Inspired by DeFi 2.0 - Protocol-Owned Liquidity on CubDeFi.com
The CubFinance protocol has undergone a massive evolution in 2021. The Kingdoms release marked a new era for sustainable Yield Farming on CubFinance. Kingdoms turned CUB into a sustainable, multi-platform Yield Optimizer.
CUB Bonding Mechanism
The above 3 LP Tokens will be the first available bonds on https://cubdefi.com/bond. The new Cub Bonding Mechanism deploys a perpetual bonding contract. As time passes, more CUB enters the bond "pool" which increased the arbitrage for "selling LP tokens" to the CubFinance Protocol-Owned Liquidity Pool.
By "selling" your LP to the CubFinance protocol, you're buying CUB at a discounted rate - creating a % arbitrage on your LP position.
The more that users bond, the lower the APR on this arbitrage will become. As new CUB enters the bonding pool (new CUB added every block), the APR on bonding will increase again.
The LP Tokens that get bonded to CubFinance become Protocol-Owned Liquidity (PoL). There are a number of impacts that follow the generation of PoL.
For the CUB-BNB Bonds, the protocol gains endlessly deepening liquidity in the CUB token. The CUB-BNB Pool will gain larger and larger depth over time and the protocol doesn't sell anything from the CUB-BNB LP position. This creates less volatility and facilitates larger and more frequent trading on the CUB Pair.
The BTCB-BNB and BNB-BUSD LP Token bonds (and future bonds like them) create PoL in a different capacity. This PoL is deposited into the Kingdoms vaults on https://cubdefi.com/kingdoms.
These LP Positions will then sit in the Kingdoms, earning both autocompounding rewards from external platforms (in the case of these 2 LP Vaults, CAKE is earned from PCS and then autocompounded back into BTCB-BNB and BNB-BUSD LP Tokens) and CUB from the Kingdoms contract.
The CUB is generated and held as PoL which will further deepen the LPs (when paired with BNB from the 4th bonding mechanism that will be released shortly after the first 3 go live).
The autocompounded LP Positions are also held as PoL. By autocompounding PoL from these CAKE Rewards, we're allowing the CubFinance PoL to exponentially grow over time.
In DeFi 2.0, there is another interesting concept: Risk-Free Value (RFV).
As PoL increases over time, the RFV of the protocol token increases as well. For example, if there is $1M in PoL, then the theoretical lowest value for the protocol token (in our case, CUB) is $1M Market Cap / Total Tokens in Circulation.
Our goal with the CubFinance protocol is to expand the PoL (and thus the RFV) rapidly. With various CUB Bonds coming into play, we're going to expand PoL quite quickly as we close Q4 2021 and head into Q1 2022.
This PoL is going to create a massive black hole effect where it attracts even more PoL through bonding and Kingdoms rewards.
Black Hole Effect
As bonds occur, PoL is going to increase dramatically. As PoL increases, the protocol will deploy the LP Capital into Kingdoms vaults where it will autocompound + earn more CUB to further deepen the permanent PoL held in CUB-based pairs. As PoL is autocompounding and CUB is re-invested into PoL, the PoL begins to naturally grow on itself.
On top of these autocompounding black hole effects, there lies 2 more key aspects of the CubFinance protocol:
Autoburning management fees from Kingdoms assets
BNB rewards to single-stake CUB Kingdom hodlers
The PoL generated through Cub Bonding is deposited into Kingdoms vaults. There, it generates more PoL through autocompounding. It also is subject to the same 10% management fee on Kingdoms assets (10% of the autocompounding rewards) as other Kingdoms assets.
If you take a macro view on CubFinance, bonding and PoL, you can imagine a very large PoL that is continuously growing through:
Perpetual CUB Bonds
Autocompounding Existing PoL
As PoL rapidly expands, the Kingdoms management fees generated by the protocol rapidly expand with it. It's easy to envision a scenario where Kingdoms TVL rapidly rises and continues to do so in perpetuity as bonds and autocompounding PoL take place.
Fulfilling the Kingdoms Ethos
The protocol-level impacts of this black hole theory are extremely interesting as you dive into potential scenarios. The entire mission driving our migration to Cub Kingdoms - turning CUB into the ultimate autocompounding yield optimizer on BSC - is to create sustainability and longevity for the CubFinance Protocol.
In order to do that, we need to track and relentlessly pursue our #1 KPI:
Kingdoms TVL or Total-Value Locked is one of (if not, the) most important aspect of CubFinance sustainability.
A higher Kingdoms TVL = higher management fees
7% goes to the protocol which autobuys CUB on the market and burns it
3% goes to a BNB Pool which is claimable by CUB Single Stake Kingdoms hodlers
PoL creates a protocol-level driving force for perpetually expanding Kingdoms TVL. This creates a vital impact where we chase outside capital to grow Kingdoms TVL while simultaneously allowing CUB Perpetual Bonds to grow PoL which is continuously deepening itself through Autocompounding Kingdoms deployment.