Flame Heats Up Tezos DeFi With A Decentralized Exchange, Yield Farm & Governance Token Ecosystem
Flame heats up Tezos DeFi with a decentralized exchange, yield farm and a governance token ecosystem. They will launch their ‘Space Farm’ in early June.
Disclaimer: DeFi is high risk and the following article contains no financial advice. It is recommended that thorough research is undertaken on any DeFi/blockchain applications, utilizing multiple sources, before participating with any blockchain projects, or tokens in this space. Read our full disclaimer here.
Important To Note: At the present time the creators of this project have opted to stay anonymous. This can present the need for additional caution in relation to the project.
– Tldr; FlameDeFi will launch their farm “Space Farm” in early June, where users will be able to stake FLAME tokens and eventually several other tokens and liquidity tokens.
The main token will be FLAME, which can be earned through staking. The FLAME presale sold out in under 5 minutes last week. FLAME can currently be traded on Quipuswap.
– Flame DeFi will launch a full DEX in Q3-Q4 this year, where any Tezos-based token can be added and traded. Liquidity providers will be able to earn a percentage of the trading fees.
Additionally, FLAME tokens can be earned by staking liquidity tokens. Any XTZ that is added in liquidity pools will continue to earn XTZ staking rewards.
– Flame DeFi has developed a method where a small percentage of the trading fees will be used to buy back FLAME tokens from the market and burn them to influence scarcity in advantage of FLAME holders.
– FlameDeFi will introduce a governance token called fDAO. This token will be hard to obtain and only 5% of the hard-capped 100,000 fDAO tokens will be available through presale (4% which can only be bought with FLAME) and an airdrop to liquidity providers of FLAME tokens (1%).
Currently, we have two decentralized exchanges (DEX) live on Tezos. The first DEX that went live was Dexter. Dexter was the first use-case for the stable coins and wrapped tokens that were live on Tezos at that point.
It offered some good arbitrage opportunities to traders (still does). The downside was that it only has a few trading pairs due to the fact that only the Dexter team is allowed to add tokens and pairs.
The second DEX to go live was Quipuswap. Quipuswap was a game-changer for Tezos DeFi due to the fact that anyone can add any Tezos-based token to the exchange.
Almost immediately after launch of Quipuswap, several tokens were added for trading and new tokens and DeFi applications started popping up fast. The DeFi space on Tezos is currently growing fast.
Additionally, there have been a few ICO’s/ presales that were trading almost immediately after the tokens were distributed.
The DEX that Flame DeFi will launch is called “FlameDEX”. It will be a complete DEX where anyone can add any Tezos-based token as trading pair, just like is possible on Quipuswap. FlameDEX has two features that are currently missing on both Dexter and Quipuswap. A governance token, and an extra incentive to add liquidity.
Dexter, Quipuswap and Flame Dex are all DEXes with automated market makers(AMM). This means that you can trade the tokens without the need to have a counterparty to buy what you are selling at the moment of your trade.
So, if John wants to sell FLAME tokens for XTZ, there doesn’t need to be an Alice to be there at that very moment to buy that FLAME. AMM smart contracts take care of the trades and calculate the price changes by use of algorithms that are specially designed for this purpose.
But these AMMs can’t function without a certain amount of tokens in a “basket” or a pool. This is called liquidity. Liquidity is needed because although AMM’s can fulfil trades without an immediate counter-party, there need to be tokens that can be exchanged. So, for users to be able to trade, liquidity needs to be added to the liquidity pool of a certain trading pair.
Let’s take the XTZ – FLAME trading pair as an example. Adding liquidity is simple. People add XTZ and FLAME tokens to a smart contract that enables people to trade these tokens on the DEX through the AMM. But with little tokens in a pool, the value fluctuates a lot more compared to when a pool contains a lot of tokens. The more tokens added, the higher the liquidity, which results in a healthier trading pair.
Long story short: a healthy level of liquidity is important for the trading experience that users will have.
Incentives To Add Liquidity
One of the challenges for DEXes is how to incentivize people to add liquidity. There are several incentives that can be provided. People that trade on exchanges pay a small percentage in fees.
Both Dexter and Quipuswap give liquidity providers a share in the transaction fees that traders pay. Additionally, any XTZ that is added to a liquidity pair also earns staking rewards.
Flame DEX offers those same incentives, but adds one more incentive: if you add liquidity to a trading pair on Flame DEX, you receive a token for as long as you continue to provide that liquidity. That token can be staked on the FlameDeFi SpaceFarm and earns FLAME tokens.
Quipuswap also has those tokens, but does not offer a native farm, or token like Flame does. Some projects offer their own tokens that can be earned by staking Quipuswap liquidity tokens. The first project to do so was Salsa DAO. People who add liquidity to the gSAL – XTZ pair can stake GSAL_QPT tokens to earn sDAO tokens on the Salsa DAO farm.
Flame DEX offers this option standard for all liquidity providers and they all will be able to earn FLAME.
*Before you decide to add liquidity anywhere, make sure you fully understand what it entails and what the risks are (including impermanent loss). So, do your own research and use multiple sources. You could get started with the Dexter FAQ section on this subject and this article on impermanent loss.
FLAME token is the main token of the FlameDeFi ecosystem. There was a presale that sold out in under 5 minutes.
Flame token (FLAME)
Initial token supply: 310,000,000 FLAME
Maximum token supply: Unlimited (once farms start) with quarterly burning
Pre-sale: 300,000,000 FLAME*
Team: 10% of the tokens sold*
Airdrop: 10,000,000 FLAME
Smart contract: KT1Wa8yqRBpFCusJWgcQyjhRz7hUQAmFxW7j
Token ID: 0
You can earn FLAME tokens on the FlameDeFi SpaceFarm by staking FLAME, by staking tokens from other projects that have formed a partnership with FlameDeFi, and by staking LP liquidity tokens.
Since FLAME is an uncapped token (unlimited supply – once farms start), to restrain inflation, a certain amount of FLAME tokens will be bought and burned with a percentage of the trading fees.
This is an interesting feature and works as follows: FlameDEX will charge a 0.3% commission on each transaction. Of these, 0.25% goes directly to active liquidity providers, and the remaining 0.05% is converted back to FLAME (via FlameDEX).
90% of the acquired FLAME will be burned, and the remaining 10% will be converted to fDAO (via FlameDEX) and distributed to FlameDEX participants who deposit their FLAME and LP tokens in the locked staking program. So, the higher the trading volume will be on FlameDEX, the more FLAME tokens will be burned.
Immediately after SpaceFarm goes live, FLAME can be staked there to earn more FLAME. And for as long as FlameDEX is not live, liquidity providers of the FLAME – XTZ trading pair on Quipuswap can stake FLAME_QPT liquidity tokens and earn FLAME on SpaceFarm.
It will also be possible to stake fDAO and earn FLAME. Withdrawing staked tokens and profit can be done at any time.
fDAO is the governance token of the FlameDeFi platform.
FlameDAO token (fDAO)*
Initial token supply: 0 fDAO
Maximum token supply: 100,000 fDAO
Pre-sale: 4000 fDAO*
Team: 500 fDAO*
Airdrop: 1000 fDAO
Smart contract: to be provided later
Token ID: 0
fDAO will be hard to obtain and only 5% of the hard-capped 100,000 fDAO tokens will be available in advance. 4% through presale which can only be bought with FLAME tokens.
And 1% through an airdrop to liquidity providers of FLAME tokens on Quipuswap. The fDAO presale will take place shortly after the launch of SpaceFarm.
All the FLAME that is received through the fDAO presale will be burned, reducing the circulating supply of FLAME at that time.
The only disclosed way to obtain fDAO tokens so far is distribution to FlameDEX participants who deposit their FLAME and LP tokens in the locked staking program. They will earn both FLAME and fDAO tokens.
There might be more ways to earn fDAO, but as the founder of FlameDeFi mentioned to me: “I don’t want to reveal all the secrets right now, but I can say that fDAO will be a very rare coin.”
So, Space Farm launches in early June. As mentioned above, people can start farming FLAME tokens and Quipuswap liquidity pool token FLAME_QPT and earn more FLAME.
More tokens to be farmed will be added. fDAO can also be staked on SpaceFarm to earn FLAME
Once FlameDEX is live, all FlameDEX liquidity tokens can be staked on the SpaceFarm too.
Withdrawing staked tokens and profit can be done at any time.
Each token that can be staked on the SpaceFarm shows an indicator that provides info on how to value the FLAME return. “50X” will earn you most, and “1X” will earn you least.
On the current placeholder of the site, you can see “TZ??” tokens. These are tokens of third-party projects that partnered with FlameDeFi and can be staked there to earn FLAME. Which projects they are, will be announced in a later stage.
For more info, follow @FlameDeFi on Twitter.
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