HappyBlock AMA #4 — Entropyfi
The fourth AMA of HappyBlock social platform product “HappyBlock Forum” went live. On OCT 28, Derek Chen, the head of the Entropyfi — a Lossless decentralized prediction Market was joining the AMA.
What is Entropyfi?
Entropyfi is a lossless decentralized prediction market. Their goal is to open up the prediction market in a lossless way, lowering the barriers to users and allowing everyone to build new financial derivatives on Entropyfi. Currently, Entropyfi has launched crypto asset price prediction products to facilitate new users to get started, and will gradually launch more complex products such as Ethereum GAS price prediction, USDT asymmetric lossless insurance, etc. Entropyfi now has access to AAVE, Chainlink and integration with Mask Network, allowing users to interact with the product directly on Twitter.
Entropyfi provides two products: self-amplifying prediction market and self-paying insurance. In the self-amplifying prediction market, the worst case that a user will have is being wrong about the prediction, but the user will still retain the original deposit. This is because everyone’s deposit will be earning yield on AAVE, and the yield will be used to reward the users who are correct. Currently, Entropyfi has launched the Bitcoin price prediction market, and they will launch the Ethereum Gas prediction market soon.
Their pool users’ deposits into yield generating platforms such as AAVE to generate yield. The yield will be used as the payout to predict winners. So the Entropyfi is Pooltogether + Augur.
Entropyfi team has 6 core members. It includes a chief scientist (who does smart contract security checks, he is an actual PhD in Computer Science), a product lead, a tech lead, a CMO, two smart contract developers (met in college, so they are the people that can trust). They also have part-time developers working in the front-end and UI/UX design.
The Benefit of $ERP Token
Entropyfi’s token has multiple utilities in the Entropyfi ecosystem. First, it functions as an incentive for liquidity providers for the $ERP token, and this purpose is pretty standard in the Defi world.
Second, it functions as an incentive for sponsors of prediction pools. On Entropyfi, Entropyfi has a role called sponsor, who deposits assets to the individual prediction market and contributes to the overall winnings with the yield (hence the winning is boosted by sponsors). In return, sponsors will get $ERP tokens.
The purpose of the Sponsor is to create a flywheel effect, where higher winning attracts more users, which increases the protocol revenue and token value, which will attract even more sponsors and hence provide a higher yield for users.
Besides functioning as incentives, $ERP also benefits from the revenue burn of the protocol. The protocol has multiple ways of accruing revenue, including bond sales and charging a % fee on the yield.
$ERP is the governance token for Entropyfi. After the DAO goes live, $ERP token holders are able to propose and vote on various proposals, such as enabling protocol fees and listing new prediction markets，it will also play an important role in the upcoming insurance product.
Entropyfi has received a full audit by Certik. The report will be published after mainnet. Entropyfi will be audited by Quantstamp later. Besides audit, Entropyfi team also uses OpenZeppelin Defender to monitor suspicious transactions in real-time. In addition, Entropyfi team also conducted internal testing in simulated mainnet environment using Hardhat. Finally, Entropyfi development team has a strong technical background, and the team conducted security audit for a major DEX before.
Entropyfi is currently deployed on Ethereum Kovan testnet and Polygon Mumbai testnet. It has received grants from AAVE Grants DAO and Oasis Foundation. Entropyfi is the protocol with the most interaction with AAVE on the testnet. And the beta product has been attracting lots of members to their community.
The self-amplifying insurance product is currently deployed on the testnet, and Entropyfi is aiming at mainnet launch near November 3rd.
To other Defi developers, Entropyfi can function as an oracle for black swan events and provide valuable data for downstream applications, such as derivative pricing. For example, Entropyfi will have a prediction market for whether USDT will lose its peg. After users place their opinion, external Dapps can reference the ratio of longs versus shorts to calculate a numerical value for the probability of USDT losing its peg. This ratio can then be used to create derivative markets such as perpetual futures or options.
During the grant application process, Entropyfi went through rigorous due diligence on their code and team background. Receiving grants from AAVE and Oasis Foundation proves their team’s background and expertise.
ITO & IDO
Entropyfi planned to launch on ITO because they see the value of SocialFi. Entropyfi thinks Mask Network will be a great portal to Entropyfib3.0 for most “normies”, and Entropyfi saw the previous ITOs have been very successful. Entropyfi also partnered with DeversiFi because one of Entropyfi’s lead investors introduce the DeversiFi team. Entropyfi’s team has a deep technical background, and they felt the DeversiFi can solve many problems of the exiting launching mechanism (i.e. fast finger, gas war, front-running)
HappyBlock x Entropyfi AMA: https://happyblocklabs.com/club/ama/3
Entropyfi is a decentralized lossless prediction market that allows you to play prediction games without losing any money. Money used in the game is pooled into Aave to generate yield, and those who win the game receive all the yield while everyone’s original deposits are redistributed to them through the smart contract.
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