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ZooDAO: Where DeFi, NFTs, and Degens Collide for Future Yield

September 12, 2023

In conclusion

The reality of a bear market is that it sucks out all the fun and, at the same time, has no mercy for your bags! 

Interestingly, token holders (excluding shit tokens) have options: they can easily sell their assets and move to more stable ones, deposit them into a DeFi protocol and earn yield or even protect their holdings by "Bumpering" them, a concept we discussed recently.

However, for the NFT holder, it is not that simple. 

In the throes of this relentless bear market, NFT markets haemorrhage value, forcing holders to part with their assets reluctantly. Nevertheless, despite Machi Big Brother —CT's less favoured antagonist’s relentless Blur bids, the reality remains: Bids are nearly extinct, and exits prove more challenging than ever, leaving many folks with no choice but to “baghold” their NFTs to death. 

If you're reading this and thinking about the once-prized NFT that's currently in your wallet, you're likely part of the group tagged as "a lot of folks," and that's perfectly fine. It only means that this article is for you as it seeks to uncover the solution to the many challenges that token holders and NFT owners face. 

The Problems 

The Sum of what has been said above is that for both Token holders and NFT owners, there is very little option left other than to seek value for their assets. The most obvious way this could be achieved is by pursuing DeFi yields. In the event that asset holders attempt to extract value via various yield sources, the common problem usually encountered is that of subpar yields across markets. 

In addition, interacting with DeFi is no easy task, and relying on yield aggregators to automate the process will likely bring us back to the first problem of obtaining subpar yields. 

All of these activities targeted at extracting value using assets affected by the bear market have one thing in common — they relegate the asset owner(s) to total boredom! Zero fun if you’re not chasing yields yourself, daunting, complex and tiring if you’re chasing yields yourself, and quite the dilemma if you’re doing neither. 

With the above in mind, a solution to the above problems would be something that sparks fun, offers the opportunity to earn competitive yields, and allows players to put their dormant NFTs and tokens to use! 

Personally, I believe "ZooDAO" is a fitting name for such a solution, and I say this without any bias. 

Welcome to the Zoo: 

No-loss yield games have long been a thing in the world of TradFi, with hundreds of billions invested in government prize bonds. It allows participants to retain their money while playing for luck. Likewise, in the crypto scene, products like YGG and PoolTogether have given the concept a shot. However, despite both being massive successes, they couldn’t adapt to the rapidly evolving DeFi space. 

On the other hand, ZooDAO introduced a fresh spin on the design in 2021, during the thick of the NFT euphoria. ZooDAO drew inspiration from Pooltogether's pioneering no-loss concept but took it to the next level. The ZooDAO version is more engaging, personalized, and enjoyable and taps into higher-yield sources, ultimately increasing profits for all users.

Now, I can tell you how this project has been dealt severe blows by the sole giant fist of this brutal bear market and other significant deleveraging events since 2021 — a cog in the wheel of something auspicious. However, this isn’t a pity party! Two years on, there’s still an overwhelming need for a product like ZooDAO — Impressive, right? Yup! 

And so, the question begs — what does ZooDAO do, and how does it solve the problem of token and NFT asset holders in this market? Why is it relevant?

ZooDAO is a no-loss yield farming game that allows you to leverage your future yield and take on more risk for potentially maximised returns by winning your opponent's yield (along with some ZOO) on top of your own, all in the safety of a no-loss environment. This doesn’t mean that players are idle, but at least, it puts into perspective why the concept of a “Battle system” related to ZooDAO doesn’t connote wielding swords and shooting arrows. Instead, a Battle is a passive experience that involves voting (staking liquidity) for a period of 21 days and tuning in to see your random opponent, the yield you can potentially win from them, and your odds against their stake.

How it works 

ZooDAO operates in stages, with the first stage of action being the staking of any NFT from the ever-growing list of 350+ whitelisted NFT collections, into the protocol. Having staked an NFT, the journey doesn’t end there, as the community or users have to deposit liquidity on top of the staked NFT, the “Votes” we referred to earlier. This liquidity will be immediately put into action to generate yields. Furthermore, those who stake their NFTs receive a wrapped version of the staked NFT. 

Those who prefer not to stake their NFTs can immediately dive into the action by casting votes on the already staked NFTs! This not only earns them their own yields but also provides an opportunity to earn the yields of opposing players in a ZooDAO DeFi battle. The NFTs provide an excellent way to leverage the social profiles of existing communities and a convenient way for the PvP yield Battles to come to fruition, but having a horse in the race can also be simply voting on an NFT you like.

ZooDAO Battles involve a 1 on 1, no-loss Battle between users competing for each other’s future yields by voting on staked NFTs. 1 on 1 in that two staked NFTs are pitted against each other, but there can be an infinite number of people voting on any amount of championed NFTs and an infinite amount of Battles happening simultaneously; all players then earn rewards proportional to their stake, and their opponents yields should they win. A Battle occurs for a span of 21 days, and at the end, the loser doesn’t incur any losses. Instead, the player is incentivized with utility-filled ZOO tokens to participate. Conversely, the winner earns both their own yield and the yield generated by the loser over the Battle period, proportional to their Votes.

Let’s break down what happens in a Battle:

In Stage 1, Player A stakes a Bored Ape and receives a wrapped version of the staked NFT (a zNFT). Other NFT stakers will do the same. 

In Stage 2, anyone can vote on Player A’s staked Bored Ape or any other staked NFT. In turn, they receive zVote tied to the capital they’ve staked, similar to a UNI v3 LP position. 

No one knows who they’ll face in the NFT battle until Stage 3. At this stage,  Player A is matched with Player B or any other player according to their League level. The League you’ll “Battle” in is decided by the number of votes on your championed NFT, so smaller players compete for smaller yields while the apes and whales Battle it out in exciting higher-stakes situations. 

In Stage 4, Users can boost their chances of winning with ZOO-ETH LP (capped at a 1:1 ratio with their votes in Stage 2).

At the end of the Battle, Player A had the highest number of votes, but that doesn’t mean they have automatically won the Battle! It’s based on probability, and each player has a percentage chance based on their total number of “votes” vs. their opponents. Player A ends up winning as the favourite, and other players who voted for Player A by depositing their liquidity will earn both their own yields generated over the battle period and the future yield of Player B proportional to their stake, potentially doubling their APY or more! Another exciting part is that the losers of Battles (Player B in this case) have an opportunity to earn a portion of $ZOO — the native token of ZooDAO, just by participating.

Boosted yields, Incentives and veZOO

The ZooDAO Battle mechanics provide for boosted yields through $ZOO distribution at the end of each Battle season. Both winners and losers earn a proportion of $ZOO tokens after a battle, depending on the veZOO ranking of the collection being voted on or staked. ZooDAO introduced the voting-escrow model through veZOO to regulate these ZOO emissions, providing more incentives to real users. 

Players can opt to lock their ZOO tokens in the form of ZOO-ETH LP behind their favourite NFT collections for periods of time to receive veZOO (which are non-transferable, by the way). To curb manipulation from whales who might attempt to buy ZOO in the open markets and lock in order to obtain veZOO and farm incentives, veZOO operates as a “mirage” token and decays over time. What this means is that ZOO lockers will not receive veZOO in the form of an ERC-20 token; instead, a user’s veZOO position is only visible via the dApp and linked to the wallet that locked the ZOO tokens, and the veZOO position. veZOO locking also primarily benefits those voting (gamifying their DeFi yields) in the dApp, since most of the ZOO emission goes to voters, and a small % goes to the NFT stakers of veZOO ranked collections. In essence, ZooDAO heavily rewards all those with skin in the game.

Apart from their role in governance, ZOO tokens play a crucial role in the fourth stage of NFT battles. They can be utilized to amplify voting positions at a 1:1 ratio of the $ value of votes, thereby enhancing the odds of winning Battles and providing a utility floor price for the token itself.

Version-wide Improvements (v0 - v1) 

As mentioned, ZooDAO isn't a newcomer and has existed for some time. The project already has a well-established DAO with numerous resolved proposals, a defined tokenomics structure, and Battles that are already underway. The initial iteration of the project, known as v0, was built on Moonbeam and gained some mid-bear attention. Nonetheless, in many ways, version 1 promises a far superior experience for ZooDAO players. 

To begin, the voting process gains efficiency by enabling voters to use a wider range of assets, including ETH, WBTC, LINK, UNI, USDC, USDT, DAI, and FRAX, rather than being restricted to FRAX tokens alone. Moreover, the limitations of time-based voting are removed, eliminating the need for voters to monitor battle periods to support specific NFTs closely. Now, voters can embrace "Anytime voting," where their votes automatically carry over into subsequent battles, generating yields.

Another important improvement is in the introduction of “Leagues” to ZooDAO. Previously, a voter might have found themselves competing against others with greater voting liquidity in the same battle. The remedy to this challenge lies in classifying voting strengths into leagues, ensuring that liquidity providers with similar levels of liquidity compete against each other, fostering opportunities for growth. These Leagues will be categorized into six, based on the number of “votes” the NFTs have:

  • Wooden League: 1 - 400
  •    
  • Bronze League: 400 - 1,500
  •    
  • Silver League: 1,500 - 5,000
  •    
  • Gold League: 5,000 - 20,000
  •    
  • Platinum League: 20,000 - 100,000
  •    
  • Ape League: 100,000 - Infinity

It is particularly exciting that the highest league is called the “Ape League” 😉

Future iterations of the ZooDAO’s DeFi Battle game will also allow the communities of various DeFi protocols to Battle for yields in Protocol vs Protocol Battles, where 1/1 cards are voted on and yields are competed for in a similar way — something like Lybra versus Swell. 😉

ZooDAO is also integrating with LayerZero, allowing for better yield generation as liquidity can be deployed across the board in search of yields and provide a more efficient way to bridge NFTs from one chain to another.  

Where do the yields come from? Version 1 will leverage GLP yields from GMX and auto-compound these yields on Abracadabra. In the future, v2 will aggregate more protocols to generate sustainable, competitive yields across multiple protocols. For the user, this activity doesn’t get past clicking a few friendly buttons to earn these yields — the goal is to abstract the complexity away from DeFi, amplify its benefits, and maximize the fun. The protocol has also made the decision to move from Moonbeam to Arbitrum, thereby exposing the protocol to liquidity and contributing immensely to visibility. 

As ZooDAO advances in enhancing its protocol, one upcoming feature of note (to come later) is the introduction of its isolated lending market. This exciting addition will allow users to collateralize LSDs (Liquidity Staking Derivatives), voting positions (zVote), and staked NFTs (zNFTs) within the platform. In a manner reminiscent of JPEG’d-style models, users can utilize LSTs (Liquidity Staking Tokens) as collateral to mint zETH or zUSD.

When borrowers leverage their zVote or zNFT positions as collateral, they will be responsible for repaying the lenders who provide the LSTs. It's worth noting that zVote and zNFT positions serve as staked derivatives, offering a wide range of potential use cases within and outside the ZooDAO ecosystem.

The Team

ZooDAO arguably has one of the most based teams in the space. The team’s work experience encompasses Lido, xDeFi, SpookySwap, and Ankr protocol. Moreover, the team’s solidity developers were responsible for architecting and developing Russia’s CBDC, a serious business. 

Closing thoughts 

ZooDAO’s approach to offering asset holders more value for their tokens is robust and seamless at the same time, encompassing the DeFi landscape. 

A few paragraphs above, we mentioned this: 

“…would be something that sparks fun, offers an opportunity to earn competitive yields, and allows players to put their NFTs and tokens to use!”

ZooDAO rekindles excitement with its no-loss DeFi Battles, generates value for NFT holders through staking, and offers benefits to token holders through voting and gamified yield generation. It offers competitive yields with enhanced rewards in ZOO and the thrill of claiming your competitors' DeFi yields. It surely doesn’t get any better than this, does it? 

The V1 private testnet is live, and Mainnet is on the horizon. There will soon be a unique chance to acquire up to 6% of the total ZOO token supply by providing liquidity on Arbitrum in a gargantuan LP program ZooDAO will introduce with their launch. The aim is to reach a liquidity target of up to $2 million, with over $225,000 already committed at the time of writing this article. The potential here is crystal clear - ZooDAO holds a very promising future.

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