The crypto market has evolved a great deal in recent years as more fundamental innovations come up within this nascent industry. Today, stakeholders have an array of options where they can contribute and benefit from the crypto ecosystem. One niche that appears to have taken over with a wave is the emerging Decentralized Finance (DeFi) space. This market enjoys a Total Value Locked (TVL) of $13.89 billion as of press time; notably, the TVL was barely $1 billion at the beginning of 2020.
Being in its early stages, DeFi became popular through participation incentives which include lucrative yields for staking on different protocols. Dubbed ‘yield farming’, this is one of the most common ways that DeFi projects are stepping up to incentivize participation.
A typical innovation within this space is a project that goes by ‘OnigiriSwap’; liquidity providers who stake Uniswap/Sushiswap LP tokens are rewarded with $ONIGIRI tokens. This native token plays an important role in the sustainability of OnigiriSwap as the next sections of the article will highlight.
The OnigiriSwap AMM Protocol
OnigiriSwap borrows its name from the unpretentious Japanese rice balls known as ‘Onigiri’; this delicacy is enjoyed by people from all over the world. Likewise, the Automated Market Maker (AMM) protocol is for everyone as long as they stake Uniswap/Sushiswap LP tokens or provide liquidity to the prospective OnigiriSwap Decentralized Exchange (DEX). The Onigiri Master Chef Menu offers a couple of options from which users can stake their favorite Onigiri mix to earn $ONIGIRI tokens.
This is the governance token of the OnigiriSwap protocol and is designed to operate as the platform’s incentive tool during the early stages. Basically, the $ONIGIRI token is a reward digital asset for stakers that provide liquidity on Uniswap; this can be done through a couple pools, although OnigiriSwap has currently limited available pairs to three so as to prevent whale dumping. The pairs include ETH, DAI and USDC stablecoin.
Staking to provide liquidity on the OnigiriSwap AMM can yield as much as 1800%, according to the current Menu on this farm. The $ONIGIRI tokens have been built with a deflationary model to sustain their value alongside the yield farming incentives, which are meant to boost development within the OnigiriSwap ecosystem. OnigiriSwap has also limited the amount of tokens that will be generated before LP’s who hold on to their $ONIGIRI are rewarded.
On the distribution of $ONIGIRI rewards, the protocol is designed to mint and distribute 20 $ONIGIRI tokens for every block. Liquidity providers who stake on the varied Uniswap pools will receive such rewards; however, this will reduce by half for every 100,000 blocks up to 1,200,000. At this point, the OnigiriSwap community will vote on whether the minting should stop and instead reward the stakers with transaction fees.
Given the deflationary tokenomics, LP’s who stake earlier are more posed to earn higher $ONIGIRI yields on harvesting. Currently, the price of one $ONIGIRI token stands at $0.003428 which up by 15% within the past two weeks. With the DeFi volatility still in play, it will not be a surprise if this token bounces back to the highs of $2.8 where it hovered at the beginning of October.
OnigiriSwap Prospective Initiatives
OnigiriSwap’s larger vision is to create an interoperable DEX that will allow DeFi users to interact between blockchains. On this front, the project’s working product is currently in development on the Polkadot blockchain. This particular ecosystem is a darling to interoperability focused initiatives based on its bridges to other blockchains such as Bitcoin, Ethereum and USDT. OnigiriSwap is set to leverage these technical underpinnings to debut cross-chain pools within the DeFi network.
Apart from the technical ambition, this project plans to further boost the effectiveness of $ONIGIRI token in governing its protocol. Ideally, the holders of this token are entitled to governance rights and a tax of the fees generated within the network. Going forward, they will make key decisions such as the addition of $ONIGIRI trading pairs and when to limit the total volume.
The OnigiriSwap team is optimistic that the community will vote to stop minting at block 11790000 in order to avoid dilution and preserve the sustainability of the project. Notably, only a total of 9% of $ONIGIRI tokens will be distributed to developers for the continued operation of its AMM protocol. Also, these funds have been locked at an interval of two weeks to prevent the team from whim and fancy withdrawals.
DeFi has proven to be a game-changer in the cryptocurrency world despite critics that the summer bubble was a passing fad. Well, now that it appears fundamentals are taking precedence, projects with a value proposition like OnigiriSwap have an opportunity to capture a significant market share of this burgeoning space. The participation incentive based on $ONIGIRI governance token is one of the cutting edges, coupled with a sound tokenomics model. This innovation is likely to be one of the sustainable DeFi AMM protocols as well as a cross-chain DEX provider, should the working product on Polkadot prove successful.