Future Scenarios About PolyCub V2

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PolyCub, the DeFi yield farming application of @leofinance, underwent significant changes yesterday. In this article, I would like to comment on these changes.

What Is Polycub?

When it launched on the Polygon network last March, investors enthusiastically welcomed PolyCub for its innovative features. The most important feature distinguishing PolyCub from other DEFI yield farming applications is its token's decreasing inflation rate. PolyCub offered Hive community members the opportunity to earn returns on the Polygon network on coins such as Hive, HBD, Leo, and SPS.

The staking of Polycubs as xPolycub offered to investors as airdrop and farm returns was one of the central dynamics of the system from the very beginning. The regular increase in the value of xPolyCub compared to Polycub was one of the primary mechanisms supporting the price of Polycub, together with the deflationary effect. With the changes made yesterday, a vexPOLYCUB was added to the equation. Unlike xPolycub, which can be converted to Polycub at any time, vexPOLYCUB includes a 2-year locking period. In return for giving up their liquidity, it provides investors with an additional 20% annual return and three times more voice in voting.

Time Locked Financial Products

Time-locked financial products are not a format that the crypto world is unfamiliar with. To earn staking rewards on proof-of-stake blockchains, it is necessary to lock coins for a certain period. The importance of time-locked mechanisms was not appreciated enough in the DEFI category until recently. Investors could easily navigate platforms and collect rewards without giving up their liquidity. These opportunistic investors, who picked the apples in the low branches when prices went up, did not bother anyone. It became clear that when currencies of DEFI protocols rapidly depreciated and confidence in the category waned, new methods had to be used.

vexPolyCub Pros and Cons

xPolyCub was a mechanism to encourage early investment in Polycub. vexPolycub is a mechanism that rewards loyalty. It ensures that those who invest in the platform have a long-term advantage compared to others. An additional 20% annual return is a serious advantage. In addition, vexPolycub investors will be three times more effective in voting on the platform.

On the other hand, two years is quite a long time. It is necessary to evaluate whether the incentives given to give up liquidity are sufficient. It seems possible to make positive or negative comments on the subject when viewed individually. vexPolyCub investors will be deprived of the opportunity to realize their profits in case of a significant upward price movement. On the other hand, in an environment where the annual staking return of many cryptocurrencies is between 5% and 10%, the 20% return is desirable. Moreover, with this additional return, vexPolycub's total annual return is 86%.

The benefits of investing in vexPolycub become more evident from a community perspective. When a community invests in a particular cryptocurrency with the logic of HODL, it supports the value of that cryptocurrency. This devotion to the supported cryptocurrency causes other investors to show interest. Thus, a favorable price dynamic is formed. It would be a simple approach to describe this situation as a pyramid scheme because the growth of the volume of a platform makes a significant contribution to the brand value. When a certain critical size threshold is exceeded, outsiders show interest in the platform. If there is no needless outflow of funds, that means having the protocol-owned liquidity to grow and having ample budgets to develop new talent. As the old saying goes, money attracts money.

On the other hand, acting in the community's common interest is not easy. When things go wrong or the prize snowballs, each individual begins to act in their interest. Fortunately, it is possible to create incentive mechanisms in accordance with game theory in crypto-based financial systems. Community members who stick their money in Polycub for longer will earn greater returns, and their votes will be more influential in determining the system's future.

Although it has not been even 24 hours since vexPolycub was announced, 290k worth of Polycub has been invested in this system. As the amount of Polycub in this pool increases, the amount of xPolycub that is liquid will decrease.

Conclusion

The Bitcoin-based price of Polycub in the last three months shows that the platform has achieved a sustainable structure. xPolyCub investors like myself have made it relatively profitably through this challenging period of the crypto market.

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I believe that features like vexPOLYCUB and Governance UI that come with Polycub V2 will add new momentum to the platform. In the light of the above considerations, I am planning to convert some of my xPolyCubs to vexPolycub.

You can access the Leo Finance announcement about Polycub V2 via this link.

PolyCub caused excitement when it first went live in March. Thanks to the improvements made, it remains an innovative platform today—many investment alternatives on the platform appeal to investors with different risk and maturity preferences. Polycub inflation, which has fallen to one-eighth from baseline, will drop to a marginal level in a few months. With the latest changes, we will see the effects of the decrease in Polycub emissions on the price over time.

I may have biased views due to my investment in PolyCub. Please do your own research.

Thank you for reading.

Posted Using LeoFinance Beta



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8 comments
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I staked all my xPolyCUB on vexPolyCUB for 2 years. Though even 3 months can be too long for crypto ecosystem, I wanted to grow my governance power & 86% APY for a year sounds great return of investment even if it is locked.

The deflationary nature of the token has started to yield a positive return between $0.13 - $0.20 pCUB. While Polygon Network is getting more value, having a solid crypto project to host millions of dollars worth of liquidity is crucial! I believe there are strong narratives that push investors to play long-term 😎

Posted Using LeoFinance Beta

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(Edited)

It is a bold move. I am hesitant as two years is a long time.

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vexPolyCub investors will be deprived of the opportunity to realize their profits in case of a significant upward price movement.

This is absolutely true, giving up the ability to take advantage of price is something, but at 86% APY I think one would have to consider the total percentage per year against how much they're likely to gain should there be a rise in price.

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The world of DeFi is changing so much, there certainly is risk. However, this is where trust comes in. What is the belief in a project.

Most crypto projects have the half life of a gnat. So it is something to consider when locking up one's assets for that long.

To me, I went ahead and added believing the additional payoff is worth it.

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It is another experiment I am curious about the results. It will be a pleasure to watch how things enroll.

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