Welcome to the first Debt Protocol article! Today, we are going to present our project, what has been done so far, and express our opinion on the possible applications in the future.
To start with the simplest definition, DEBT is a decentralized finance protocol that aims to capture significant dominance in DeFi through innovative and intuitive applications.
What is Debt Protocol (and what makes it unique) ?
You might already have heard of it: $DEBT token is the first step to create a Proof of Debt protocol!
Our token has been launched 5 days ago on the Binance Smart Chain. It aims to redefine the way tokens circulate in the DeFi and allows people to earn $DEBT tokens over time, and automatically, without increasing the supply and without taking any transaction fees on buys and transfers.
Let’s start from the beginning …
The inspiration for Debt came from the desire to reproduce what is happening in the real world. The Debt Protocol brings in the DeFi world an old but working idea from the real world. To understand its concept, we can take the definition of what a “debt” is in the traditional world.
By definition, a debt is a duty of one person to another. Financially, it means that one person owes money to another. Usually, this debt is paid over a period of time.
With Debt protocol, we automate debts in a secure, decentralized and mandatory manner, using blockchain technology and its smart contracts.
How does the Debt Protocol work?
Holders are all debtors and creditors towards someone thus allowing the token to have a sustainable and complete cyclical debt. However, holders can be more creditors than debtors.
In fact, it depends on the number of tokens. The more tokens the user has, the more debts he earns, as his influence over debt protocol is higher. On the contrary, the fewer tokens a user has, the more credit he has to pay to his debtors.
The Debt Protocol inside the $DEBT token
The debt protocol is incorporated directly into the $DEBT token.
To maintain a cyclical debt within the protocol, holders are dispersed in 5 tiers according to the number of $DEBT tokens they have. The higher tier you are in, the more creditor you become. You, therefore, receive debts from other people. Conversely, the fewer $DEBT tokens you have, the less you participate in the system. You are a debtor and therefore have debts to pay.
This is done automatically, which means that if you have debts to pay to a higher tier, DEBT will be deducted from your account. You will also receive debt tokens from the tier below yours and even from the tiers above yours depending on their actions for the system.
The debt incurred is reflected every 10 minutes in each user’s wallet and amounts to 1% of the total holdings per day. It is updated in the pool above every time a user does a transaction.
If a user owns 1M DEBT token, he will have to pay 10k tokens (1%) every day. This means that he will see his tokens decrease every 10 minutes by 70 tokens and reach a total amount of 10k DEBT after 24 hours. Those 1% will be credited to its creditors, which means the wallets in the Tier above the user. It also means that users in the Tiers below are your debtors and will pay you 1% each day.
Is there an advantage to HODL ?
There is ! We implemented 2 protections to encourage people to buy and hold $DEBTS.
Number one: Someone that never sells his tokens sees his tokens count double in the calculation of his tier.
Example: someone holds 400’000 DEBT and never sold any $DEBT. The protocol will assign him to a higher tier if 400’000 x 2 = 800’000 DEBT is enough!
Number two: Everyone who buys a predefined amount of $DEBT, or more, will be exempted from debts for the next 12 hours! At the moment, the minimal amount is 20 million $DEBT.
Governance, what about it?
Ownership of the contract has not been renounced by the team. Is that bad news? No! Why? Because there are no advantages to being the owner. We cannot mint tokens, block wallets, claim unclaimed tokens, etc.
(You can check our 2 audits for proof: Solidity.finance & CTDSEC.com)
Why not renouncing it then? Because it allows governance to be applied. What can be done with the contract is changing the threshold of each tier and the percentage of debts paid per day & the percentage of selling fees (up to a maximum of 10%). Changing the threshold is useful if the price of the token increases/decreases too much. This way, it prevents new buyers from, for example, having no chances of getting into a higher tier, or, on the contrary, if the price drops too much, it prevents having everyone in the top tier.
For all those reasons, in the future, we will implement governance in order to let the community decide what is the better option for the protocol to work.
In the future …
In the crypto sphere, dreaming is allowed. The biggest dream would be to launch our own blockchain, that would be based on the Debt Protocol concept. This would be the ultimate application of Proof of Debt.
This blockchain would be without transaction fees and people could bridge their respective tokens in Dtokens (ex: ETH bridge on Debt = DETH). Our blockchain would not only generate passive income but also be much more attractive for economic markets since money must always be in circulation on Debt.
A more realistic plan for the moment is to create a market for Synthetics or NFTs around the token, directly benefiting from his technology.
If you want to learn more about our future plans, we kindly invite you to read our website.
Thank you for reading this article!
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Telegram : https://t.me/debtprotocol