The current DeFi space is getting bigger every day and faces more and more challenges, especially in terms of diversification of investment types. Nowadays, the best known DeFi investment categories include funds, lending protocols, staking/farming, aggregators, etc. However, none of them allow investors to influence their returns through their behavior during the investment period. In traditional finance, the typical way to influence the strategy and development of an investment is to be a controlling shareholder of a company.
In the crypto space, the closest way to impact an investment is to be a whale and hold a significant portion of a project’s tokens. However, even by being a whale, you will not get any voting rights to partake in the project’s decisions, but you will be able to impact, to a certain extent, the price evolution by your behavior.
The idea of our product was born from the willingness to offer every investor the ability to influence his investments. Thus, our product will offer a combination of a traditional financial product, namely a Special Purpose Acquisition Company (“SPAC”) (offering an increased buying power somehow comparable to that of a whale) and the decentralization achievable on the blockchain (enabling the avoidance of a centralized authority/manager).
To better understand the purpose and operating process of our “Whale Club”, it is highly recommended to go through a summarized SPAC’s definition.
A Special Purpose Acquisition Company (“SPAC”) is a company created for the sole purpose of raising funds through an Initial Public Offering (IPO). Such a firm will raise the funds deemed necessary without having, at the time of the IPO, target companies to acquire or any operating business. Most of the time, such companies are formed by founders with expertise in particular business fields or industry. Once the IPO is successfully completed, the funds will then be used to acquire one or more unspecified businesses that will be identified after the IPO.
In accordance with the applicable legal provisions, the target companies’ acquisition(s) will be processed. Thereafter, the founders will profit from their stake in the new company while the investors will receive an equity interest according to their capital contribution.
Should the planned acquisition not be processed after a predetermined period of time (usually 2 years), the SPAC will reimburse its investors.
INTRODUCING THE WHALE CLUB
Further to the SPAC basics detailed above, the time is ripe to explain our Whale Club which combines some of the SPAC features with the Blockchain’s decentralization.
First, the DefHold Whale Club will offer different vaults in which you will be able to invest your assets. Each of these vaults will have a different minimum investment and a different minimum market cap of the project in which the funds will be invested. Initially, there will be small, mid and large cap vaults.
Once launched, each vault will accept contributions from investors for a predefined period of time. By investing in the desired vault, it will be required to pay the investment amount in USDT or USDC. Additionally, investors will be asked to pay an entrance fee in DEFO amounting to 5% of their investment. This entrance fee will be redistributed to stakers and farmers (95%) and to the developer fund (5%).
Upon completion of the contribution period, investors will receive secondary tokens representing their share of the vault, similar to LP tokens received by contributing to a liquidity pool. With their secondary tokens, investors will have access to a private area associated to each vault.
In each private area, there will be an initial period for each investor to propose any project, meeting the minimum market cap criteria, in which the vault’s assets should be invested.
Once the proposal period has ended, a voting period will begin and last 24 hours. During this period, every investor will be able to vote for his preferred project, with more or less weight depending on his initial investment. Thereafter, the project with the most votes will be the one in which the vault’s funds will be invested.
After to the voting period, the investment and divestment period will begin. Again, this process will be fully handled in the private area and will be divided into several voting stages. Indeed, buying and selling transactions will each be separated in 3 steps (each of them corresponding to 1/3 of the vault’s total funds). Each buying transaction will require at least 50% of the total voting rights to be approved and processed (same threshold will be required for selling transactions). Once this threshold is reached, the vault will use the USDT/USDC to market buy the underlying assets. This transaction split into 3 stages will allow to DCA on the buying side and implement a kind of trailing stop for the selling transactions enabling to benefit of further upsides. However, processing all 3 transactions in a single round will still be allowed provided that they are approved at the same time by more than 50% of the investors.
Regarding the vault exit, the initial investment and the corresponding profit will be returned to the investors each time a selling transaction is processed. Nevertheless, 5% of the generated profits will be used to buy DEFO tokens and distribute them to stakers and farmers (95%) and to the developer fund (5%).
WHALE CLUB BENEFITS
- Small investors can benefit of the buying power and experience of whales. Moreover, they will not suffer from Whale dumping as their assets will be sold at the same time as those of the whales.
- Whales will benefit of additional buying power and will be able to discover innovative projects thanks to the proposals of other investors.
- Decentralization allowing every investor to propose and vote for the targeted investment as well as the entry and exit price without any centralized authority or fund manager.
- Cost cutting as there will be no middleman or asset managers to be remunerated. All features and processes will be handled by smart contracts.
- Entrance fee and profit-sharing will benefit all DEFO holder as it will increase the buying pressure on the token and offer additional revenues to stakers/farmers.
The information provided herein-above does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat our website’s and communication channels’ contents as such. Please conduct your own due diligence and ensure that you consult your financial advisor before making any investment decisions, as cryptocurrency investment is subject to high market risk. DefHold is not responsible for any form of loss of funds. Hence, DefHold is not responsible for any direct, indirect or consequential losses as a result of your investment decisions.