The Origin of Dafi
Inspired by the catastrophic 2018 crash, it became clear that the current incentive model in all decentralized networks, is flawed. All great concepts are created after years of stealth mode — testing and researching. Dafi is now solving the biggest issue faced by every decentralized economy. A broken token model that could only have been solved when the team took the first small steps to initially develop a simple economy.
Once upon a time
Let’s go back in time, to a rainy Tuesday in 2018. What many people don’t know is that Dafi was originally planned to be a simple peer-to-peer marketplace. To make this marketplace function, network inflation was required. In other words — you had to reward users for staking and participation, otherwise it could not be decentralized.
Network’s can incentivize, this usually functions the same way. Distribute tokens → attract users → creating sell-pressures especially when adoption is low. It’s informally known in the Blockchain space as pump and dumps.
This is where the problem started. A fixation on solving this network-effect flaw, meant to reengineer token-economics completely. Something that has not been done properly since Satoshi. This is where the pivot began, and things got interesting.
Institutions
Dafi’s team has been fortunate enough to work very closely with several leading universities across England, including the University of Manchester, Leeds and York. As well as the incubation from the Royal Bank of Scotland in 2020. This support consisted of guidance & research — truly pivotal factors for Dafi. By gaining insights into the decentralized incentive paradox — it accelerated the creation of the protocol that would fix it.
Testing
Dafi mostly focused on different theories and concepts that work in traditional economies. The final piece of the puzzle came when we developed the first basic synthetic pegged to Bitcoin’s network demand, as an MVP.
This then evolved in creating network synthetics for every blockchain and platform. Meaning — we could now incentivize nodes, staking and even liquidity — in a reduced token quantity. By factoring in network demand, Dafi enhances scarcity when demand declines, and rewards longer-term users without just simply giving out tokens.
This solves the biggest issue within decentralized economies — rewarding the longer-term users later, instead of earlier.
Dafi’s team comes from a mix of technical market analysts and Blockchain. This meant a rich vision into the hyperinflation model used by nodes, staking & liquidity today — the only foundation of all things decentralized. It developed into a beautiful model of how decentralized networks should work.
Factoring in demand and adoption in the form of an algorithmic synthetic, builds stable, better protocols. Simply, what started as an issue the team became obsessed with, evolved into the promising discovery that would change the fabrics of all Blockchain networks.
Journey
It became a perseverance through the years to bring a positively-disruptive innovation, in the form of Dafi, and even more challenging as a self-funded research project. There was never a TGE, even though there have been a few supporters of our mission along the way. The longer-term journey for Dafi is just beginning — and it involves switching every decentralized network to adopt synthetics on the Dafi protocol.