It is a widely accepted truth that building a credit score system for crypto or web3 requires a significant amount of knowledge in the field. Despite the numerous projects attempting to tackle this daunting task, it is still considered a Herculean feat.
Intriguingly, at the centre of today's article lies a pack of llamas (once human) who are ingeniously pioneering a social framework and cultural momentum for Curve finance, the protocol that pulsates at the core of DeFi's current landscape.
While this might not exactly look and feel like what an ideal credit score framework would look like, it’s surely an interesting approach to things.
How cool is this Llama?
Curve and the Llamas?
Curve finance remains the second most important component of the DeFi ecosystem right after Ethereum. Curve’s deep stablecoin liquidity can only be rivalled by centralized exchanges and its unique tokenomics opens up the protocol to composability.
Curve’s solid reputation and lack of a utility-based NFT counterpart is the major driving force behind the development of the Llamas ecosystem. You can consider the Llamas to be a group of individuals invested in the continued growth of Curve and Convex, and in order to achieve this, have decided to build a social layer for the protocols.
The objective is crystal clear - to construct a reputation accrual flywheel that unleashes boundless opportunities for the esteemed members, affectionately called Llamas. In order to fulfil the cultural aspirations of the project, the Llamas have devised an innovative NFT finance initiative.
To begin with, each Llama would be a unique ERC-721 digital collectable, serving as a virtual representation of its owner to trace and incentivize constructive actions, both on and off the blockchain. The total number of Llamas to be minted will be 1,111 at a mint price of 0.1ETH.
Badges, the marketplace, and Llama workforce
For any reputation scheme to work successfully on-chain, there must be a means to acquire social proof and a process with which the social proof is earned. The Llamas have figured this out and designated “Badges” as proof of work earned by taking on tasks. Although the Llama NFTs can be traded, badges will need to be earned as they prove the skills and abilities of the token holder.
Llama badges will be available on the Llama marketplace — a place where Llama holders can hunt for bounties, compete for incentivized tasks, and earn yields for the treasury, as well as rewards or badges that help build their reputation. The more badges earned, the better the reputation of a llama.
Just like Curve’s permissionless factory pool creation system, the marketplace for badge hunting will also be permissionless — any project can create a use case for the deployed badges. At first, only three (3) forms of badges will exist: Raid, Class, and Veteran. However, as the ecosystem evolves, more badge types will be added.
Raid Badges
According to the llamas, these badges are to be used exclusively for product launches or at the point where a project seeks to garner attention, liquidity, or energy in one place. As llamas participate in activities belonging to this badge type, they earn rewards such as heavy-weight yields and their reputation, in the short-term, increases in value with earned badges. An example of this class would be llamas who are dope prompt engineers and have the prompt engineering class badge (or audit or contracts or video editor or whatever) that can be targeted for specific opportunities.
Class Badges
The llamas refer to this badge type as a skill-based, reputation-heavy, low-yield in long time frame badge type. The class badge helps to create a distinction between contributors to a project, allowing such projects to reward active participation. An example of this could be a PvP event where Llamas would compete to deliver to hit a protocol’s pool TVL target.
Veteran Badges
Consider this badge to be proof of “OG” — indicating that a contributor or community member was part of a project before the influx of other members to the project. This badge type tracks a set of activities that mirrors the moments that solidified the OG status of a project’s community member.
One more important personnel of the Llama badge ecosystem is the “Attester” — the one who signs off on a badge to verify the completion of bounties and tasks. These mysterious anons will be selected by the badge deployer during the process of deploying the badge. The role of the attester is akin to a quality control officer, and just like any other Llama, they’ll earn rewards for the work they put in. Any Llama can become an attester by putting in the required amount of work to a level of mastery.
What’s with and in the Llama Treasury?
It’s important to state that after the Llama mint, 100% of the proceeds will be used to buy CRV and CVX and will be locked as veCRV and vlCVX in the “Llama-sig” (Llama’s community multi-sig). These locked tokens would be Yield-bearing with 50% of the yields earned by Llama holders and a further 50% to compound yields and grow the treasury.
N/B: Llama treasury will be mainly made up of CRV tokens.
The llama treasury would be filled with grass, shrubs, flowering plants, and trees, all edible stuff for classic Llamas. Consider this list of edibles, as grants from a number of established Curve ecosystem projects such as CNC, CVX, cvxCRV. These grant projects are partners who not only support the Llamas, but have delegated some tokens to the Llamas.
According to the latest Q&A by the Llamas, Grant tokens will also be locked up in their respective governance positions and used to vote as well as generate real-yield for the Llamas.
Just like we said at the beginning of this piece, the Llamas are keen on the continued growth of the Curve ecosystem and as a result, will not hesitate to put the treasury to work for this cause — voting for the betterment of Curve with its locked governance tokens. This will involve the use of Llama’s acquired voting power to participate in Curve governance, boosting gauges and voting for proposals that promote the health of the broader ecosystem.
Visual representation of the Llama ecosystem with the Treasury at the core.
Image source: Llama Mirror publication
Enter the LlamasHaus
This repository of brilliance stretches far beyond just Badges, marketplaces, and ERC-721 NFTs. It extends to encompass what is referred to as the Llamahaus - a contract-based auction house or Launchpad that the Llama community can leverage to their advantage.
As per the Llamas, this contract offers a versatile, all-encompassing, and impartial platform for launching new initiatives. Llamas will have the freedom to roll out NFTfi, tokens, and on-chain art using Dutch auction, English auction, or any other variation of auction mechanics.
However, only llamas with Attester-level badges will be able to create and launch a project using LlamaHaus. A percentage of the mint or token supply of projects using LlamaHaus will be taken and added to the treasury — another source of revenue.
Other revenue sources:
Here’s a list of all the revenue sources mentioned so far including others not mentioned above:
- Revenue generated from the mint and auction
- 5% royalty fee from Llamas secondary sales
- locked grants
- protocol-owned Llamas (POL) yield strategies
- v2 badge marketplace
- Revenue from projects using Llama workforce platform.
All these contribute to a viable economic flywheel for the Llama ecosystem.
Heard enough! How do I participate?
If you’re new to the Llama community, you still have an opportunity to participate in the public auction although the process for allowlist and whitelist is now closed.
Here’s the flow for Llama’s mint:
April 13th — Team and treasury mint
April 14th — AL mint commences
April 16th — Whitelist auction begins
April 22nd — Public auction
So much Llama news, can’t wait.
Closing thoughts
In recent times, NFT finance has become a serious approach to NFT utility and most of them have gone on to be successful. The Llama initiative stands out for its meticulous economic design, which is not unexpected, given that its core founders have been valuable contributors to the Curve and Convex ecosystem for a long time.
If you want to listen to Grant interview the Llama contributors you can do so below:
https://www.youtube.com/watch?app=desktop&v=x-0m7b1WvuA
Our outlook is predominantly optimistic, and we envision that the slightest indication of accomplishment in this undertaking will spur NFT initiatives, specifically using the Llama approach to become a crucial social layer in DeFi flywheels which in hindsight could become a net positive for the space.
