Why holding $HALO is a compelling financial opportunity
Win and help win
TL;DR: Holding $HALO is a compelling financial opportunity because value accruing to stakers can only increase, bonding curves multiply your staking rewards and staking helps charities. By holding $HALO and staking, you win and help win.
December is going to be very exciting for us at Angel Protocol. After 9 months of careful nurturing and attention, our brainchild is finally coming to life. Our platform will open to the public and we will start sharing ownership of the protocol with $HALO token holders.
Our charitable side makes us convinced that holding $HALO is a unique, beautiful opportunity to take part in the construction of the largest community-owned charity organization in the world. Our crypto side (with the help of Delphi Digital) made us imagine the right incentive mechanics to provide an appealing value proposition to token holders.
Achieving true decentralization means making $HALO attractive to the public to keep value in the protocol, and encourage wider participation. This is why we made holding $HALO a compelling financial opportunity:
1. Value flowing to $HALO can only increase
The Angel Protocol endowments only contain $UST and are immune to crypto markets fluctuations. All donations received by the endowments are locked forever. $HALO stakers get at least 5% of all yield generated by the endowments, that only grows. Forever.
2. Bonding curves multiply $HALO stakers’ rewards
In Angel Protocol, $HALO holders stake their tokens to charities they want to support. This staking mechanism operates with bonding curves.
What are bonding curves?
This barbaric term is used to define a simple system where, by depositing a token A into a pool you get a token B in return, which price follows a pre-defined pattern (a curve) defined by the quantity (supply) of token A in the pool.
In its simplest form (y=x), a bonding curve looks like this:
Imagine that you want to stake 1 token A when the supply of token A in the pool is 10. The price of token B would then be 10 token A. You would get 0.1 token B in exchange of 1 tokens A.
Now imagine that the supply of token A in the pool increases to 20. The price of token B would then be 20 tokens A. If you decided to sell, you would get 2 tokens A with your 0.1 token B.
Because the supply of token A in the pool increased, the value of your stake increased as well.
Why does Angel Protocol use bonding curves?
Each charity will have its own bonding curve. Since $HALO stakers’ rewards are directly correlated to a charity’s donations, it would make sense from a purely financial perspective to only stake to the charities receiving the most donations to get the lion’s share.
And because staking to a charity directs even more donations to them (more on that later), a vicious circle appears where large charities keep on getting more donations because stakers want more rewards, leaving smaller charities out of the equation entirely.
We had to incentivize purely financial agents to stake to lesser-known charities and reward early supporters of smaller charities with extra financial gains. Bonding curves are a great tool for this. But not any bonding curve. A concave (or sublinear) bonding curve. Ours will look similar to this:
Why do bonding curves multiply $HALO stakers’ gains?
Imagine that you’re a long time follower of charity A above and have decided to stake your 1,000 $HALO to them when charity A’s Charity Shares (the token you get in return of staking your $HALO) price was of 1 $HALO. You get 1,000 Charity Shares of Charity A.
You’ve left your $HALO staked with Charity A for a whole year and the staking rewards for charity A amount to 15% for this year. You’re supposed to be able to collect 150 $HALO.
Remember that value that accrues to stakers can only increase in Angel Protocol? With our design, value accrues through the bonding curves by burning charity shares. If you hold charity shares, their price increases automatically as donations come in with an ever-raising floor.
Back to you. Thanks to your support, Charity A has gained supporters that have staked their $HALO and has been receiving automated donations, pushing its supply of $HALO reserve and the price of its Charity Shares further.
Conservatively, after a year, the price of the Charity Shares you own is now at 1.5 $HALO. If you were to sell your 1,000 Charity Shares, you would get 1,500 $HALO, netting you 500 $HALO. That’s 3.3x more than without a bonding curve. Not too shabby.
3. Staking helps charities
This is, in our eyes, the most compelling argument of all: by staking to a charity and earning monetary rewards, you are helping them, in tangible and non-tangible ways.
More tokens staked to a charity means:
- Increased visibility on our platform and increased donations
- A higher chance to be included in the Charity Indexes to receive automated donations
- Capturing a larger portion of protocol fees originating from other verticals through a validator-like commission
By staking, you win and help win.
About Angel Protocol:
Angel Protocol is a global social enterprise building on the Terra blockchain that leverages decentralized finance (DeFi) to create perpetual endowments for charities. We abstract away the complexity of DeFi while providing all the benefits for those who need it most: charities & non-profits. By doing so, we build a world where all charities can have financial freedom. With us, when their donors give once, they give forever.