Most DEFI platforms incentivize user for locking their assets. Most DEFI protocols allow users to borrow against their collateral, however borrowing APY can be very high and if a user lends a stable coin versus a variable asset, he’s at risk of liquidation risk, so he has to constantly check the health factor. This concept encourages users to lock their assets and discourages micro transactions.
Fluidity aims to solve this problem by allowing users to convert their assets to their “fluid” counterpart. Fluidity protocol automatically invests the native assets in DEFI apps like Compound or Solend. Assets can also be used in in yield generating strategies. When a fluid asset is converted back to the native asset, the latter is removed from the defi protocols.
To encourage transactions, fluidity distributes the rewards when a user uses fluid assets. A random factor in calculating the reward is added to incentivize users while protection mechanisms are in place to prevent transaction spamming.
Project outlook
The basic concept is good, however it might be too abstract for the average user. We can see the layers of smart contract risks is piling up since fluidity uses other protocols for yield generation. There’s also a risk of loss in defi investing strategies which might depeg the ratio of 1:1 of fluid assets. A full review of how the native assets are lent out should be done if you plan to convert a sizeable amount. You can review the full documentation.
The project is audited and for now, there’s still a lot of centralization. The centralization is mostly at the level of the defi protocol configuration, large rewards are reviewed before distribution. So the project is still very dependent on the team. This helps to stabilize the project as it moves towards decentralization.
Airdrop potential
The governance token of fluidity FLY is already issued. It is mostly used as a governance token, but it is planned to be used as a utility token. For now it can be staked and used in vaults. The FLY token was dropped in 2 “waves” and a 3rd “wave” is currently ongoing.
You can earn “loot bottles” convertible to FLY token for the next 74 days by staking FLY and you can earn a multiplier by transacting FLY and FUSDC on selected platforms like jumper.exchange
You can check their airdrop campaign and don’t forget to do your own research before jumping on board.
Layer3 offers unique interactive experiences that help users discover new blockchain protocols and earn via perpetual incentives. By completing quests, users get the chance to interact with new token less protocols and get the chance to be eligible for future airdrops while building their online identities.
For new projects, Layer3 offers an engaging platform where they can build their communities, drive adoption and network growth. Layer3 has many solid competitors, however it distinguishes itself with smaller easy to complete quests.
Layer3 and Mercle both have hinted that they are aiming for a decentralized model that is user owned. This means that a potential airdrop is possible. For layer3, to be eligible, you will have to complete at least 100 quests that offer a CUBE NFT. Each cube costs around 0.25$ excluding network fees. To complete each quest, you will have to complete some tasks on different platforms, provide liquidity, do some bridging, some swapping, etc…
Each quest will have a cost and a small capital will be needed. On average, you should expect to burn between 100 to 200$, so you will have to do your own research and see if it’s worth it to embark on this journey. As of today, there’s 18 days left for season 1. It’s important to note that the first 100 cube will get you eligible for season 1, so you will have to expect more seasons to follow. Once the 100 cubes are collected, you will get the following message:
Comparison
What would a future token be worth? It’s impossible to predict, but let’s compare with Galxe which already have a token:
Users: 17M users for Galxe versus 1.1M for Layer3
Layer3 has over 49M quest completion, while Galxe has over 73k campaigns launched by 5k different brands.
We can see that Galxe is more advanced than layer3 and it offers more products such as a galxe passport for sybil protection.
Presently Galxe’s token is worth 4.32$. It is up from the 1$ range during the bear market. It has 200M total supply with 50% of the tokens already in circulation. The market cap is around 0.5b with a diluted market cap of 0.86b.
While it is not clear what is the net revenue of Layer3 or Galxe, so the token price is based solely on speculation. However GAL token is used for the following:
Governance token
Paying for application module fee
Paying for Galxe oracle engine and credential API
Curating Digital credentials
We can see that the GAL token is not simply a governance token, but is also a utility token used to pay for Galxe core services. This could drive the price up when Galxe services are in high demand. So the platform adoption is directly correlated with the token price.
Most of the protocol fee will go to credential curators and the rest goes to All the protocol fees go to the Galxe Community treasury. It would be interesting if a portion of the fees goes to the GAL token holders.
By comparing Layer3 to Galxe, Layer3 will have a smaller market cap and the value of its potential future token will depend on the utility it will have within the ecosystem and what benefits it will have for token holders.
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