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deFarm Economy

Treasury and Governance

Governance

The veDEF token is integral to the governance process of deFarm, functioning as the key tool for community-driven decision-making. Holders of veDEF tokens are granted voting rights, enabling them to actively participate in shaping the future of the deFarm platform. This system encourages Token Holders to propose and vote on various aspects of the platform's development and policy changes.

In the governance model for deFarm, the core topics and community topics are structured as follows:

Core Topics

These topics are pivotal to the strategic and operational framework of deFarm and can only be proposed by the founding team. However, they are subject to voting by veDEF holders, ensuring community involvement. The core topics include:

Platform development and upgrades: decisions on significant updates, new feature integrations, and overall improvements to the deFarm platform.

Strategic partnerships and integrations: strategic partnerships and integrations with other platforms, and importantly, extending to other blockchains.

Protocol Fee Adjustments: Any changes to the fee structure within the deFarm ecosystem, such as transaction fees or service charges.

Treasury Fund Usage: Decisions on how the funds in the deFarm Treasury are utilized.

Community Topics

veDEF holders can propose topics mentioned below, called community topics. To submit a proposal, a holder must own an amount of veDEF tokens, ensuring significant investment and interest in the platform. These proposals are then democratically voted on by all veDEF holders. Once a proposal secures majority approval in the voting process, it becomes the responsibility of the deFarm Core Team to execute the decision.

For example:

UI/UX improvements: Suggestions for enhancing the UI/UX on the deFarm platform to make it more intuitive and user-friendly.

Community events and programs: Ideas for organizing events and programs that engage the community.

Feature Requests: Proposals for new features or improvements to existing ones on the deFarm platform

Farming pool creation: Suggestions for creating new farming pools.

Treasury

The deFarm Treasury represents a critical financial foundation within the deFarm ecosystem, serving as a central repository for accumulating and managing the protocol's revenues. Its primary purpose is all-around, designed to ensure the long-term financial stability and growth of the deFarm platform. The Treasury is not merely a store of cash but an active financial tool that covers every aspect of deFarm's operations, development, and strategic expansion.

A contribution to this Treasury is the addition of 98 million $DEF, which will follow a 3-month cliff after the TGE and then be vested over 2 years. This vesting schedule is planned to align with deFarm's long-term financial strategy.

Management

In the initial stages of deFarm's operation, the Treasury is managed by the founding team. This decision is rooted in ensuring a stable and controlled start for the platform, with the team bringing expertise, vision, and a deep understanding of deFarm's strategic goals. The founding team's responsibilities in managing the Treasury include:

Strategic financial planning: Making key decisions on fund allocation and resource management to align with deFarm's short-term and long-term objectives.

Operation: Overseeing the day-to-day financial operations, ensuring that funds are utilized efficiently and effectively.

Risk management: Identifying and mitigating financial risks, including market volatility and operational uncertainties.

Once the protocol achieves sustainable self-management, the management of the deFarm Treasury will be transitioned to our decentralized governance structure. The transition is a fundamental step towards democratizing the platform, handing over the community with decision-making power. The governance system will involve token holders and stakeholders in key financial decisions, reflecting our target of decentralization.

Transparency & Clarity

The deFarm Treasury's wallet address will be publicly available. This transparency allows stakeholders to track treasury transactions and balances, ensuring openness in financial management. The founding team will also provide regular financial reports on the Treasury's activities. These reports will cover details like fund allocations and spending.

Even under the founding team's management, we will engage with the deFarm community for feedback and suggestions regarding the Treasury. This approach not only ensures transparency but also prepares for a future transition to a community-led project.

Business Model

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Sources of funds

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The deFarm Treasury gathers its resources from three essential sources.

Firstly, we have Incentive Programs from our partners, which include rewards from trading activities and the contributions these activities make to the incentive programs of our partnered DEXs.

Secondly, we receive Rebate Fees from our DEX partners. These are based on the trading volume we generate on their platforms and each fee is individually negotiated and agreed upon with these DEX partners. These three streams are pivotal in maintaining a robust and sustainable Treasury, allowing us to continuously innovate and provide value to our users.

Lastly, our Protocol Fees constitute a significant portion of the Treasury's funds. These fees are collected through a few different methods: an Early Exit Fee for those who withdraw their funds before the end of a predetermined period, a Commission Fee from the operations of our farms, and an Admin Fee, which is a part of the management fees.

The Protocol Fees structure within deFarm can be divided into two main categories: fees allocated to Managers and those allocated to the Protocol.

Manager Fees

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Management Fees (Seasonal Farm):

Managers earn an ongoing fee for the administration of the farms, calculated on a per-block basis, which they can mint at any time. The fee is determined by the formula: (Share supply * time interval * fee rate) / 365. This rate varies from 0% to 3%.

Performance Fees:

Managers are also entitled to fees based on the farm's performance. They can mint these fees when the farm's current Assets Under Management (AUM) is higher than at the time of the last minting. The calculation for this fee is: (current AUM - AUM at previous mint) * fee rate / share price, with the rate ranging from 0% to 70%.

Entrance/Exit Fees (Seasonal Farm):

Fees are applied every time an investor deposits (entrance) or redeems (exit) shares. These are calculated as a percentage of the deposit or withdrawal amount and can range up to 1%.

Protocol Fees

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Early Exit Fee

If investors choose to withdraw their funds before the end of a predetermined lock-up period (ranging from 3 to 120 days), they are charged an early exit fee. This fee is taken from their withdrawal amount in shares and varies depending on how early the exit occurs within the lock-up period, with penalties ranging from 2% to 10%.

Protocol Fees

A commission fee of 1% is charged on all vaults, deducted from the underlying assets when the farm is live and before funds are deployed to DEXs.

Admin Fees

An administrative fee of 10% is charged on all manager fees. This is collected in USDC/USDT for Single Farms and in shares for Seasonal Farms.

Farm Creation Fee

deFarm implements a fee of 0.001 ETH for the creation of each farm. This charge is in place to prevent bad actors from spamming the system by creating numerous farms.

Referral Fees from DEXs

While not quantified in the provided information, these are likely fees earned from DEXs for directing trading volume to them.

This fee structure is designed to ensure that Managers are rewarded for their expertise and performance, while also providing revenue to the Protocol for its maintenance and development.

Farm Fees

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Link signer Fee

A $1 fee is charged from each farm’s fund to set up a link signer with Blitz. This fee is necessary for all farms to ensure secure transactions with our DEX partner. It's a one-time fee applied at the farm's creation for linking the farm with Blitz.

Reserve Fee

Each farm is charged a total of $2 as a Reserve Fee. This includes $1 to cover the potential withdrawal fee from Blitz and an additional $1 reserved against any future increase in Blitz's withdrawal fees. These funds are separate from the farm's trading margin. If Blitz's withdrawal fees do not increase, the additional $1 is returned to the farm after closing.

Seed Fees

When buying or selling Seeds, a 10% fee is incurred. Of this fee, 6% is allocated to the Seed Owner, and 4% goes to the deFarm Treasury.

Allocation of funds

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Operating Costs

A reasonable portion of the deFarm Treasury is allocated to cover operational expenses, ensuring the smooth functioning of the platform. This includes payrolls for our team, which is crucial for maintaining a skilled and motivated workforce. Additionally, office expenses such as rent, utilities, and equipment are covered under this allocation.

Development Fund

The development fund in deFarm Treasury is aimed at driving growth and enhancing the platform. A significant portion of this fund is allocated to marketing and promotional activities, which are key for building brand awareness and attracting new users. Another crucial part of this fund is dedicated to product development, ensuring deFarm continues to offer innovative and user-friendly solutions. Additionally, maintaining and updating the platform's technology is a priority, with investments made for regular upgrades. These updates are important for ensuring the platform's security and providing a smooth user experience.

Buyback & Burn

A portion of the Treasury's funds is reserved for a buyback and burn mechanism. This involves periodically buying back deFarm tokens from the market and permanently removing them from circulation. This strategy is intended to manage the token's scarcity and market value, potentially enhancing the token's long-term value.

Reward for stakers

In terms of reward for stakers from the deFarm Treasury, up to 50% of the funds are designated to be distributed back to Token Holders, with a specific focus on veDEF token holders. This substantial allocation reflects a strong commitment to rewarding and incentivizing the long-term support and investment of Token Holders in the platform. By designing this reward model, deFarm aims to acknowledge and reward the loyalty and continued participation of its Token Holders, further strengthening the bond between the platform and its user base.

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