Decentralized finance (DeFi), or open finance is more like a movement, a concept than a specific (tangible) thing. It’s an acknowledgement from the community and an expression of confidence that the traditional finance system is irreversible broken.
Technically, DeFi is term that describes a collection of blockchain-based, intermediary-free solutions reshaping banking—including lending, and the financial industry. Implementation has seen the delivery of financial services being 10X than those delivered by traditional firms.
Diverging from the intermediation and resolution of conflicts dictated by legal proceedings and high fees, DeFi settlement layer is code.
Since code is law, transactions are pre-determined and results are specifically dependent on the terms laid out by a guiding smart contract.
By porting financial services to a transparent blockchain—most of which are based in Ethereum, DeFi has democratized access to financial services enabling coin owners to borrow against their holdings or earn above rate interest rates by lending coins/stablecoins to those in need.
What is the DeFi Money Market (DMM)?
With over $1.6 billion worth of ETH locked by DeFi dApps, one promising platform that has been gaining traction over the last few months is the DeFi Money Market (DMM).
Through the platform, a registered user and owner of ETH or stable coins like USDC or DAI can earn annual yields of 6.25 percent.
Interestingly, the DMM market is backed by tokenized real-world assets which generate income greater than interest owed meaning there is baked-in over-collaterization independent on the performance and volatility of the deposited coin.
The one-year collateralization is 183 percent, and the value of all active assets stand at $8,792,879 at the time of writing.
DMM differentiates itself by using deposited assets (ETH, DAI, and USDC) to purchase interest generating real-world assets which are subsequently tokenized and posted on the transparent Ethereum ledger tracked by Chainlink’s oracles.
This way, users can track the asset’s performance and carry out different analysis should any form of audit be needed. Interest earned is then recycled back to the DMM DAO ecosystem where DMG can be swapped for ETH/DAI/USDC inclusive of accrued interest.
Notably, the introduction of a delegated payments on the Ethereum network means fees are payable in DMM mTokens, not ETH. Over time, and as recently observed, it has been increasingly expensive (exceeding Bitcoin) to post transactions or execute smart contracts via the Ethereum platform.
This arrangement is, therefore, a welcomed relief for traders and investors seeking value by lowering fees while still being secured by a trusted and one of the most decentralized Proof-of-Work-powered blockchain platform.
Some key drawers of DMM include:
- Stability: While the crypto world is known for its wild volatility, DMM yields are stable. This is because DMM assets are backed by tokenized income generating real-world assets effectively creating a bridge linking traditional finance with the crypto world. For savvy investors, the prospect of stability should be the main drawer since it allows him/her to make decisions and based on this prediction—based on stability, earned yield can be used to supplement income.
- There is an element of trust since there is stability due to the linking of yields to the performance of DMM assets which generate income. Most importantly, these assets are tokenized meaning they are transparently viewable from a distributed layer.
- There is over-collaterization since income generated by backing real-world assets are usually more than the projected, stable annual yields. Besides, the value of these assets (ETH, USDC, and DAI) are usually higher than the amount of issued ERC-20 compliant DMM mTokens.
- The DMM Foundation’s partnership with Chainlink—a decentralized blockchain-agnostic oracles platform. The deal adds another layer of security to the ecosystem by writing essential on-chain that details the overall health status of DMM. As per their whitepaper, the goal of Chainlink is to “reliably and securely take information on the assets that back the DMM Ecosystem, and publicize them on-chain.” This way “Chainlink will accurately and transparently portray the health and collateralization of the DMM ecosystem as well as inject the necessary information for ecosystem participants to know how their crypto is being allocated to generate interest.”
- There is flexibility as interest earned by a DMM holder is accumulated per block. As such a holder can enter and exit the DMMA with no time restrictions.
Behind the DMM Foundation is a seasoned team of experts drawn from academia, Legal and regulatory, compliance, Fintech, and DeFi.
Gregory Keough is a seasoned global executive and entrepreneur with 25+ years’ global experience and impressive track record of digital innovation in both large enterprises (MasterCard, Telefonica, and others) as well as startups. He is the CEO and Founder.
Derek Acree has over 20 years of experience in corporate and business law. He also has extensive experience in mergers and acquisitions and joint ventures in a broad range of industry sectors, in both cross-border and domestic transactions.
Corey Caplan is an experienced entrepreneur with a demonstrated history of working in the software-as-a-service, consulting, and cryptocurrency industries.
Others include: Adam Knuckey, Zachary Rynes, and advisor Matthew Finestone.
Early investors of DMM include legendary investor, one of the early adopters of Bitcoin, and seasoned VC, Tim Draper. Others are Stephen McKeon, Alon Goren, and Josef Holm.
DMM has partnered with Huobi, Chainlink, Draper Venture Network, Coinbase, Binance-backed Trust Wallet, Loopring, just to name a few.
DMG Tokenomics and Distribution
DMG is an Ethereum-based ERC-20 compliant utility token and a fork of Compound’s COMP governance token. There are 250 million DMG tokens in total supply of which slightly over 25 million are in circulation.
DMG will be a tool, a sort of glue, of managing and growing the DMM DAO ecosystem. Holders of DMG can vote for changes, effectively governing many aspects of the DMM DAO.
Specifically, they will decide which types of assets will be introduced and state their allocation. Meanwhile, the decentralized community governing the DMM DAO can vote to effect changes on DMG tokenomics and utility including claiming the excess revenue generated from within the DMM ecosystem.
DMG tokens are distributed as follows:
- 30 percent of tokens were sold to public investors through an initial decentralized exchange (DEX) offering (IDO). Each token was sold at $0.36 first at the dmg.defimoneymarket.com powered by Loopring protocol’s Dolomite, and second at mesa.eth.link, powered by the Gnosis protocol.
- 30 percent reserved to incentivize partners, developers, and for integration with other protocols
- 40 percent allocated to the DMM Foundation for continued development, support, and for other general purpose. This amount of locked till Nov 15, 2020, thereafter a vesting schedule will be initiated till Nov 21, 2021. Contract time-locks and vesting are designed to reduce DMG supply over time while limiting the voting power of the DMM Foundation.
The team opted for an IDO (which is technically an IEO) so that everyone with an Ethereum address and an internet connect can participate.
Token sale started on June 22, 2020, ending two days later as the team raised $6.5 million, easily surpassing its hard cap of $2 million. Initially, the IDO was scheduled to run for a month through to July 22, 2020.
150 million of DMG tokens are vested
The private sale raised 9.3 million DMG tokens were sold. A cap of two million DMG was placed per investor. Each token was sold at $0.16
10 percent of raised funds used to bootstrap liquidity (to prevent huge slippage at DEXes). On June 22, the DMM Foundation injected more liquidity at Uniswap.
Primarily, funds will be used for protocol development, marketing, issuing grants, business development, funding loans for asset introduction, legal, reserves, and to meet miscellaneous expenses.
DMG Market Performance
According to Coingecko, DMG is currently trading at $0.831623 with a market cap of $22,901,690, drawing a 24-hour trading volume of $3,512,317. There are 27,768,243 DMG tokens in circulation from a fixed total supply of 250 million.
At DMG spot price, its ROI is 2.3X in USD terms, less than a week after launching.
- Big announcements are expected in coming weeks and because of the popularity of DMG we expect top exchanges to list DMG. Having DMG partnered with Huobi and Coinbase team is a give away on what might come.
- Huobi plays a big role in the DMM ecosystem for fiat-crypto gateways and liquidity.
- There is total transparency. The circulating supply was made public on Coingecko by tracking the DMMF’s token holdings including time-locked smart contracts.
- DMG’s demand remains high and was one of the top traded token in UniSwap. On June 25, 2020, DMG token accounted for 25 percent of UniSwap’s protocol and the team had not even deposited extra liquidity.
- As a client-facing DeFi dApp, the team has allocated 10 percent of raised funds to boost liquidity. On June 25, 2020, the team deposited $350k of liquidity to the DMG-ETH pool on Uniswap. Dolomite’s DMG liquidity was equally boosted.
- DMG liquidity is also being built as more exchanges continue to list the token. Idex is the latest while it has been integrated by 1inch Exchange. Through 1inch Exchange, users can swap in and out of the DMM DAO ecosystem with minimum slippage thanks to the exchange’s ability to pool liquidity from different Ethereum-based DEXes.
- Buying token is easy. With sales executed via DEXes, all one has to do is connect via a Coinbase wallet, Trust Wallet, Portis, MetaMask, and any other supported wallet and get started without hitches.
- Time-lock contracts and vesting will reduce supply of DMG which is a net positive for price. Meanwhile, there is checks and balances to ensure decentralization, preventing the DMM Foundation from having majority control.
- Regardless of its sharp uptick in price and trading volumes, DMG is still a low cap token with immense value proposition that has attracted interesting investors including Draper. The token, and what its represents, is highly likely under-valued.
- DMM brings real-world assets to the Ethereum blockchain further extending DeFi use cases while remaining unique from other DeFi platforms. Interest payments are secured by a first lien of these vetted and approved income generating assets. And the more the assets (mTokens), the more the revenue.
- Their yield is stable (6.5 percent) and backed by real-world assets that can be transparently audited. According to a Blockfyre report, the interest received by holders of DMG tokens are currently drawn from $8.5 million worth of real-worth asset majorly from pools of vehicles in the United States. Over 1,000 lien documents has so far been published. In a world of declining yields, the above rate yields is a real drawer for investors seeking for diversification. More categories of assets will be voted and added in the future.
- The team is experienced and draw their experiences from the logistics industry, finance, banking, academia, investment world.
- DMG has attracted top-tier partners including Chainlink—a leader in decentralized oracles, Huobi, Draper Venture Network, and even Binance-based Trust wallet. A listing at Binance will drastically re-value the token, pumping it to new highs.
- Tim Draper has invested in the DeFi platform which goes a long way in indicating its quality.
- Since there is a baked-in overcollaterization (physical assets generating higher yields than interest expected by clients), extra DMG tokens can be burnt/destroyed, used to grow the ecosystem, or as decided by the community depending on extra income revenue earned. This is a strong fundamental that will support DMG prices over the long haul.