
2) AMM. Imagine if Uniswap could use and leverage the billions of liquidity it has in its pools. That is what Core is aiming to do. By using the underlying liquidity to provide loans (or any other yield generating strategies that the devs release) you can pay all liquidity providers higher fees, without the need for a forever inflating token. We’ve already seen with Uniswap and Sushiswap that liquidity providers will flock to where they make the best returns. My bet is on Core being that place in the not so distant future.
Right now, the biggest risk to liquidity providers is impermanent loss. Core’s own AMM will be reducing this risk 2 fold. Firstly, highly fees as mentioned above, and secondly the ability to short/long one of the coins in your liquidity pool, to provide an insurance against it.
3) LP AMM. There is already a pool on Balancer for trading LP tokens that sees a lot of activity. Devs have hinted at working a LP swap into the core ecosystem, meaning fees from these trades could soon generate extra rewards for LP stakers.
4)ERC-95. Again Core devs are showing off their ability to innovate with the launch of the ERC-95 token, allowing real time date to be pulled from chain. This opens up countless possibilities in the future, and a potential pathway into the trillion dollar derivatives market. Delve deeper into ERC-95 here.
5) LP futures AMM. As if things weren’t interesting enough already. Of course, not everyone is going to want to lock up liquidity forever to mint fresh LP tokens. This is where the LP futures market comes in. An LP holder can sell their LP tokens rewards for a set amount of time, with the buyer gambling whether they can make more money in rewards over that time period than what they will pay for it.
6) Governance will be introduced. One of my favourite quotes coming from the Devs is that they plan on handing over the keys for the lambo to the kids once its able to drive itself. At this point the community, and specifically the LP holders, will have a say in any changes to Core, but until then we need to give Devs the time and patience they deserve to build out this massive project.
7) The latest news dropped from the Devs is an interesting emergency stop feature that will be implemented soon. This feature will allow Core token holders to pool their Core tokens together if they believe a bug has been spotted. Once the contract has 500 core inside it, the emergency stop button is pressed, and Core grinds to a halt until investigations take place. If the stop is for a valid reason, 10 core is shared between all contributors. To stop users crying wolf, if it is found there is no bugs and no valid reason to call the stop, all 500 Core will never be returned.
As well as what has been mentioned above, I am sure the devs will have many more surprises and innovations in store for the ever growing community. I am sure I am not the only Core supporter who is looking forward with great optimism to see what 2021 and beyond brings for what is, in my opinion, one of the most exciting yet overlooked projects in the space.
For more info on Phase 1 check out this awesome official Core article
