Based Loans has recently started money markets for the under-served community-driven projects such as Akita, filling a significant gap in the lending market. The announcement has motivated me to write this proposal.
I believe Gitcoin should deposit its Akita tokens in lending markets for the following reasons:
- Having a large credit market for Akita enables its trading on the market. Traders and asset management platforms use lending markets to deploy strategies that trade billions of dollars every day. By building a thick lending market for Akita on Based Loans, and the likes of it, Gitcoin and Akita communities stand to benefit from having a tradable token on the market.
- A large money market for Akita will likely generate revenues (interest, farming rewards, etc.) to Gitcoin’s treasury as well as Akita token holders. These revenues can be put to work for the community.
- It offers the token asset, and the project behind it, the legitimacy it needs. Many argue today that community-driven tokens such as Akita are not serious projects because of the lack of a clear value proposition. I personally disagree with this notion, however, it is a common view. Having thick credit markets on lending protocols offers Akita a better presence in the market, increasing its utility and perceived value.
- Deposit $25-50M worth of Akita (or more) to Based Loans.
- Allocate additional 10% of the total deposited Akita amount as rewards. This will encourage Akita token holders to deposit their tokens in the market. Non-token holders will have an incentive to buy the token and deposit it for the rewards.
- Ask Based Loans to offer additional rewards for depositing Akita.