Mission DeFi - Ep 37: How A Hybrid NFT/DeFi Model with Beautiful Art could change an industry
Primer: Join Brad Nickel as he interviewed 0xNeptune, the Chief Architect of The Idols. This is a hybrid NFT/DeFi project that has very unique initiatives to align the founding team with the community. Find out what the Virtue Circle is and how it works to bring value to the entire ecosystem together with VIRTUE tokens.
Who is Neptune?
Studied computer science but was always interested in finance and tech
After graduation, spent a few years in TradFi doing investment banking and private equity
Got into crypto around 2017 and bought Ethereum before the first bull run
Loved the space and was one of the first to open a MakerDAO vault, also one of the first to get liquidated
Really get into the space around one early 2020 before DeFi summer
Before this, was working in a DeFi fund focusing on various investments and yield farming
Always been interested in NFT and DeFi, so trying to marry these two in a unique way in The Idols
Team Members
Who are the team members?
Friends in real life
Neptune is one of the more outspoken crypto people within his group
The idea and formation stage for the project took close to 7 to 8 months
A lot of them left their jobs to work on this full time, and it had been about 4 months since
Everyone on the team is huge Web3 believers
Wants the Idols to serve as a good example for NFT and DeFi projects
Heavenly waffle - Chief Builder
Heavenly waffle is actually Neptune’s roommate from college
Knew each other for a very long time and he is one of the smartest coders that Neptune knows
Worked in all the top tech firms in Web2.0
Neptune asked him if he was interested to start this NFT project where they could do things a lot differently
Laser bear - Artist
Worked in the industry for over 15 years
Very good at what he does and had worked in a lot of games and books
This is his first NFT project
About Staking
Difficult of staking
Ethereum today is still a proof-of-work blockchain like Bitcoin but will transit to the proof-of-stake model, hopefully in Q2
Will be using the underlying token as a staking node instead of using computations and computing power to secure the network
Can be a difficult and technical process because of the need to:
Maintain hardware
Running Ethereum node software and updating the software constantly
Make sure the system has close to 100% uptime
Need to have 32 Ethereum before you can run your own node
Lido partnership
The Idols partnered with Lido
Lido is the most widely used liquid staking solution in the market
By depositing ETH with Lido, you are delegating to LIDO’s network of proof-of-stake operators
“The Idols is actually partnered with Lido and you know, a little easter egg for you guys - I D O L is actually an anagram for Lido, which is partially where our name comes from.”
- Neptune
Lido has a very intense onboarding process to onboard top of the line operators within the lateral network
By staking with Lido, you let them do the hard work while you just earn the rewards (around 4-5% APR) in the form of stETH
The Idols
Origin Story
Several of the team members are huge NFT fans and had been collecting NFT for some time
Did not like the difference in incentives between the community and the founding team members of some of these projects
Founders will sell NFTs during the mint to raise ETH
In addition, they are also keeping a percentage of the secondary sales charged on every trade
Going to do it differently from these projects - 100% of the ETH raised during the mint events, called The Offering, is going to be staked with Lido and the staking rewards distributed fully to all of the NFT owners
Everything behind the design decision for The Idols is to answer the question of how the founding team can align more fully with the community
“I don't want to call it a misalignment, but there's a difference in exposure and a difference in incentives between the community and the founding team, right? Because, yeah, the founding team is really kind of the ones earning all of the ETH and all of the revenue within the project, while community members are the ones holding these NFTs that should increase in value as the community grows.”
- Neptune
Why the name Idols?
If you look up the dictionary, it stands for something that people worship
All the characters in the NFTs are idols themselves, protecting Ethereum
Also a little play on how people worship the NFT ecosystem
The conceptual idea of Idols at the beginning was along the lines of DeFi gods where the stakers of VIRTUE tokens are like praying to the Idols
Fully Decentralised and Permissionless
The NFT mint event, termed The Offering, is scheduled for launch in Feb 2022
No details of how it is going to be like yet but it is going to have an auction mechanism
Going to have their own little twist to it
Will release a lot more details in the near future
100% of the ETH raised will be deposited to Lido and locked away permanently in the Idols treasury
“One of the cool things about our project is that it's fully self-sustaining on day one. So it doesn't require any centralised input from any entities in order to continue. Once the contracts have been deployed, it's up to the community on where they want to take it.”
- Neptune
Treasury has no multisig and is fully managed by smart contracts
How the stETH is managed and how the rewards are paid is 100% governed by smart contracts
Smart contracts are non-upgradeable
Nobody, including the founders, can withdraw the ETH locked inside
The Idols wanted to be one of the few people who bring DeFi back to its roots with fully decentralised contracts
Brad mentioned that this is important because the concept behind decentralised finance is that once the contract is deployed, it cannot be changed or altered or edited for the benefit of the anyone
There are 10,000 Idols NFTs each with different traits, some more rare than others but all the NFTs will have an equal claim on the staked rewards
The Virtuous Circle and VIRTUE token
Genesis idea of the Virtuous Circle
The idea of having an immutable treasury that was generating yield was always there
The original idea involved a lossless lottery-type concept (like in pooltogether) but the idea evolved to simply distribute staking rewards equally to all NFT owners
This evolution to the Virtuous Circle is much more robust
What is the Virtuous Circle?
VIRTUE token is an ERC-20 token
By staking VIRTUE, you will receive the proportional share of the 7.5% comms charged on each NFT resale
At launch, there will be zero VIRTUE tokens in circulation
To get VIRTUE tokens, you need to bond stETH into the Idols treasury where it will be locked away, similar to the ETH that is raised at The Offering
This increases the Idols treasury, so Idols NFT owners will get more rewards
This means that the NFTs will be worth more so the resales of these will fetch a higher price, which will result in more commissions from the resales and VIRTUE token stakers will earn a higher APY
This increases the demand for VIRTUE tokens, which causes more people to bond stETH into the Idols Treasury, which begins the cycle again
They wanted this mechanism so that either by buying an Idols NFT or by staking VIRTUE, the value of the system increases as a whole
All of these activities will generate more stETH which will secure the network better
Yet at the same time, the rewards will be distributed 100% amongst the community
“I would suspect that a large number of the Idols NFT owners will be staking the stETH rewards they get back in obtaining VIRTUE tokens, right? Because it's essentially a compounding effect of continuing to earn. So hopefully, that increased value just continues to push the dynamic upwards for all components of the system.”
- Brad Nickel
How the team aligns itself with the community
Team Incentives
10% of the total Idols will be reserved for the team and early advisors
Chose to have 100% of their compensation in the exact same tokens that the community has, so everyone is fully aligned
The team is reserving 15 million (15% of total supply) with a vesting schedule that is not linear and time-based like most other projects but based on the success of the project
The 15 million allocation vests along the bonding curve itself
Every time a user bonds their stETH into the treasury, the 15% allocation for the team accrues a little more
The Art
Went through a couple of iterations to get the art style and colours right
Over 100 hand-drawn assets from the artists
In NFT projects, there are a lot of traits that do not work well together and the random generation will make it look awkward, so they tried their best to make every single trait aesthetically compatible with other traits
Goldlist
The whitelist currently is designed so that there is an opportunity to mint NFT at a lower than the public minting price
Incentives are not aligned this way
Still wanted to reward early contributors but in a different way
“You get people who are not necessarily long term supporters of the project, but they just get on the whitelist so that they can mint the NFT at a discount and flip and use the rest of the community as exit liquidity afterwards.”
- Neptune
If you’re on the Goldlist, you are going to receive a proportional share of 1 million tokens that are provided for by the actual founding team
Out of the 15 million allocated for the team, 1 million will be distributed to the Goldlist members and vested along with the same schedule
Being on the Goldlist is equivalent to having founder level exposure of being allocated tokens as opposed to having a discounted mint for the NFTs
How to be in?
The team is looking for committed members who are helping others to learn more about the project
Also, have some contests going on in Discord and Twitter
The selection process is being managed directly by the founding team
Roadmap
Will be focusing on adding more value to the Virtuous circle
The first project will lock away VIRTUE tokens forever in an immutable treasury, but the second project in Q3 will work towards burning the VIRTUE tokens to make them deflationary
All these projects will drive demand for the VIRTUE tokens, which will mean more stETH being bonded into the treasury
Q4 they will work towards the transition to a full DAO
Even at launch, all the contracts of the Idols are fully permissionless and fully decentralized
They wanted to remove themselves from the picture as the community grows and hand the keys over to the DAO directly
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