One startup aims to solve the problems with rebase tokens

Rebase tokens are a kind of cryptocurrency that adjusts their circulating provide in response to cost fluctuation. This may be finished through burning or minting tokens through the community to make sure value stability with out affecting the worth of a person’s holdings.

These tokens exist as a method to keep away from crypto value volatility whereas nonetheless providing the advantages of cryptocurrencies, akin to decentralization and world use. Nevertheless, they’ve a number of key failings.

For one, rebase tokens require lively growth of the protocol’s treasury in an effort to stay worthwhile. This causes some protocols to pursue irresponsible lending fashions, which, whereas worthwhile, incite cascading liquidations when losses compound on market strikes to the draw back. That is terribly unlucky for not solely the overwhelming majority of buyers however for the groups left operating tasks throughout instances of poor market sentiment.

Many of those tasks, constructed on the rebase token philosophy, exist as Fantom-powered Olympus DAO (OHM) forks (right here, fork means “to repeat”). Nevertheless, because the failings of this philosophy proceed to seem, some imagine OHM forks are dying off. One startup, FantOHM DAO, claims the alternative and goals to repair the issues related to rebase tokens of their present state. 

Constructing utility

FantOHM is a decentralized reserve forex protocol primarily based on the Fantom FTM token, with the FantOHM different referred to as FHM. Basically, each FHM token is backed by tokens throughout the FantOHM treasury, which means that FantOHM offered belongings have an intrinsic worth to be primarily based on.

Nevertheless, FantOHM belongings aren’t tied to the precise worth of the FHM token and may recognize or depreciate algorithmically, similar to a typical rebase token. Ideally, this implies FHM would be capable of exist and maintain its worth whereas ignoring volatility. 

Whereas FHM is nice for managing a fluctuation in worth, the asset doesn’t have a lot utility exterior of that. To resolve this, the FantOHM staff designed a stablecoin referred to as USDB. USDB is an asset that’s created each time an FHM token is burned.

Due to USDB, customers can nonetheless have the worth of their belongings held within the FantOHM treasury whereas profiting from the utility provided by USDB. Because the stablecoin is created each time an FHM token is burned, an FHM token is minted each time a USDB token is burned. By offering another forex in USDB, FantOHM DAO is basically giving their platform a enterprise growth arm with its personal funding quite than changing the asset fully. 

Creating one thing new

The FantOHM staff is tough at work constructing its protocol and the USDB token alongside it. They’ve launched the product whereas preserving its core staff of founding members, launched a secondary, cross-chain suitable protocol that has elevated person publicity to the Moonriver community, and are actually launching the USDB stablecoin.

All previous, present, and upcoming adjustments have and will likely be agreed upon by the undertaking DAO, making certain all monetary choices are determined upon by the group. 96% of the DAO’s members are invested anyplace from $1,000-$5,000 into the community, and FantOHM DAO can also be the primary Protocol Owned Liquidity ecosystem to spend money on nonfungible tokens (NFTs) related to the undertaking’s growth.

The staff will proceed to develop its imaginative and prescient over the approaching months alongside assist from its current companions such because the Yoshi Change, the Clandestina Gang, Beets.fi and Liquid Driver.

“In a panorama of infinite sport gamers, FantOHM DAO is the Berkshire Hathaway of its friends,” says a member of the staff. “We spend money on tasks that present deep-value use circumstances for the way forward for cyber safety, income manufacturing, and equitable enterprise account administration.”