DeFi

Alright. I invite you all to my first casthread (probably won't be a thing - casthread.. cast-thread.. threadcast?) Anyway! Let's drive into one of the most exciting defi projects, that I've seen for a long time: Peapods ($PEAS) 👇

Chapter 1️⃣: What's a Pod?

🌱 #Peapods introduces a game-changing concept in #DeFi: wrapping one or multiple liquid assets into a single ERC-20-TKN, known as "Pods" or pTKN within the Peapods ecosystem.

🔄 Pod Tokens (pTKN) can be created by wrapping original assets or purchased directly on decentralized exchanges like #Uniswap. They're always fully backed by the underlying assets (TKN) and can be unwrapped at any time.

💡 Additionally, each Pod has its own liquidity pair which includes a less volatile asset that liquidity providers (LPs) can pair 50/50 with the pTKN. Pod creators can choose initial paired assets like DAI or pOHM (from an OHM-Pod).

📜In summary, a Pod (pTKN) is a fully backed synthetic asset (with one TKN) or an index (with multiple TKN) paired with DAI/pOHM, forming its own liquidity pool. This enables obtaining pTKN through TKN wrapping or direct purchase one the open market.

Chapter 2️⃣: Pod Fees

🔧 Pod creators have the flexibility to adjust pod fees during creation, altering how the pod manages fees and distributes rewards. Up to five different fees can be adjusted, including fees on wrap/unwrap actions and optional fees on direct pTKN trades.

📜For me, #Peapods and the #PEAS Token represent one of the most exciting innovations in #DeFi to date. As long as we've known the crypto market, volatility has been its endless resource. Peapods has found a way to harness this volatility and turn it into real value.

💸 These fees collectively generate revenue for the pod, from which the creator can set a partner fee of up to 5% and a burning fee for the pTKN of up to 50% of the generated fees (with a combined limit of 50%). The remaining revenue is used to buy #PEAS tokens on the market.

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❓Ok, so trading pTKNs generates fees which is revenue. But why trade pTKN instead of the original assets (TKN)? 

💡Pods create arbitrage opportunities, making pTKN trading appealing to traders seeking profit from price disparities.

Chapter 3️⃣: Liquidity Mining

💰Arbitrage opportunities arise whenever a price deviation occurs between a TKN and its pTKN counterpart. 

❓But how does an arbitrage opportunity occur? 

Here's a simplified example:

Picture this: There are two pools, each containing 3 #PEAS and 3 #DAI, creating a 1 PEAS = 1 DAI price. 

A trader buys 1 PEAS for 1 DAI in Pool 2, leaving it with 2 PEAS and 4 DAI, resulting in a new price of 1 PEAS = 2 DAI.

➡️A price deviation occurs between pool 1 and 2.

🥷Arbitrageurs exploit this deviation by buying PEAS from Pool 1 at the lower price and selling in Pool 2 at the higher price until equilibrium is restored.

🔄 #Peapods creates new liquidity pools with pTKNs, leading to price deviations between pTKNs and their TKN counterparts. Traders, incentivized by arbitrage opportunities, exploit these deviations, contributing to protocol fees.

🤔We remember the pod fees: The arbitrage trader is forced through the pod's fee tunnel and will always walk it as long as the arbitrage profit is greater than the fees incurred. In other words, the implemented pod fees siphon off a portion of the arbitrage profit.

🔥 Peapods employs mechanisms favoring or "forcing" price deviations, attracting more arbitrageurs and generating additional protocol fees. This includes the burning fee for the pTKN, automatically leading to pTKN price deviations from TKN prices.

🔄 The second mechanism involves #pOHM as an alternative partner choice for the pod's liquidity pool. $OHM, designed to remain within a price range, adjusts its token supply based on market demand, encouraging price stability, but offering more volatility than $DAI does.

📜In summary, arbitrage opportunities arise from price volatility, allowing Peapods to capture profits through built-in fees and distribute them to pod creators, liquidity providers and token holders. This is the essence of liquidity farming. #LiquidityFarming #DeFi

Chapter 4️⃣: PEAS Tokenomics

💎 The #PEAS token is deflationary, with a maximum supply of 10 million units fully minted at protocol launch. 88% of the total supply has been allocated to liquidity positions, while the remaining 12% is vested for the team.

📉 This deflationary nature means PEAS has no inflation at all. LPs are rewarded through PEAS that were bought up on the open market. Additionally, protocol fees are used to buy and burn PEAS tokens on the market, making PEAS inherently deflationary from the start.

🔥 As more #Pods are created and liquidity is attracted, more #PEAS tokens are burned, continuously reducing the PEAS supply. Pod creators and early liquidity providers are incentivized to organically market their respective liquidity pairs, enhancing Peapods' network effect.