With the rise in popularity of Bitcoin last year followed all other crypto coins that were sold as “the next Bitcoin”. And with alluring 100% (others even 1000%) yields, people rushed in without knowing the volatility of these coins.
And as expected, the classic pump and dump happened, soon as the price inflated, early buyers sold by volumes and moved on to the next coin, leaving the losers behind with useless coins nobody want.
So entered the stablecoins; coins that are pegged to the US dollar with the ratio of 1:1. This allowed people to get off the risky coins and keep the value of their investments when prices are going south.
With stable coins balancing the risk of growth coins, it’s all good now right? Not really. Here’s why, growth coins & stablecoins are on opposite ends of the risk spectrum.
And although it’s true that one of the main ways to protect yourself from volatility is to move your capital into stablecoins, truth is stablecoins depreciate in value every day due to inflation.
“Each year your stablecoin buys you 5–20%+ less stuff than the year before, depending on what you’re buying. So yes, it’s “stable” .. at losing you money every year.”
Image from TempleDAO
What is TempleDAO?
TempleDAO is a DAO (Decentralized Autonomous Organization) whose goal is to minimize volatility while letting you enjoy high returns.
How? By creating an ecosystem that provides perfectly balanced exposure to growth coins in a way that’s beyond simple indexed currency baskets.
Because TempleDAO believes that the volatility of retail defi is not because defi and crypto coins have no intrinsic value but rather a result of shortage and shortcomings of available products and offerings.
And with that, they started working to provide a curated range of sophisticated, automated investment offerings that will allow users to boost their return, manage their risk or both.
And the first of their offering is $TEMPLE, a newly designed, far improved community token.
How is $TEMPLE different from other tokens?
By design, $TEMPLE is different. It has 3 principles that separates it from other tokens.
1. Ecosystem growth benefits $TEMPLE holders.
The 1st principle is simple. The more TempleDAO grows, the more reward $TEMPLE holders will received.
2. Protocol features reduce volatility and reward long term holders.
This is one of a few features that reduce price volatility and reward long term holding. Value is delivered over time to stakers (those who buy and hold $TEMPLE) rather than immediately pumped prices. So you get the same value, without the pump and dump incentive.
And there are 5 mechanisms or features implemented to make this work.
3. $TEMPLE’s intrinsic value always increases and is not diluted away.
Unlike most protocols that deliver yield, TempleDAO’s token minting is limited by value created. The token supply growth is constrained by a collateralization ratio of protocol controlled assets in the Treasury.
In short, the protocol will not dilute stakers by minting coins from thin air and enable predatory sellers to dump on hodlers. Most protocols steal from the believers to give to the day traders. TempleDAO will not.
As you can tell, TempleDAO is aiming to be pump-and-dump proof by reducing volatility and rewarding long term holders.
How does $Temple reduce volatility?
There are 5 mechanisms or features implemented for $TEMPLE to reduce volatility. But it all begins with buying and staking.
There are 2 ways to buy $TEMPLE.
from the Automated Market Maker (AMM)
from the TempleDAO dApp
The difference between the 2 is captured in this table:
Image source from TempleDAO
The main difference between the 2 is Price Impact and where your $ goes.
Buying from an AMM causes price to rise which everyone likes. However, what follows is a race to who can sell first to take advantage of the high price.
In contrast, buying from TempleDAO doesn’t impact the price, so the price is stable and your $ goes to the reserve where it’s deployed immediately to generate yield and grow the protocol.
And growth in protocol reserves mean growth in intrinsic value. How does this benefit you? The answer is Safe Harvest.
1. Safe Harvest
TempleDAO believes that excessive minting of $TEMPLE as rewards or freebies would dilute the value of the token and create a negative feedback loop of endless dumping.
So, to prevent dilution of value they created the Safe Harvest feature where $TEMPLE can only be minted when there is growth in protocol reserves and intrinsic value.
If TempleDAO mints new tokens, this will decrease the intrinsic value and push the price down.
But since TempleDAO strongly opposes diluting the token’s intrinsic value, the $TEMPLE rewards will only be constrained by growth in reserves so you can only expect a positive yield.
As a stakeholder, this means that you won’t get a 1,000% APY inflation yield token that’s about to get dumped. Instead you’re getting a much smaller but safer yield backed by real growth in intrinsic value.
2. Safe Premium
Another feature to stop the AMM pump and dump is Safe Premium a.k.a. price ceiling. The concept is simple, TempleDAO protocol sells $TEMPLE to users at a multiple of 3x - 6x of the intrinsic value.
By selling $TEMPLE at a fixed price, Automated Market Makers won’t be able to top the price of the protocol for 2 reasons.
No one would buy from the AMM because TempleDAO protocol is selling the coin cheaper.
This creates an arbitrage opportunity for people to buy cheap from TempleDAO and sell on the AMM.
And as more people buy from the TempleDAO protocol to take advantage of the price difference, the reserves also grow increasing the intrinsic value and rewards of stakeholders in return.
3. Bonus Rewards
Occasionally, TempleDAO’s Safe Harvest will have accumulated excess rewards. This means that they can offer higher than usual rewards for a limited time. When this happens, the Temple creates a Special Offer: a rare opportunity to earn higher, otherwise unavailable APY.
Image source from TempleDAO
4. Unstake Queue
This is very simple, when you unstake your $TEMPLE or you want to cashout, you enter an orderly queue to exit. Every block only allows a specific amount of $TEMPLE to be unstaked and when this limit is reached you’ll be assigned to the next block.
Additionally, the amount of unstaking allowed per day is capped (currently at 3% per day). This feature is designed to prevent unnecessary runs, reduce volatility and preserve fairness.
5. Temple Defend
A.k.a. price floor – is based on the concept of Buy Low, Stake High.
Temple Defend allows you to sell your staked $TEMPLE back to the TempleDAO protocol for a fixed price should $TEMPLE sell on AMM for too low. This means you can buy $TEMPLE cheaply from Automated Market Makers and sell it to the protocol for profit creating a demand in the AMM and driving the price back up.
Image source from TempleDAO
Conclusion
To sum it all up, TempleDAO aims to encourage long term holding or staking by creating DeFi products that are non-volatile, stable, and pump-and-dump proof. By implementing features that limit rewards & oversupplying, constrain prices, and avoid overruns, they created an environment that allows everyone to earn and profit together.
In their own words,
“This is the Temple of Financial Freedom. We can’t promote new defi technologies if we don’t make everyone rich in the process.”
If you’re interested to learn more about $TEMPLE and TempleDAO, here are some links to their published articles: