The Problem with DeFi
The DeFi space is an exciting and rapidly-expanding area of the cryptocurrency markets. Many developers pride themselves on creating new financial instruments that reduce friction, increase yield generation, and ultimately provide users exclusive control over their assets. Meanwhile, some nefarious individuals create projects whose sole purpose is to deceive, swindle, and ultimately steal investor’s hard-earned ETH.
One of the biggest indicators of the ultimate success and legitimacy of a project is the token/coin launch. Even large projects with notoriety and positive sentiment can botch the launch of their project leading to loss of confidence from the community and potentially, abject failure. Pre-sale buyers often offload their tokens for a “quick flip” resulting in a significant decrease in the price of the asset. Fair-launch tokens suffer from the fact that early buyers can accumulate a large amount of the supply with a small investment and end up draining ETH liquidity after the token surges 10–1000x its initial value. Some projects have a sound idea, but the contract does not function as intended leading to loss of investor funds. Unfortunately, one of the most common downfalls of new projects is the infamous “rug-pull” scam in which ETH is removed from the liquidity pool, leaving well-intentioned buyers holding valueless lines of code.
One thing that is so distressing about this trend is that it perverts one of the foundational values of cryptocurrency; providing financial freedom for ALL, not just SOME. This lack of integrity gives the space as a whole a bad reputation and can cause people to avoid participating in the revolutionary new monetary system that is being developed. Mainstream adoption is coming, however, infrastructure must be implemented to keep new investors safe so they can continue to contribute and flourish in the space.
The graveyard of wasted potential that was mentioned earlier is what inspired HedgeTech to create the Vault. In short, it is a way to provide insurance for early project investors through a smart-contract that holds an ETH reserve that furnishes an ever-increasing price floor. It ultimately solves the issues that stem from weak-handed presale investors, incompetent marketing and development teams, faulty tech, and unfulfilled promises. The Vault features a dashboard that projects can leverage to give reassurance to potential investors.
The Vault concept is fairly straightforward: A percentage of all transactions is converted to ETH and sent to a smart-contract. The Vault is only accessible to token holders through a dashboard where users can swap their tokens for ETH at a price that is determined by the amount of ETH in the Vault. Whenever this function is performed, all tokens that are sent to the contract are subsequently burned. This means that EVERY transaction adds to an ever-increasing price floor for the token and if the token price ever falls below the base price, holders can burn their tokens in exchange for ETH in the Vault helping the token to rebound through the deflationary mechanism.
For example: if the total supply of the token is 100,000 and the Vault has 5,000 ETH then the swap would be .05 ETH per token. This swap price is static, meaning all tokens will be worth .05 ETH. The Vault concept in tandem with deflationary tokenomics will provide a sustainable model for HedgeTech to perform well long-term.
The Vault can also be used by projects to incentivize pre-sale investors to hold their tokens after launch. A portion of funds raised will go directly into the Vault, which can be seen in real-time through the dashboard. When the token is launched there will already be a hard price floor, which will only increase over time providing stability and promoting positive price action.
HedgeTech is experimenting with innovative ways of filling the Vault with ETH besides just the trading tax. Expanding the total ETH that is locked in the Vault will increase the token’s underlying value. Our governance token VLT will be used for all major decisions of this project, from day one this will be a project that values community input and influence. The token will launch at 2x the presale price and the Vault price floor will launch at the same time as the token listing. Investment risk is minimal by design, thanks to the Vault. Our code is almost fully complete, and seed investors will be airdropped governance tokens (Amount TBD).
HedgeTech is a small team of professionals who are passionate about making DeFi a better place to be. We have fallen victim to scams before and we know how discouraging it is. We value development transparency and community input. This concept has never been tried before and we know there will be some hard decisions to be made as the project evolves. The community will play a vital role in shaping the future of the Vault and how it is utilized. We feel the Vault is a simple and safe solution to a long-standing issue with ERC20 launches. We aim to build trust between project teams and investors to remove the gamble from early investing, Hedge Your Bets with HedgeTech!
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