Understanding Polycub and Defi 2.0 together
When Leo Finance team launched the Polycub in the Polygon chain , not only they opened a bridge from Hive to polygon chain but they also talked Defi 2.0 and it's revolutionary nature , their xPolycub vault in which ratio always goes up and it is something for the Diamond paws.(Holders will be rewarded)
So Defi 2.0 is actually a new concept and I guess it do not make sense to talk about Polycub and without talking about this relatively new concept.
How Defi 2.0 is different then Defi 1.0
When we talk about the traditional Defi it is mainly govern by giving lucrative incentive to the user to attract more and more liquidity and this incentive is generally platform owned/minted token so more token minted with more liquidity . If the platform owned token do not get any other usecase , it is supposed to fall from it's value unless it keep getting more liquidity then previous day and get more in fees to burn there token.
How current Polycub is different then Defi 1.0
Ignore the arrow from the below figure but start of the Polycub is no different then Defi 1.0
That's why this strong emission of the token really tanked the price of the Polycub token though in few month , I guess August - September 2022 it's Defi 1.0 phase will end, when it emission will become zero and new phase will kick in ,that is Defi 2.0.
What will happen in Polycub in coming month or in Defi 2.0
When there is no liquidity rewards so I think there will be no liquidity provider also as such. All the liquidity will be governed and owned by the Protocol through Bond mechanism. Liquidity Provider will now be purchasing Bond that will give them discount in token if purchased from the market.
So I assume in the Polycub case , Liquidity provider will be offered Polycub lower then the market rate and Protocol will buy the Polycub from the market as it will earning from the management fees as well as the transaction fees.
Since Protocol is buying the token from the market , so it is expected that it will appreciate in value.
Collateralization of Loan will also help platform to earn.
This is another mechanism by which platform will earn and I am not sure but I guess till the loan duration this liquidity is getting owned by the platform and my understanding is platform is now earning in 2 ways by offering the Collateralized loans. Again this earning will be used to buy the Polycub from market that is supposed to appreciate the value.
Will Defi 2.0 or Polycub will be always profitable?
To be Defi 2.0 /Polycub to be profitable it is necessary that buy from the market should exceed the sale value. So platform need to generate a handsome amount of revenue that can be used to buy the token.
In other words just going to Defi 2.0 is will not become automatically profitable and platform need to add and monitor its service to generate money and I think team need to work constantly on it.
More I thought about it, more I realized that it might not be TVL (Total Value locked) by platform will solely determine the worth and actually it will be more how much transactional value platform will do and how much fees it will generate.
So what is actually better in Polycub.
Leaving aside the rug pulls, What will happen if we keep minting the token?
One of the USP of the polycub is that it's emission will be zero after end of it's Defi 1 phase, So these number of Polycubs will be limited and there will be no new tokens are getting minted so it is very easy that price can really shot up with limited number of tokens.
Since in Protocol based liquidity in asset swap etc, Protocol itself start owning the paired token that also generate profit for it and in worst case let sy nobody use the platform , then still token value do not go to zero because whatever now protocol owns can be used to back the Defi token , i.e in our case is Polycub. This concept is more like of "Risk free value" and that is unlikely to be 0 in defi 2.0 but this concept does not exist in defi 1.0 and token value can be 0.
xPolycub may turn into a hidden gem.
I am not sure if someone is actually noticing xPolycub , it is now sitting close to 4 million Polycubs staked and it means that even with limited supply of the Polycub,more then 50% of Polycub is not available in market.
By design, the value proposition of xPolycub keep increasing in it's Polycub value and if Polycub moon then xPolycub is going to give multifold returns.
It also look a very clever move by Leofinance team that by designing xPolycub , they effective removed large amount of the Polycub from the market.
Disclaimer: I do have my position in both Polycub and xPolycub and all the information presented here is my interpretation of the documents that I read of Polycub and Olympus DAO and I might be wrong in interpreting and understanding them
If you like to more about it then I will suggest to check Cointelegraph article and hit on the Leofinance Discord.