FAQ
Answers to the Hottest Questions
Why do we need GambleFi in the first place?
Dollar-pegged stablecoins have become an essential part of crypto due to their lack of volatility as compared to tokens such as Bitcoin and Ether. Users are comfortable with transacting using stablecoins knowing that they hold the same amount of purchasing power today vs. tomorrow. But this is a fallacy. The dollar is controlled by the US government and the Federal Reserve. This means a depreciation of dollar also means a depreciation of these stablecoins.
Mystery DAO aims to solve this by creating a non-pegged stablecoin called BETIFY. By focusing on supply growth rather than price appreciation, GambleFI DAO hopes that BETIFY can function as a currency that is able to hold its purchasing power regardless of market volatility.
BETIFY is backed, not pegged.
Each BETIFY is backed by 1 USDC, not pegged to it. Because the treasury backs every BETIFY with at least 1 USDC, the protocol would buy back and burn BETIFY when it trades below 1 USDC. This has the effect of pushing BETIFY price back up to 1 USDC. BETIFY could always trade above 1 USDC because there is no upper limit imposed by the protocol. Think pegged == 1, while backed >= 1.
You might say that the BETIFY floor price or intrinsic value is 1 USDC. We believe that the actual price will always be 1 USDC + premium, but in the end that is up to the market to decide.
How does it work?
At a high level, GambleFi DAO consists of its protocol managed treasury, protocol owned liquidity, bond mechanism (minting), and high staking rewards that are designed to control supply expansion.
Bonding in the "Mint" page generates profit for the protocol, and the treasury uses the profit to mint BETIFY and distribute them to stakers. With LP bond, the protocol is able to accumulate liquidity to ensure the system stability.
What is the deal with (3, 3)?
(3, 3) is the idea that, if everyone cooperated in GambleFi, it would generate the greatest gain for everyone (from a game theory standpoint). Currently, there are three actions a user can take:
Staking
Minting (Bonding)
Selling
Staking and minting are considered beneficiary to the protocol, while selling is considered detrimental. Staking and selling will also cause a price move, while bonding (minting) does not (we consider buying BETIFY from the market as a prerequisite of staking, thus causing a price move). If both actions are beneficiary, the actor who moves price also gets half of the benefit. If both actions are contradictory, the bad actor who moves price gets half of the benefit, while the good actor who moves price gets half of the downside. If both actions are detrimental, which implies both actors are selling, they both get the worst possible outcome!
Thus, given two actors, all scenarios of what they could do and the effect on the protocol are shown here:
If we both stake (3, 3), it is the best thing for both of us and the protocol.
If one of us stakes and the other one bonds, it is also great because staking takes BETIFY off the market and put it into the protocol, while bonding provides liquidity and USDC for the treasury!
When one of us sells, it diminishes effort of the other one who stakes or bonds.
When we both sell, it creates the worst outcome for both of us and the protocol
Why is PCV important?
As the protocol controls the funds in its treasury, BETIFY can only be minted or burned by the protocol. This also guarantees that the protocol can always back 1 BETIFY with 1 USDC. You can easily define the risk of your investment because you can be confident that the protocol will indefinitely buy BETIFY below 1 USDC with the treasury assets until no one is left to sell. You can't trust the FED but you can trust the code.
As the protocol accumulates more PCV, more runway is guaranteed for the stakers. This means the stakers can be confident that the current staking APY can be sustained for a longer term because more funds are available in the treasury.
What is a rebase?
Rebase is a mechanism by which your staked BETIFY balance increases automatically. When new BETIFY are minted by the protocol, a large portion of it goes to the stakers. Because stakers only see staked BETIFY balance instead of BETIFY the protocol utilizes the rebase mechanism to increase the staked BETIFY balance so that 1 staked BETIFY (BETSLIP) is always redeemable for 1 BETIFY.
What is reward yield?
Reward yield is the percentage by which your staked BETIFY balance increases on the next epoch. It is also known as rebase rate. You can find this number on the GambleFi DAO staking page.
What is APY?
APY stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of GambleFI DAO, your staked BETIFY represents your principal, and the compound interest is added periodically on every epoch (8 hours) thanks to the rebase mechanism.
One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 BETIFY on day 1, after a year, your balance will grow to about 1377.
Why does the price of BETIFY become irrelevant in long term?
As illustrated above, your BETIFY balance will grow exponentially over time thanks to the power of compounding. Let's say you buy a BETIFY for $400 now and the market decides that in 1 year time, the intrinsic value of BETIFY will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 BETIFY by the end of the year, which is worth around $2754. That is a cool $2354 profit! By now, you should understand that you are paying a premium for BETIFY now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your BETIFY balance to grow exponentially and make this a worthwhile investment.
What will be BETIFY intrinsic value in the future?
There is no clear answer for this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every Betify with 100 USDC, the intrinsic value will be 100 USDC. It can also be decided by the future DAO governance. For example, if the DAO decides to raise the price floor of BETIFY, its intrinsic value will rise accordingly.
How does the protocol manage to maintain the high staking APY?
Let’s say the protocol targets an APY of 100,000%. This would translate to a rebase rate of about 0.6328%, or a daily growth of about 2%. Please refer to the equation above to learn how APY is calculated from the rebase rate.
If there are 100,000 BETIFY tokens staked right now, the protocol would need to mint an additional 2000 BETIFY to achieve this daily growth. This is achievable if the protocol can bring in at least 2000 USDC daily from bond sales. If the protocol fails to achieve this, the APY of 100,000% cannot be guaranteed.
Do I have to unstake and stake BETIFY on every epoch to get my rebase rewards?
No. Once you have staked BETIFY with GamleFI DAO, your staked BETIFY (BETSLIP) balance will auto-compound on every epoch. That increase in balance represents your rebase rewards.
How do I track my rebase rewards?
You can track your rebase rewards by calculating the increase in your staked BETIFY balance.
1. Record down the Current Index value on the staking page when you first stake your BETIFY. Let's call this the Start Index.
2. After staking for some time, if you want to determine by how much your balance has increased, check the Current Index value again. Let's call this the End Index.
3. By dividing the End Index by Start Index, you would get the ratio by which your staked BETIFY balance has increased.
Is GambleFi Audited?
GambleFi DAO is currently preparing to get an audit from RugDoc and Certik. All of our code is also intensely audited by some of our private auditors.
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