How Does It Work?
Circulate is the first-in-kind lending protocol on TRON with simple functionality. Cryptocurrency deposited into the platform earns interest from borrowers. Assets under deposit are trustlessly recognized as collateral in Circulate Finance and can be used to borrow funds. Similar lending protocols already exist in Ethereum such as AAVE and MakerDAO. The primary differentiating benefit is that Circulate Finance implements an innovative model to create a more sustainable eco-system than other competitors. The rule is very simple: more profits are shared directly with platform users in order to support adoption and create further value in the eco-system.
Instead of incurring a penalty for the share of CIR tokens or principal of deposits for users, profit sharing is implemented to create a sustainable floor price for the token. 60% of commission fees and interest revenue earned by the platform will be used to directly support the sustainability of the platform.
In the above diagram 30% of all fees are used to match with a certain amount of CIR token based on the exchange price of CIR that is added into the LP pool under a DAO system that is entirely controlled by the community. This flow of funds gradually increases the price floor of the token. The other 30% of fees will be used as a token buy back which facilitates positive price movement.
Here is a detailed example:
$10,000 USD in daily fee revenue is collected during the initial ten days for a total of $100,000 resulting in $60,000 (60%) available for platform support.Half of this amount or $30,000 is allocated to each of the LP addition pool and Buyback pool respectively. At this point, the community might decide to initiate spending 3% of $30,000 daily to add to the LP pool. The calculated amount of $900 is used to add the LP under DAO. More precisely, for Day 11, the daily emission rate is around 30k CIR (50% or 15k goes directly to users) if the price of CIR is $1. The pairing of $900 along with 900 CIR is added to the LP pool and 14,100 CIR is the new emission rate for Users for that day.
The amount of $900 might appear insignificant relative to influencing the price of CIR; however, this needs to be viewed with a long-term perspective. If $10,000 in daily fee revenue was collected after day ten, the growth of the money supply added to the LP system each day would accumulate substantially, and possibly $50,000 to $100,000 gets contributed into the LP pool by the second month.
After two months fewer than 1 million new CIR tokens are issued to users by then. Each token would have an intrinsic backed value of $0.1 to $0.2 at that stage and this factors only the LP addition system component. The token buy back mechanism results in a deflationary effect which further increases the intrinsic value much higher. Furthermore, the remaining amount of fees (40%) not spent on buybacks or LP additions are to be utilized in optimizing returns from stable coin yield farming which is risk-free in Ethereum. The Circulate Team also intends to use a portion of presales funding and unspent funds from Operation and Marketing in yield farming to support the Circulate Finance eco-system.
Besides the normal DAO system that targets platform structure, Circulate Finance will create a protocol of the DAO that allows the community to decide on usage of funds. This secondary DAO system facilitates management of spare funds for sustainable eco-system growth of the platform. The LP injected into the system is governed by the DAO which is completely under community control.
Site:
https://www.circulate.finance/Telegram:
https://t.me/circulatefinance
