What Is DAFI Protocol (DAFI)?

DAFI (DAFI)is a protocol that allows networks to incentivize users based on their adoption. The protocol seeks to solve the problem of rewarding users without compromising token scarcity. Usually, platforms distribute tokens even at low adoption rates, causing an excess supply that devalues the economy. The solution offered by DAFI is to seek to link reward and demand together to create an incentive for the users and increase retention on platforms.

With DeFi, DAFI primarily aims to address three issues, which include:

• Hyperinflation:It is difficult to offer incentives to the users when demand for the network is low. At such a stage, issuing tokens can create harmful supply shocks.

• User retention:The distribution of tokens is good for new users, but this practice is unfair to long-term users. In essence, there are no economic incentives to the users who accumulate rewards to support the platform until it has a wider adoption.

• Market decline:In 2018, many token economies crashed because of similar inflation models. In other words, there were not enough incentives for miners and holders.

To solve such issues, DAFI aims at sustainable adoption by introducing a model where reward quantity is tied to network demand. There are three core economic principles behind this. The first is reducing the number of network rewards at the beginning to avoid supply shocks and single user control of network value. Secondly, increasing the issued tokens as adoption rises, thus linking two market-factors to promote the growth of decentralized economies. And ultimately, increasing scarcity when demand declines to protect the economy by avoiding over-release of tokens.

Using DAFI, other protocols and platforms can create a reward system from their native token. It is then pegged or attached to the demand of the network and eventually distributed to users. As a result, users can seek to gain incentives to use the platform even at low adoption rates.

The whitepaper states that DAFI offers a way to create scarcity by making reward quantity proportional to demand. Users can stake the DAFI token for governance purposes and help create further incentives for future users.

History of DAFI Protocol (DAFI)

Zain Rana is the founder of DAFI. Besides that, he is also a global blockchain speaker. Rana has completed his BS in Biomedical Science from The Manchester Metropolitan University.

Some other team members of DAFI include Neil Nguyen as the economics lead, Ali Martinez as the creative lead, and Igor Stojkoski as the UI designer.