With total value locked in the staking economy at around 22 billion dollars and growing at an astronomical rate, this is a moment in history akin to the great gold rush.
Decentralised Finance, the hottest sector of all, has what is approaching 9 billion ‘total value locked’ in the ecosystem, and even mindful of the soaring fees on the Ethereum blockchain this figure should continue to grow.
However, all is not wine and roses given that all these defi projects and their staking pools and rewards are in essence after ‘the same dollar’. When such a high percentage of staking is now ‘locked’, how much is left for the Defi projects to fight over?
The RAMP DEFI solution
Rather than concentrating on competing with the glut of Defi projects out there who are looking to attract new staking by offering ever more complex solutions, RAMP DEFI is eyeing up the huge value staked on blockchains that are outside of the Defi sector.
It seeks to ‘unlock’ the 22 billion dollars that are staked on these other blockchains — especially the Proof of Stake blockchains, which will enable it to start accumulating a ‘total value unlocked’.
So how does this work?
If you are in a staking program on a supported blockchain then you can delegate your assets into the RAMP DEFI delegation smart contracts. RAMP DEFI will then collateralise them into stable coins that can be used within the native blockchain ecosystem. What happens then is that you are able to wrap your tokens and bring them over to the Ethereum ecosystem.
So, for example you could create an Elrond or IOST USD stable coin that can be moved between blockchains. You can add these tokens into the RAMP DEFI smart contract and still receive your native staking yield plus retain ownership of your tokens. You could then port over the stable tokens to the Ethereum ecosystem to stake them there, and on top of that be incentivised to do so by receiving RAMP tokens (called yield stacking).
RAMP will also have a universal interest pool where staked RAMP tokens will give the holder yield (yield on yield on yield).
RAMP token use cases
Some of the use cases for tokens in Defi are tenuous to say the least; a charge that could never be levied at the RAMP token. Firstly, it is a governance token that the RAMP community can use to help decide the direction of the project.
Secondly, the token is used for yield farming. What RAMP DEFI have done with the token is build a participation driven model. Therefore, if you mint a stable coin you farm RAMP. If you take part in lending and borrowing you are farming RAMP. In this way the activities that drive the farming of RAMP fully incentivise users to participate in the RAMP ecosystem.
Thirdly, holders of RAMP are incentivised to farm efficiently. The more RAMP tokens held; the higher will be the farming efficiency. Holders who participate the most will receive the most tokens.
All the staking rewards and all the interest generated go into the shared interest pool which releases value to the RAMP token holders. All this activity that needs the RAMP token proves that there is a valuable business model behind it.
Security and safeguards
Obviously, security is an overriding factor when it comes to smart contracts and past history tells us that various Defi projects have gone for speed to market rather than making sure that their smart contracts are robust enough and free of vulnerabilities.
RAMP DEFI make security a real key focus and therefore have gone with ‘Blockchain Foundations’ for their coding solutions and contract audits. Only once the proper amount of rigour has gone into making sure their smart contracts are bomb proof will they be released for widespread use.
Collateralisation and liquidation are important safeguards to get right. If collateralisation is too low then there is a higher chance of assets being liquidated so the collateralisation ratio here is vital.
There is also a mechanism whereby liquidators can come and provide the ‘off take’ in a scenario where there is a significant drop in an asset’s value. Only in the case of a price drop of more than 24 hours would a liquidation occur and that would be OTC in order to avoid a domino effect happening to other assets.
The RAMP DEFI lightweight, cross chain solution of wrapping stable coins and bridging them to the Ethereum blockchain is being developed under a common stable coin standard which would work for all collateralisation and liquidation activities across all blockchains. This would mean that all risk could be spread across a whole portfolio of assets rather than on any one particular point of failure.
Investment profile and the future
RAMP DEFI raised just over a million dollars in their private sale, a relatively modest total when you look at what they aim to provide. Investors from the VC world include Alameda Research, Arrington (XRP) Capital, ParaFi Capital, Blockwater Capital, Signum Capital, Torchlight Ventures and others.
Several partnerships are now signed and others are on the way. IOST and Elrond will be the first 2 blockchains to be used and Nuls is now partnered and also ready to take part. The RAMP delegation contract is just about ready and therefore the RAMP platform should launch very soon along with the announcement on the public sale.
The Defi space is innovating at a fantastic rate and hardly a day goes by when yet another defi project integrates a technology or implements a use case that gets investors to sit up and take notice. Well RAMP DEFI isn’t going to just get investors to sit up and take notice — it hopes to turn the defi space on its head!
A project that succeeds in unlocking the vast amount of value on blockchains outside of the Defi space is going to receive a lot of attention. If RAMP DEFI does indeed manage to bring the $22 million value staked on other blockchains over to Ethereum then a second major Defi boom certainly isn’t out of the question.