Project Review: DuckDAO

Can this rapidly popular duck change the early investment mechanism?

DuckDAO is a decentralized incubator supported by the community. Its goal is to provide all community users with an opportunity to invest in early encryption projects, so as to provide funding, expertise and marketing support for potential cryptocurrency projects.

The early financing of cryptocurrency projects is only for high net worth investors or venture capital institutions, which has been criticized by community users. Large investors or venture capital institutions are often able to buy tokens in the strategic round, seed round and private round of a project at a price far lower than that after the project token goes online, and then sell their shares to retail investors to easily achieve profits. However, at the same time, it has a certain long-term negative impact on the popularity of the project.

In view of this, DuckDAO, a decentralized incubator, hopes to break the “dead circle” of early investment in high potential encryption projects by providing opportunities for all community users to invest in early encryption projects.

At present, there are 3084 token addresses of DDIM in DuckDAO community, and the token price has increased by more than 700% in the past month. Before learning about DuckDAO’s incubation program and token economics, this paper will first introduce the operation mechanism of DuckDAO and its DeFi market maker, Duck Liquid Pool.

What is DuckDAO?

DuckDAO officially launched its website on July 14, 2020, claiming to be a decentralized incubator supported by the community. Its goal is to provide everyone with an opportunity to invest in early encryption projects, not just for high net worth investors or venture capital institutions, so as to provide funds, expertise and marketing support for potential cryptocurrency projects.

According to the previous AMA activities of DuckDAO, Ken, Lukas and Travis Derek are the three founders of the project, but the official website does not disclose the background of the founders. It is known that DuckDAO’s partners include YouTube encrypted bloggers “Ivan on tech” and Boxming, both of whom have more than 200000 subscribers.

In addition, the exchange partners of DuckDAO include LATOKEN, Bibox, Kucoin, ACDX, Serum and Hotbit.

How does DuckDAO work?

DuckDAO promotes the rapid development of the project by establishing a long-term partnership with the supported encryption projects. The operation mode has the following three levels:

Level 1 (incubation level): cooperate with a project in the initial stage, including marketing, consulting and other services, until the project goes online to an exchange.

Level 2 (strategic level): assist the project in strategic publicity and other activities through social media channels such as twitter and telegram.

Level 3 (general contribution level): DuckDAO manages OTC sales and community requests for project tokens, but does not directly participate in the project.

First of all, DuckDAO will conduct due diligence on whether the project meets the security standards and potential user interests. After the incubation project is successfully launched, DuckDAO will continue to provide marketing and consulting services for it.

The project cooperating with DuckDAO will allocate a certain amount of token quota for DuckDAO users. At present, the only way to join the DuckDAO community is to have the community token DuckDAODime (DDIM).

What are the conditions for joining the DuckDAO community?

DuckDAO will divide the community members into five different levels according to the number of ddim coins held by users. When the minimum threshold is reached, they can join the corresponding DuckDAO community club. The five levels are as follows:

The higher the level, the higher the amount of investment community members can get. However, if a user’s ddim balance is lower than the minimum threshold of his level, it will be automatically eliminated.

It is worth noting that, quite different from other DeFi projects, 10 members of Duck All Star Club will have the right to vote on the unlocking of DDIM reserve, and 6 or more people can get the approval.

At present, there are two ways to obtain DDIM: buying ddim on Uniswap and participating in community activities (such as AMA).

Token economics of community token DDIM

DuckDAO pointed out in the ddim yellow paper released in October 2020 that the total supply of DDIM is 1.5 million:

DDIM Reserve: 500000 pieces
Pre sale: 400000 pieces
Uniswap: 280000 pieces
Airdrop: 200000 pieces
Duck Treasure: 120000 pieces

Of the 120000 allocated to Duck Treasure, 80000 will be awarded to community members who participate in AMA and contribute to Dao; 40000 will be allocated to team members of DuckDAO and will no longer be allocated to team members after that unless they purchase their own tokens.

In addition, the 500000 tokens allocated to DDIM Reserve have been locked, which can only be removed by the DuckDAO team, and can only be decided by the top 10 DDIM holders’ vote (only with the consent of 6 or more), which can be used as the liquidity required by the exchange, the liquidity required by the member incentive, and the liquidity required to adjust the token price.

What is Duck Liquidity Pool？

Duck Liquidity Pool was pioneered by DuckDao, the world’s largest and most popular crowd-backed digital asset incubator. With DuckDaoDime (DDIM), we revolutionised the early stage crypto investment market. Next, we incubated and successfully launched some of the earliest DeFi projects in the space. By incubating Base Protocol, DuckDao re-ignited the elastic supply token market. As DuckDao moved from one step to the next, it became clearer that the yield farming industry and digital asset market making were not currently designed for longer term success of all involved stakeholders. Hence, DuckDao went back to the drawing board and built a DeFi market making solution that also provides a long term passive income to all liquidity providers.

The Duck Liquidity Pool is a DuckDAO DeFi Market Maker protocol that will provide an opportunity for yield farmers to take advantage of the new opportunities with real skin in the game. At the very core of the DLP is the “One-Sided Token Burn” (Unilateral burn) which is counterintuitive at first, because it burns 50% of the earned rewards. However, the high expected APY levels, access to 50% of profits from market making, airdrop of incubated project tokens and customised NFT campaigns can result in compounding of long term passive income. The Duck Liquidity Token’s ticker is $DUCK.

Starting mid 2020 yield farming platforms started their operations with proprietary tokens — and nearly all them lost value because of the massive inflation that happens when high returns are given. This can’t work out in the long term, which is why Duck Liquidity Pool researched and built the revolutionary “Deflationary Farming 2.0”.

One-Side-Burn means that you will lose one side of your liquidity. Yes right, you will never get it back! Why should you still do it then? Because the rewards you get from farming (staking LP tokens) are higher than what you have put into the liquidity after a certain time! Sounds quacky? This is the miracle behind protecting the DUCK token from inflation. Every time when someone leaves the Duck Farm, his provided liquidity gets burned and the supply of the DUCK token gets lower. And not only DUCK token gets burned, also DDIM gets burned in pools like DDIM/ ETH, DDIM/USDT. Same mechanism. It is always the ONE SIDE of the liquidity that gets burned to make the whole DuckDAO token system deflationary. And in the end everybody will profit from this!

At present, there are three open capital pools of duck liquid pool on Uniswap, which are DUCK / ETH, DUCK / DDIM and DDIM /ETH. At the time of writing, 24-hour trading volume of DuckDAO was $552600, with a total lock in value of $6124000.

What are DuckDAO’s incubation projects and portfolio?

DuckDAO’s recent incubation projects include algorithm stable currency Base Protocol, asset exchange agreements Bondly Finance and Poolz, new block chain consensus agreement GEEQ based on honest proof PoH, Defipie Platform integrating loan LaaS, liquidity LPpaaS, pledge SaaS and other services, and social currency platform Fyooz.

Among them, the incubated project Base Protocol token base has made an increase of more than 100 times, and Geeq and Defipie have also made an increase of more than 20 times.

Conclusion

To sum up, DuckDAO provides an investment window for community users in the early financing of the project. In addition, the “One-Sided Token Burn” model adopted by its market maker protocol leads to the fact that duck token is a deflationary token, which has attracted extensive attention of community users. However, although retail investors can avoid becoming “takers” to a certain extent through DuckDAO, the lack of “endorsements” from large venture capital institutions and the uncertainty of the early development stage of the project also deserve attention.

On the other hand, as mentioned above, although DuckDAO claims to be a decentralized incubator, the unlocking proposal of DuckDAO’s DDIM and DUCK Reserve can only be put forward by the DuckDAO team, and whether or not to unlock is only decided by the top ten DDIM holding addresses. This is far higher than the user governance threshold of other DeFi projects in the market, and far from the so-called concept of decentralization.