SigmaFi is the DeFi layer every other protocol is missing. Logic behind each individual token structure is something many people overlook increasing the odds of failure as time continues to progress.
The Sigma Foundation is the first organization to experiment with combining several economic theories in order to create a paradigm shift in economic stabilization. We propose a full circle plan from DAO implementation to bootstrap, then gradually migrate to an algorithmic decentralized incentive structure. This shift can be conveyed in the following perspective: in any economy, there are basic economic forces of supply and demand. Ultimately these forces are driven largely by incentives - there is typically one or multiple incentives to go from one asset to another, often for financial gain. The objective of the SigmaFi model is to simplify price coordination. When somebody exits the ecosystem there is an incentive for somebody else to enter.
Starting next week we will start the transition of Sigmadex into 2 different complementing products; SDEX will be the token used for both platforms.
Sigmadex
Multi-chain DEX aggregator with a dynamic incentive layer and unique reward mechanism.
SigmaFi
Base game theory inspired currency layer with an inflationary reward system and deflationary penalty system allowing a degree of ecosystem stabilization.
Our team is proposing to focus all available time and energy on the SDEX base currency layer for the token launch moving forward. Since day 1, Sigmadex has envisioned being more than just another "DEX" in the market. To accomplish this we will use our resources on building an immediate sustainability layer within the ecosystem.
This layer will provide the proper incentives to keep new capital flowing into SDEX for long term benefits. In order to capture maximum rewards, participants must not only acquire and stake tokens the traditional way, they must further commit time for a larger reward only available to themselves. The earlier they start the process the more benefits they will reap and ultimately the more competitive advantage they will have as time lapses.
Current market conditions have proven that most projects are failing to sustain the most important test... the test of time. Following our philosophy of building a product that continues to stay relevant for the future and dedicating as much attention to the token purpose we expect unparalleled results. Innovation will be the leading factor in keeping our head well above water even during the most turbulent times.
- Roland Haggins
Early Adoption Advantage
Similar to Bitcoin, the incentive structure for early adopters can be broken down into 2 areas:
- A lower entrance price
- Competitive advantage of early adoption
In Bitcoin's early days block rewards were much higher than today, incentivizing people to participate in the network. We've taken this model and adjusted it to fit the Sigma ecosystem in the form of mining and minting APY NFTs. Individuals who participate in the mining process early on will have the time advantage by capturing larger rewards before everyone else.
Several game theory elements are in place to provide the necessary incentives for staying vested in the protocol and in the case of imbalance, penalties will bring the ecosystem to an equilibrium. The SigmaFi ecosystem has been engineered to have proper capital distribution allowing for an opportunity to transition without drastic volatility. As we progress, the DAO will fine tune parameters and phase in economic algorithms as we continue our experiment.
By exiting the ecosystem completely users will forfeit all of their time advantages forever. With every position that is forfeited a new opportunity is created for somebody else, enabling new capital to enter the SDEX ecosystem fairly and ultimately creating a positive token loop.
The SDEX token
SDEX will continue to be the native utility token used by both the liquidity protocol (Sigmadex) and base layer economic protocol (SigmaFi).
Building a sustainable economy and methodical currency across the Sigma ecosystem should be one of the biggest driving forces for both a successful launch and long term adoption for all Sigma DeFi products.
Economic Scenarios
| Action | Price Impact |
|---|---|
| Buying SDEX | Positive |
| Staking LP to Earn APY NFT | Positive |
| Staking SDEX to Earn APY NFT | Positive |
| Penalties | Positive |
| Earning APY | Neutral |
| Selling SDEX | Negative |
If we interpret the above scenarios, the following assumptions can be made:
Buying SDEX ✅
Buying SDEX on the market for speculation, staking, mining NFTs or any other purpose will increase wallet holders and contribute to further demand and appreciation of the token.
Staking LP to Earn APY NFT ✅
Staking LP tokens requires the purchasing and staking of 2 assets, one of them being SDEX. This would be a positive impact on SDEX and is temporary locked liquidity allowing for lower slippage. Ending an LP stake before it has matured also builds the protocol treasury to be more sustainable.
Staking SDEX to Earn APY NFT ✅
Staking SDEX tokens requires the purchasing of SDEX and removes them from circulation temporarily. This would be a positive impact on the SDEX ecosystem. Ending an SDEX stake before it has reached its maturity also deflates the token supply.
Penalties ✅
Oddly enough penalties and commitment violations are the backbone to protocol stabilization and encourages a unique price coordination model between participants when things start to bend deeply out of the equilibrium range. By introducing psychological game theory mechanics and understanding the long term value of SDEX's feedback loop, it can become evident that realizing gains will result in opportunity loss that cannot ever be earned back.
Earning APY ✅
When APY is being earned, there is still an incentive to compound rewards into the principal as there will be more opportunity for earning. If a user decides to pull out their rewards there is still a semi-positive outcome as it will create organic volume and have minimal downward effect on the ecosystem since the principal is still staked in the platform. The protocol is designed to absorb this type of pressure with very minimal slippage (if any).
Selling SDEX ❌
In any market a large amount of selling can impact pricing negatively potentially creating a downward spiral of fear and therefore we propose mitigating this by aligning incentives and using penalties for violating commitments.
How do we propose true economic stabilization?
True economic stabilization is not a simple task to solve, as a matter of fact, full stabilization does not even exist in the real world. On top of this all, there is no known formula or pre-built theory to accomplish this task.
The core element to keeping the SDEX ecosystem stabilized is to incentivize users to never exit the ecosystem completely. This becomes an issue when a persons initial investment becomes highly profitable. The result is increased motivation to realize their appreciated gains. In order to counteract this occurrence we propose the addition of valuable irreplaceable assets which cannot be obtained through traditional means (acquiring on market, etc).
Stabilization Through Penalty System
By having penalties that reduce the token supply, eventually we will move to a more dynamic system that balances the amount of stakers to fine tune arbitrary values proposed by the DAO.
Every penalty issued opens a new opportunity for somebody else to enter the SDEX ecosystem fairly.
- Lowers the token supply drastically
- Protects the token price
- Ensures whales cannot abuse the protocol
- Reduces global inflation rate
Community Transparency
We anticipate sharing our development accomplishments through GitHub and our social media channels. This includes details from the proposal phase all the way to completion. The process of creating initial specifications, wire framing, designing and testing all the way to mainnet deployment will assist with timelines moving forward. We are confident that with this type of transparency into the process, the community can obtain a perspective of what the team is working on behind the scenes as development is prioritized.
We encourage everyone to follow our GitHub to see detailed documentation and information on our development cycles.
A Fork of Nothing
Unlike most crypto projects, both Sigmadex and SigmaFi are unique products built by Sigma Labs and are not forks of other protocols. Everything from the Sigma Vault, Claim Drop, APY NFT Mining Pools and even the standard ERC20 implementation has required customization to support its elastic token supply.
Keep in mind the engineering and developing of these many assets by our team require the passing of intensive QA, as many of the contracts will be handling third party assets with no central party control. Both internal and external code audits are just one small aspect in building our ecosystem.
