WHAT THE FUCK IS..... Keeper DAO!?
KeeperDAO is the latest in a string of fascinating DeFi experiments. Given the community-driven nature of Keeper DOA, the project is constantly evolving. Let’s dive in to understand just how Keeper DAO’s protocol works and how their DAO operates.
KeeperDAO seeks to align incentives for two main groups, liquidity providers and token holders. The Keeper DOA native token is $ROOK. The incentive for liquidity providers to supply assets is nothing we haven’t seen in the DeFi space. KeeperDAO reduces the complexities of participating in liquidation and arbitrage strategies, allowing liquidity providers to earn a profit off their staked tokens. For liquidity providers that supply assets to the pool during the mining period, rewards will be prorated against ownership % of the total assets in that individual pool. Rewards for liquidity providers are calculated and emitted per-block. Learn more about becoming a liquidity provider at: https://app.keeperdao.com
Where things get interesting is on the other side of the proverbial coin. You see, Keepers need to be incentivized to maintain infrastructure to call liquidations and find arbitrage opportunities. This means there needs to be long term opportunities to ensure Keepers are actively participating in the network, not just taking short term positions. How does the Keeper DOA accomplish this? The answer is in their name….
The Keeper DOA is fueled by $ROOK, a governance token. Peep the action on the token contract here.
$ROOK is an ERC20 token that allows holders to propose and vote on system upgrades, and administer profit share between Providers and Keepers. We introduce “arbitrage-mining” for early keepers, aimed at bootstrapping activity during the initial stages of the protocol. Pools emit rewards for keepers independently, and rewards for keepers are calculated and emitted per-day. Rewards are distributed 24 hours after the day ends.
It is to be expected that KeeperDAO liquidity pools will be holding more assets than are being utilised by Keepers at any given time. So, when the pool expands to, say, $500M in assets, but Keepers are only utilizing a fraction of the pool, the DOA can use the excess funds and distribute them across various yield generating protocols.
The initial total token supply is set at 1,000,000 ROOK. All $ROOK tokens were unrestricted when Keeper DOA launched in 2020. That being said, ROOK will move to an inflation model in the future, so the total future supply remains a major variable. Eventually $ROOK rewards will be amended as $ROOK token holders vote for/against different proposals related to inflation, rewards, etc.
Since KeeperDAO will be ever evolving, it is hard to know exactly where they are headed, but some emerging developments we can speak to are:
- The ability for $ROOK holders to delegate their $ROOK to Keepers to encourage/discourage behaviors that cannot be automatically captured by on-chain smart contracts
- The ability for KeeperDAO to front-run attacks against DeFi protocols and return the funds safely back to the appropriate parties.
- Allow users to route their liquidity through proxies, for trading or lending. These proxies automatically capture any profit that can be extracted from arbitrage or liquidation and return those profits back to the user.
This is a fascinating experiment, so make sure to keep an eye on this DOA as it evolves!