NFTs have been a stupidly huge success, not only because of communities around them but also the potential behind real world use-cases (football game tickets etc), yet the market is actually sorely lacking anything of the sort. Currently projects have been trying to add value to their collections via mass airdrops, however if your jpeg is worth nothing, 2 jpegs are also worth… nothing. It’s why some such as myself consider NFTs to be “longs on leverage”, as low liquidity can result in some disgusting price increases overnight and whales/influencers to easily push floors up/down at will.
I do believe NFTs have a future, yet the only project I’ve seen thus far with a genuinely interesting usecase is Parallel (a experimental trading card game in development). However I stumbled upon another project recently that intrigued me the more I read about it.
StakeDAO
I’ve been aware of this project since it launched, but I never bothered to check it out. Essentially it is an options-based protocol akin to Ribbon Finance or Dopex.io, with strategies to leverage premiums in-house to create a yield. We’ve all done the degen farming before, but farming tokens to dump isn’t really want most people want when they think of crypto passive income. YFI definitely led the charge in this department, but I believe simplified options strategies are the dark horse of yield in this market, generating 20%+ APY (beating most passive yield LP protocols) yet still being a sustainable market structure that can carry itself into the future.
So anyway onto SDT…
Although I am bullish on the entire project, the Premium strategies they offer is by far the most simple yet ingenious closed-loop system I’ve seen so far that generates stable yield yet utilises NFT potential. So currently there is only one strategy, the Avalanche Arbitrage strat, which requires a Tamiel/Leviathan NFT in order to stake SDT (their token) and gain yield. There is also a max allocation for the avaxarb pool depending on the rarity of said NFT.
So in summary this system:
- Pays you out in sdFRAX3CRV-f (USD auto-locked in their frax vault earning 26% APY at time of writing), so your rewards will accrue until you withdraw removing any excess gas costs
- Gives the NFT a natural intrinsic value (access to 75% APR vault)
- Enables NFT investors to simply invest in StakeDAOs collection (only 100/10/1 commons/rares/uniques respectively for each card)
- You have FULL exposure to SDT price while its in the vault, which on a 60mil mcap coin ensures you make profits on the project if it gets bigger, whilst also protecting you from downside with the USD payouts. This essentially acts as a soft impermanent loss.
- SDT goes up > Yield goes down percent-wise, but capital increases value significantly
- SDT goes down > Yield is static which greatly softens capital loss
The real x-factor about this is that the NFTs are just that, NFTs. There’s no crazy curve annotations and percentages to calculate for working out potential yield, most users want stuff that’s simple and works, and StakeDAO’s system means their cards essentially act as VIP passes. Or in reference to the title, it’s a layman’s proof-of-guaranteed-yield. There’s also other NFTs that give APR bonuses to existing strategies for those technical farmers out there.
The intrinsic value part of the NFTs is likely deliberate, as their approach of access and not airdrops/trading platform fees ensures that the NFTs are not considered as potential securities in the future (way too many SOL nfts took this route out of desperation). To give my 2 cents, this method very much reminds me of OHM’s value-backed tokenomics but in the version of an NFT. As far as I know all NFTs are building on hype, communities and while all that is fun and engaging, it’s a millionaire’s game of musical chairs that could stop at any moment. Hence, StakeDAO is really pushing the envelope on creating new ways to ensure exclusivity, create value and to still tap into the fun of owning a dope card with some sick mythology art on it.
