If you are a follower of Defi, like to make money but are afraid of risks from the market, then luckily, the pilgrimage to the temple called TempleDAO will be an interesting and experiential trip for you. So what is TempleDAO? And how it works, let’s find out together.
What is TempleDAO?
TempleDAO is a decentralized autonomous system whose goal is to keep your investments stable and profitable. Temple is the project’s token. It differs from the two most popular token models on the market:
- Growth Tokens (BTC and Alcoins): Very vulnerable and risky but with great profit potential.
- Stablecoin: Not volatile but the value is decreasing every day.
TempleDAO wants to offer a product that combines these two models, is less volatile than “growth” tokens while still providing good returns for those who accumulate the tokens.
Mechanism of Action
So how does TempleDAO reduce token volatility? It does it in two different ways:
- Staking: When the market is bearish, profits are increased and supply is reduced to put positive pressure on prices and avoid large price cuts.
- Buy Temple: TempleDAO will also buy back tokens directly from weekly hands through its reserves. These tokens will then be burned to protect against a new price drop.
To better understand Temple tokens, let’s learn about two types of tokens currently on the market:
- Tokens have a fixed supply: As money flows into the protocol, the token price will increase and early buyers will benefit the most. This first design is unstable: if the price increases too quickly, people will sell and it can cause a large price drop.
- Another solution is to create tokens with unlimited supply: Tokens of this type usually have no intrinsic value but allow to reward stakers/farmers by maintaining a very high APY. It is also unstable: As soon as the price increases, people start selling because they know that not everyone has the opportunity to withdraw, the supply is so large that token sales have a large impact on the price and cause panic among everybody.
TempleDAO is completely different and allows to solve these problems. These are the operating principles of the ecosystem to solve the above problems:
- Ecosystem growth will benefit Temple token holders.
- Value will be distributed gradually instead of immediately, the protocol wants to avoid excessively increasing the price of the token.
- The intrinsic value of the temple token will never be diluted. Temple token generation is limited by protocol reserves. The protocol does not want to dilute the intrinsic value by creating tokens as gifts or incentives for sellers to dump to stakers. We can calculate the intrinsic value of the Temple token according to the following formula: Intrinsic value = Protocol reserves/total token supply.
Since TempleDAO does not want to reduce the intrinsic value of the token, the creation of new Temple tokens will only take place if the intrinsic value remains higher than before. This is the first operating mechanism of the protocol.
Mechanism 1: Managing supply and maintaining intrinsic value
Here is how TempleDAO will manage the minting of temple tokens:
If the reserve is $100 and there is a supply of 50 temples, each temple will have an intrinsic value of:
100$/50 = 2$/token
If reserves increase by $30, the intrinsic value will increase:
130$/50 = 2.60$/token
The intrinsic value increases by $0.60 but if we increase the supply, this value will decrease. Therefore, TempleDAO will calculate the maximum mint limit allowed to keep the old intrinsic value of 2$. This mint limit is 15 temples
130$/(50+15) = 2$
Therefore, we see that the supply is limited by the amount of reserves available so as not to dilute the intrinsic value of the token. This allows for the protection of the token’s intrinsic value even as the protocol increases supply and introduces rewards.
Let’s go back to the previous example, we saw that the maximum mint limit is 15 Temple tokens to keep the intrinsic value equal to the old value. But instead of creating 15 token temples, the protocol will create 10 temples. This would result in an intrinsic value of:
130$ / (50+10) = 2.17$
That means the intrinsic value increased by $0.17.
Here is the mechanism that will be applied: Calculate the maximum mint limit, where a part is reserved to pay stakers, the rest is to pay the project team and finally a part is used to increase content value token’s location.
Mechanism 2: Set up “Safe premium” (Safe insurance)
There will be two ways for you to buy temple tokens: Through AMM or directly on the protocol.
TempleDAO wants to implement the concept of “Safe premium” by placing a cap on token prices to limit price increases.
The profits for stakers will ultimately be the same, only instead of increasing the token price, the profits will be paid as rewards to the stakers. This is a better solution for maintaining a long-term community.
How “Safe premium” works:
If many people buy on AMMs, the price will automatically increase, TempleDAO plans to sell tokens at a price 3 to 6 times the intrinsic value on AMMs. As for the protocol, the price will be fixed and can be purchased directly (this will be the same as an OTC purchase).
Since the price of the temple sold by TempleDAO is fixed, the price on the AMM will not increase more than the price on the protocol. We will have the following situations:
People won’t buy on AMM, they will buy on the protocol.
Some people will do arbitrage by buying on the protocol and selling on the AMM until an equilibrium is reached.
The good thing about this is that people will buy directly on TempleDAO, so there will be new cash flow to increase the protocol’s reserves. The AMM will only be considered liquid for users who want to cash out.
Mechanism 3: Bonus Reward (Extra bonus)
There may be certain periods of time where the protocol will have accumulated excess reserves and may be more profitable than usual. This extra reward will be visible in the protocol, you just need to stake the tokens and locks until the reward period ends. Then, once this period is over, you can continue to earn regular rewards as usual. The bonus reward will incentivize the purchase of temple tokens to benefit during the bonus period and thus increase the protocol’s reserves.
Mechanism 4: Unstake queue (Queue to unstake)
If one day you want to unstack your temple tokens, you will have to queue to unstack. This mechanism works as follows: In each block, there will be a certain amount of temples that can be unstaken. When you make your withdrawal request, you will be notified of the block at which you will have your tokens completely unstaken. This queuing system reduces price fluctuations and prevents too many people from unstaking at the same time.
Mechanism 5: Temple Defend (Defense mechanism)
If there is too much selling pressure in the AMM, the Temple Defense will be activated. The Temple defend mechanism allows each temple owner to resell tokens at a protected price (Protected price is a price backed by assets in the reserve fund), meaning everyone will be able to buy the temple at the protected price. cheap on AMM and sell back to TempleDAO at a protected price. Therefore, some players will make profits and increase the price of tokens in AMM.
A small note is that the Protocol has also established a put option system, you have the right to sell but have no obligation to sell at a protected price. This means that if the price of the token on the AMM becomes equal to the protection price, then you can continue to hold and benefit from staking or you sell at the protection price.
Furthermore, TempleDAO will have investment strategies that you will choose according to your risk appetite. The staked tokens will be invested through different strategies using derivatives to make the portfolio grow and hedge against volatility, this will be fully managed by TempleDAO, they takes care of setting strategies and implementing them automatically.
Development Roadmap
Below are the two most important updates of the current project:
- Link TempleDAO to Balancerr: You will be able to use USDC/DAI/FRAX/USDT to buy TEMPLE and get the best price available from AMM Balancer.
- Launch of Ramos (Random Automated Market Operations Support): TEMPLE holders will continue to enjoy the same farming profits with low price volatility, but without the need to stake or lock up tokens. Through RAMOS, the rewards of you will automatically accumulate into the temple E token price through the Treasury Price Index (TPI).
Core Team
Currently I cannot find information about the project founder. However, through the Audit versions, they had information about a few founders but it was not published. Currently, TempleDAO is operated by DAO.
Investors & Partners
I couldn’t find any information about TempleDAO’s capital raising or the project’s partners.
Tokenomics
- Token Name: TempleDAO Token.
- Ticker: TEMPLE.
- Blockchain: Ethereum.
- Token Standard: ERC-20.
- Contract: 0x470ebf5f030ed85fc1ed4c2d36b9dd02e77cf1b7
- Token Type: Utility, Governance.
- Total Supply: Unlimited
Exchanges
You can buy Temple directly on the TempleDAO protocol or through decentralized exchanges like Balancer or Uniswap.
TempleDAO’s Information Channel
- Website: https://www.templedao.link/
- Twitter: https://twitter.com/templedao
- Medium: https://templedao.medium.com/
- Telegram: https://t.me/TempleDAOcommunity
- Discord: https://discord.com/invite/v4XFQ8pmtr
summary
The Temple project is very new, the project founders have thought of a lot of things and come up with a lot of mechanisms to promote long-term holding of the project’s tokens. However, last October, the protocol was stolen by hackers for $2.3 million. This shows us that the defi market still has a lot of risks and vulnerabilities, especially new projects need to be more careful when building their projects. However, TempleDAO has also committed to compensating users for losses and is proposing changes to make the protocol more secure. If you are interested in TempleDAO, please follow me to update the latest articles about the project.