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DPLP
Decentralized Perpetual Liquidity Protocol
This page explains the concept of the Decentralized Perpetual Liquidity Protocol (DPLP). If you are just interested in farming, read the docs on DPLP Farms.
What is DPLP?
Read Liquidity Pools to understand what a liquidity pool is and what providing liquidity means.
LP Token Farming is a new and experimental concept only on the TOAD.Network ecosystem. The goal of LP Token Farming is to decentralize the liquidity. In other projects, the team holds a large amount of liquidity and promises to lock it for a certain period. At TOAD.Network, we give all of our Team LP tokens to the community, allowing people to farm them. Besides providing more liquidity for users, this makes the project "rug-pull-proof". All the LP tokens from the team are donated to farming pools that drip slowly over time to those who stake their tokens in those farms, meaning devs have only as much access to these tokens as any other user.
Here is a video that explains this concept:
Why is DPLP better than a DEV Lock?
First, we need to understand what a DEV Lock is. A DEV Lock is a mechanism by which projects compensate the developers of a project. In essence, when a project is created, usually part of the liquidity captured during the funding process (IFOs, ICOs, Launchpads…) is locked in a specific contract that is only accessible to the developers' wallets and that can be claimed by them only after a specified amount of time has elapsed.
What can happen is, that developers, after the time has elapsed and they are able to claim their tokens, start to dump them when price is high. This then drains the liquidity from the pool, diminishing the token value and damaging standard users' portfolios.
With DPLP, developers donate the liquidity collected and store it in a special smart contract that allows any user to connect to it. This contract behaves exactly as any other standard pool contract, with one important difference: the return of the investment is the same LP token that is provided to the farm, instead of the native token for the project.
This LP Farming is the basis of the Decentralized Perpetual Liquidity Protocol that TOAD has brought to the cryptoverse.
DPLP allows any user to constantly strengthen their position in the project simply by reinvesting their newly earned LP tokens- saving users time and transactions.
The DPLP protocol aims to make the DeFi ecosystem safer for all users by enabling a new mechanism to provide and maintain liquidity.
Designed to benefit long-term investors, DPLP requires a higher percent fee on both entrance and exit. This prevents the standard "whale behavior" of entering, earning quick gains, and leaving the farm with all liquidity drained.
In short, the LP farming contract will charge a 10% fee on deposits, reinvests and withdraws.
By charging a higher fee to get in and out (that goes right back to the rewards pool), DPLP ensures that the rewards pool will never run out of dividends. The users who keep their liquidity locked in the contract the longest are the users who will earn the most rewards.
In long, this works as follows: Let’s say that some users want to remove their tokens from the contract as they have reached their expected gains or the pool is not as attractive for them anymore. Once these users withdraw, the rewards pool will grow from the exit fees these users paid to withdraw. This means that the rewards for users who remain in the contract will be larger, making it more attractive to other people looking to provide liquidity.
This DPLP mechanism will ensure that TOAD, PAD or projects launching on our LaunchPAD will always have liquidity.
Last modified 3mo ago
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Outline
What is DPLP?
Why is DPLP better than a DEV Lock?