A unique layer 2 noncustodial AI-DeFi solution aimed at revolutionizing the altcoin markets
I’m thrilled to announce to you today a project SingularityNET Foundation has been developing and incubating in a quiet way for a while — SingularityDAO, a new initiative in the decentralized finance (DeFi) space.
The mission of SingularityDAO is one dear to my heart: To improve the funding and growth situation for early and mid-stage blockchain projects. It aims to achieve this mission via leveraging AI and well-designed tokenomics to create radically more liquidity for the corresponding tokens.
The context of this mission will be clear to anyone who has been active in the blockchain space in the last few years. During this time, hundreds of projects have launched unique decentralized software and social technologies based on tokenomic innovations. Many of these projects, however, struggle to achieve consistent project growth in spite of solid underlying technology progress — in part because low liquidity and high volatility render their tokens unappealing to purchasers.
SingularityDAO introduces a new set of financial tools oriented toward solving these liquidity and volatility problems.
SingularityDAO’s novel AI-DeFi mechanisms make it more beneficial and less risky to hold portfolios of utility tokens that individually have only modest liquidity — thus increasing the liquidity available to the projects that issued these tokens, and providing an ecosystem in which volatility-dampening mechanisms like futures and options can introduce. Our ultimate goal is to create market conditions that are favourable to high-quality innovative projects using tokens to achieve rapid growth.
Why are we choosing to get into the DeFi space?
The crux of the matter is: Humanity needs more high-quality decentralized technology projects.
Advanced technology, centrally including software technology, is the key to the next stages of the advance of the human species. And these next stages are going to progress more beneficially if the tech involved is not owned by a small number of parties but is rather guided in its growth via democratic and decentralized mechanisms.
This means resources must get directed to the many high-quality decentralized tech projects that already exist — and the even more numerous amazing new ones that are going to be created in the following months and years.
If we can increase the liquidity available to the utility tokens of these projects, we can foster the emergence of mechanisms that will decrease the volatility of the exchange rate for these tokens and increase the ease of project operation. This is the raison d’etre of SingularityDAO.
In short, SingularityDAO democratizes AI for advanced financial prediction, risk management, arbitrage, and automated market-making — via incorporating all this AI in a tokenomic framework with a focus on lower-liquidity altcoins and their aggregates. In this way, it will fulfil its mission of using decentralized AI and DeFi to create new mechanisms that can radically accelerate the growth of the decentralized tech economy.
How Does It Work?
The SingularityDAO design has significant features in common with prior DeFi projects such as TokenSets and Compound Finance but also has several unique aspects.
SingularityDAO involves three types of new tokens, which represent three layers:
- A lower layer of token-sets known as DynaSets. A DynaSet is a dynamically managed collection of utility tokens, somewhat like an ETF in traditional finance, but explicitly oriented toward lower-liquidity as well as high-liquidity altcoins. Generally, the management of a DynaSet will be done by AI robo-advisors, e.g. wrapped up in agents running on SingularityNET platform
- A middle layer which allows users to farm and hedge yield tokens known as SingYield tokens. These SingYield tokens are based on the ETF-like DynaSet tokens and allow holders to share in the returns obtained when smart contracts automatically loan out DynaSet tokens to borrowers wanting to perform trading (including simple arbitrages and also AI-based trading)
- A top-layer governance token called the SingDAO token, which is earned by keeping SingYield tokens within the platform.
The decentralized market-making required on the back end of trades involving DynaSets and SingYield tokens will greatly boost liquidity for the altcoins included in the DynaSets.
The SingularityDAO tokenomic system provides an opportunity for individuals and institutions to purchase lower-liquidity altcoins corresponding to exciting technology projects in an implicit way, via purchasing DynaSets and SingYield tokens derived from them. The overall ecosystem has the potential to significantly decrease the volatility experienced by purchasers of such tokens, which will increase the viability of the projects corresponding to the tokens.
As one would expect from its origin within SingularityNET, SingularityDAO has been designed to make effective use of AI at every level. AI robo-advisors will be used to manage many of the initial DynaSets; AI bots will be used for return generation based on DynaSets borrowed from yield farmers; and AI strategies will be used for hedging DynaSets and yield tokens so as to dampen volatility throughout the ecosystem.
One factor is: SingularityDAO’s mission and methodology are highly copacetic with current trends in the blockchain space and crypto markets.
Recent rapid growth in the DeFi sphere demonstrates there is a substantial current appetite among crypto investors for non-custodial versions of the sophisticated mechanisms available in traditional finance.
And we are also seeing a large number of new blockchain technologies coming out aimed at bypassing the speed and cost issues that limit current Ethereum-based DeFi projects — both higher-layer technologies built on top of Ethereum, and alternative blockchains designed for scalability in the fintech context.
Putting these factors together, it seems likely to me that DeFi is going to explode in 2021 to an unprecedented degree. With SingularityDAO, we’re aiming to direct this explosion with the benefit of AI — and direct it toward creating a tremendously better situation for early-stage decentralized tech projects and their corresponding utility tokens.
Why else now?
SingularityDAO also has the potential to be a facilitator for some new developments we have been eager to introduce within the SingularityNET platform.
Our partner project Ocean Protocol has introduced the exciting notion of an IDO, an Initial Data Offering, in which a user’s dataset can automatically be associated with a corresponding token which can then be traded on a decentralized exchange.
We have been considering for a while doing something similar for AI services running on SingularityNET — creating mechanisms for auto-generating liquid utility tokens corresponding to selected SingularityNET agents and products back-ended on SingularityNET agents. These tokens would then be exchangeable on DEXs.
Our own spinoff projects Rejuve, NuNet and Xccelerando — each of which is intended to soon launch its own token, interoperating with the AGI token — have provided us with some inspiration here, but of course, such a mechanism could extend far beyond SingularityNET spinoffs.
However, my feeling has been that to create a large variety of tokens corresponding to SingularityNET agents, without sophisticated methods for supplying liquidity and modulating price volatility for these tokens, might lead to more chaos than fundamental progress.
A flourishing SingularityDAO network — as well as creating highly valuable financial mechanisms to boost the growth of the current altcoin universe — will provide precisely the sorts of mechanisms needed to foster a healthy financial ecosystem involving derived tokens running on top of SingularityNET.
Combine this with the major role that SingularityNET-based AI tools are going to play in predictive modelling, trading and market-making algorithms operating behind the scene of SingularityDAO, and the synergies between SingularityNET and SingularityDAO begin to seem very profound indeed.