DAM: Unlocking the Potential of Long-Tail Assets in the Polkadot Ecosystem

On July 13, 2022, the exchange rate of the US dollar and the euro reached 1:1, which is undoubtedly a historic moment. Since the financial crisis of 2008, the US dollar has continued to strengthen relative to other fiat currencies. This dollar shortage stems from foreign governments and companies borrowing dollars to expand capital, despite their revenues being in non-dollar currencies, the demand to repay dollar debts continues to exist. However, the circulating dollars are insufficient to pay these debts, which is also one of the reasons for the "massive money printing," which has exacerbated inflation to some extent.

In this context, the cryptocurrency market increasingly requires dollar-pegged stablecoins. Currently, the most circulated stablecoins in the market are "centralized" stablecoins primarily based on USDT and USDC, which usually conduct legal collateral off-chain. Although this method provides security for users, the costs of minting and redeeming can be high, and there are risks associated with centralization.

Therefore, stablecoins issued in a decentralized manner have emerged. These protocols generate stablecoins through cryptocurrency collateralization, shifting the minting and redemption mechanisms on-chain, and incorporate incentive mechanisms to maintain the peg, featuring characteristics such as decentralization and censorship resistance.

As of early August, the total market capitalization of the cryptocurrency market is approximately $1.1 trillion, with BTC, ETH, USDT, and USDC accounting for about 58% of the overall market capitalization. Most DeFi protocols and services revolve around ETH. However, nearly 40% of asset holders do not have access to similar services, especially users in the Polkadot ecosystem.

As a project that has consistently ranked in the top 10 by market capitalization, Polkadot has always attracted attention. However, the development status of Polkadot's DeFi seems to be seriously underestimated. This may be because Polkadot currently lacks leading DeFi protocols. But is that really the case?

DAM: A solution tailored for the Polkadot ecosystem

DAM (dPRIME Asset Modules Finance) is a liquidity protocol built on Moonbeam that allows users to lend the platform's stablecoin dPRIME through over-collateralization. This enables users to unlock liquidity without selling their existing assets, allowing for fuller participation in Moonbeam and even the entire Polkadot ecosystem.

Moonbeam, as the "Ethereum" within the Polkadot ecosystem, carries the important task of launching smart contracts and is one of the parachains with the most ecosystems. It has the highest number of XCM integrations, is user-centric, and has secured official partnerships with several leading Ethereum projects.

The core of DAM revolves around two tokens: the multi-collateral stablecoin dPRIME and the platform governance token DAM. Users can obtain dPRIME by over-collateralizing mainstream and long-tail assets in the parallel chain. Borrowers deposit collateral recognized by the protocol into DAM's linked-multi-collateral-vault (LMCV), paying a one-time mint fee.

dPRIME holders can mint, acquire dPRIME as a reserve asset in the secondary market, or convert it into other assets to seek better investment opportunities. When a borrower's vault status is unhealthy, liquidators can obtain a portion of the collateral and bonuses to cover the borrower's vault fees.

The platform governance token DAM is not only used for community governance, voting, and deciding protocol revenue, but it can also mint collateral assets in the platform. Users can deposit DAM into the stableswap pool to obtain LP Tokens, and then stake them on the relevant platform to earn ddPRIME, which can be used to mint dPRIME or other assets available for collateral.

The design features of DAM include:

1. dPRIME is an over-collateralized debt.
2. Each asset has an upper limit to ensure that the protocol does not have excessive risk exposure to any single asset.
3. Provide sustainable income for ddPRIME holders, that is, share the protocol revenue.

The DAM team is passionate about the industry and demonstrates professionalism. In the future, DAM is expected to expand from Moonbeam to all Polkadot parachains, providing services for every Polkadot ecosystem user. This will not only benefit the Polkadot ecosystem but may also open new opportunities for the long-tail asset market in the multi-chain space, allowing each asset to fully realize its value.

Financing Information

DAM Finance recently completed a $1.8 million Pre-seed round of financing, led jointly by Jsquare and DFG, with participation from institutions such as Arrington Capital, Ledgerprime, D1 Ventures, 11-11 Capital, and Stacker Ventures.

Views of Investment Institutions

Jsquare, as an investment institution focused on research and technology, believes that DAM, as the first over-collateralized stablecoin project in the Moonbeam ecosystem, can bring better liquidity to multi-chain ecosystems like Polkadot, while maximizing respect for users holding diverse assets and providing value for long-tail assets.

As a leading Web3 fund that has long been deeply supportive of the development of the Polkadot ecosystem, DFG has always believed in the potential and future of the Polkadot ecosystem. They have been deeply involved in the investment of multiple high-quality projects and have supported parachain slot auctions. DFG firmly believes that the current Polkadot ecosystem is severely undervalued, which is why they are very excited to participate in the DAM project.