What will the token do?
TL;DR Backstop risk.
$GUARD Token Utility:
Token is designed to be at the core of the Asgard protocol's risk management and governance system:
Governance: GUARD token holders vote on critical risk parameters such as collateral ratios, approved assets, and liquidation thresholds.
Risk Management: inspired by AAVE's Safety Module, Asgard implements a similar mechanism to hedge the risk of insolvency/bad debt:
Safety Module: GUARD holders can lock their tokens into the Safety Vault -> that acts as a mitigation tool in case of a bad debt situations within the protocol.
Auction Mechanism: In case of a bad debt event, a portion of the locked GUARD tokens are auctioned to cover the deficit.
Backstop Module: The community can deposit stablecoins and SOL, acting as a buyer of last resort for GUARD tokens in case of a bad debt situations.
Why will $GUARD holder's stake?
GUARD holders will be incentivized to stake their tokens in the Safety Module for several key reasons:
Earn rewards:
Safety Incentives: stakers earn additional GUARD tokens as rewards for participating in the Safety Module.
Protocol Fees: A portion of the protocol fees can be distributed to stakers, subject to vote by Asgard's DAO.
Governance Power:
Staked tokens retain voting rights, allowing holders to participate in protocol governance.
Staking signals long term alignment hence there would be multiplier bonus to incentives given by protocol for active participation in the governance process.
What is $GUARD's token flywheel?
Protocol usage generate fees. These fees can be partially distributed to GUARD stakers in the Safety Module, along with additional Safety Incentives, encouraging more staking.
Increased staking enhances protocol security -> which enhances brand value -> which attracts more users -> which increases protocol fees -> which increases the incentives to stake.
Staking acts as a token sink, potentially mitigating sell pressure by locking up supply.
Stakers are incentivized to actively participate in governance, leading to protocol improvements that expand network effects -> further enhancing the brand.
This cycle of usage -> increase security -> increase brand value creates a self-reinforcing loop that drives sustainable growth and value accrual for all participants in the Asgard ecosystem.
Our insights for token utility and value capture come from:
AAVE Tokenomics: https://docs.aave.com/aavenomics
Multicoin's blog on how protocol's can capture value: https://multicoin.capital/2021/09/16/daos-manage-risk/
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