MANTRA DAO is building a one-stop-shop for all things DeFi with true decentralization at its core through community-governance. Harnessing the highly secure and scalable RioChain, a substrate-based blockchain in the Polkadot network, MANTRA DAO aims to release a whole ecosystem of financial products. Here's how they plan to capture the limitless decentralized finance market.
1. Borrowing & Lending
In the next few days Polkadot will enable transfers of DOTs to be freely traded between wallets. This is the start of Polkadot ‘going live’ as it begins its journey to become the ecosystem of choice for those frustrated with ‘clogged chains’ like Ethereum. MANTRA DAO’s plan is to build bridges between Ethereum and Polkadot so assets with deep liquidity on Ethereum can be used to earn interest for those on Polkadot. These bridges will tap into reliable, high interest yielding platforms like Compound. In MANTRA DAOs phase 2, they will be tapping into more lending platforms across multiple protocols, giving their users easy access to the highest interest rates. Phase 3 we will see MANTRA DAO develop their own stablecoin based on cross-chain collateralized assets. This is especially lucrative as it lets people leverage their holdings without losing exposure to the underlying asset.
This is a novel way to reward users based on acting in good faith and reward them with reputation points called Karma. Here are some of the ways you can accrue Karma.
Voting on proposals
Voting on a proposal that passes
Opening a loan
Paying back a loan in full on time
The full list of ways to earn Karma are shown in the table below:
Now that we know how to earn Karma, the table below shows what we can do with it. Pay careful attention to the columns of “Min # of OM staked” and “# of MANTRA POOL Entries”, as we will talk about those next.
3. MantraDAOs Mantra Pool
This is an interesting way to bootstrap their platform with users. It is based on the MANTRA DAO Foundation putting their money where their mouth is and using the platform to earn interest on their holdings. Each week 25% of the interest earned from the Foundation is redirected back to MANTRA DAO users in the Mantra Pool. Earning tickets to Mantra Pool is possible by performing the following actions
1 burned OM = 1 Mantra Pool ticket
Karma Tier = X Mantra Pool tickets based on your ‘Min # of OM staked’ and ‘# of
MANTRA POOL Entries’
4. DAO (Decentralized Autonomous Organizations)
Let’s talk about Decentralized Autonomous Organizations or DAOs for short. These DAOs in their basic form, are a group of token holders with voting rights to make changes to the protocol. Outside of crypto, voting is typically not a wildly new idea or something to get excited about. However, to get an idea of the power of the DAOs we will use Bitcoin as an example. In our following scenario we will imagine that Bitcoin is governed by a DAO in which 1 BTC equals 1 vote in the DAO and all users are allowed 1 vote per BTC per proposal. Users could propose that the block halving schedule be changed from every 4 years to every 2 years. If this proposal passed, we suspect it would create a supply side crunch, in which the price of bitcoin would go up. There are endless possibilities that arise just from tweaks to the emission schedule, which helps to illustrate the power of DAOs.
As currently proposed MANTRA DAOs voting system will be set to 1 staked OM equals 1 vote and token holders will have the ability to vote and make the following changes to the system:
Adding new assets for staking
Adding new assets for lending
Using treasury funds to give grants to worthy projects
Modifying the current interest rates for staking and lending
Polkadot and its chains are built around cross chain interoperability and the same is true of the substrate chain that MANTRA DAO is building on called RioChain. While details are scarce, from the information available it seems that staking could be lucrative for all involved in the process. Here's an example of why Staking through MANTRA DAO may be advantageous to native staking: Let us assume that borrowing XTZ through MANTRA DAOs borrowing platform has an interest rate of 3% but staking XTZ has an interest rate of 5%. With MANTRA DAO, you can quickly borrow XTZ and then start staking and earning those XTZ rewards from staking! You might be wondering, why would anybody lend out XTZ for 3% interest when they could earn 5% by staking? There are 2 reasons.
It is a short term way to earn interest on a coin you plan to flip in a few days or weeks.
For those risk-averse who want stable interest rates without worrying about trying to find a reliable validator.
6. Mantra Upside, putting it all together
There is no other single project that is doing as much as MANTRA DAO in the Polkadot ecosystem, with their first movers advantage in borrowing, lending and staking. These 3 are the future pillars of sustainable long term revenue to the token holders. The quickest way to illustrate that point, is to look at the equivalents on Ethereum as reference points. Please note, that the previous Staking pillar does not exist on Ethereum and while subjective, we will use Kyber (KNC) as our reference point for staking.
Maker (MKR) = $613m market cap
AAVE (LEND) = $782m market cap
Kyber (KNC) = $344m market cap
Combined market cap = $1.739b
In our view, even if MANTRA DAO somehow failed to capture 2 out of those 3 pillars, its market cap (price) should still be around 800% of its evaluation today after 2 years. For us, what really drives the value proposition for this coin is the broad market share the project will encapsulate, in arguably the hottest niche blockchain technology has seen to date.