Article by @0xgp_
Disclaimer : The information provided in
this article does not constitute investment advice, financial advice, or
any other sort of advice and you should not treat any of the website's
content as such. Do your own research and remember this information is
provided for educational purposes only.
I. GENESIS
It seemed essential to me before launching into the presentation of DFK to talk about the blockchain he inherits, Harmony
It is in June 2019 that the mainnet of the blockchain is launched with over 600 validators.
It is one of the rare blockchains to have theorized & especially set up a system of sharding, with in addition to that a mechanism of consensus relatively atypical the "Fast Byzantine Fault Tolerance" (FBFT) which is to vulgarize very roughly a kind of optimized proof of stake.
I leave you two very complete articles to inform you more in detail, because the technology would deserve that I dedicate a complete article to it :
- https://open.harmony.one/messaris-report-on-one
- https://medium.com/harmony-one/fast-byzantine-fault-tolerance-8bd24eb5e65d
The architecture of the blockchain allows us on average transactions of 2s and fees for a basic tx of about 0.002 ONE, that is to say less than a cent.
Small but nonetheless important detail : Harmony communication has misled people around the topic of it being an L2 or not.
Harmony is not a L2, it's a very efficient L1 with performances that could be compared to a L2, but it's still a L1 that for the moment is not yet full battle tested and that doesn't inherit in any way the security of the Ethereum network.
The development of Harmony was done in a relatively organic way, going from 30m of TVL in April to 500m today while integrating only protocols that are easily recognizable trusted : Sushi & Curve.
And as we can see, DFK is for a lot because it represents more than 50% of the total TVL of the blockchain.
But then, where did it all start, and how did a protocol that was still unknown a few months ago, manage to stand out on a blockchain that was not very well known but perfectly suited to the needs of DeFi Kingdoms ?
For DFK, everything started on August 28, 2021, with a small team, a small community, without any investment from VC, on a blockchain that at the time was completely unknown and with only a grant from Harmony.
Over the months, the project grows at a crazy speed, the team delivers, holds the roadmap, the very first heroes (2k) gen0 sellout in less than 11 minutes.
The yield farming is extremely well studied and extremely lucrative, which contributes greatly to the success of the protocol, but I will come back to it later.
Today, more and more heroes are summoned at the time of writing this there are 68k.
On DFK, there are several ways for a user :
- The simple staking in the bank for those who believe in the project and want to enjoy a return more than correct without headache
- The LP of course more advantageous but more risky with the IL
- The summoning for those who consider themselves lucky and wish to see born incredible heroes
- The questing to accumulate resources for the next adventure
- The headhunters of the tavern, who jump on each hero they consider interesting to either increase the size of their line-up or resell it at a more interesting price
But then how does the game work, what makes this unknown project on a no-name blockchain become in less than 6 months an absolute banger with an incredible soundtrack.
II. DFK ?
Before starting the global presentation, it seems important to me to talk about some metrics.
What makes the very high yields tokenomics and yield management sustainable ? Well, it is the smart approach used by the dev team.
Moreover, as I mentioned before the $JEWEL token is really the centerpiece of the protocol and for me, it is an extremely important point for the success of a p2e, it is necessary to gather a maximum of players before thinking of gathering investors / speculators
I also think it is important to remember that as on many p2e, there is an initial investment before starting the adventure to begin to reap the benefits, is it the time? Is it worth it? I won't answer that question, you tell me when you finish reading this.
Global:
Reference price of $JEWEL $7.5 (price at time of writing)
HardCap of the $JEWEL : 500.000.000
MarketCap of Jewel in circulation : 458.000.000$.
Total current MarketCap (jewel in circulation + lock) : 2.315.000.000$.
FullDilutedMarketCap when the hardcap is reached (at the price of 7.5$) : 3.750.000.000$.
Pre Minting :
- 5.000.000 $JEWEL - For the development of the game, linearly vested and delivered at the completion of specific point on the roadmap
- 2.000.000 $JEWEL - For promotion, marketing, airdrops... Linearly vested.
- 2.000.000 $JEWEL - For initial liquidity, not locked, but liquidity will not be removed.
- 1.000.000 $JEWEL - For bounties and for the team genesis, half was paid after the launch of the game & the rest is released linearly.
This being said, we can move on to the presentation of the protocol:
> The lore : https://docs.defikingdoms.com/learn/lore
After creating your character, you will find a map with different locations that have a specificity and that allow you to interact directly with the protocol.
The Marketplace
Allows you to swap & build your LP Simply a fork of Uniswap V2, it works, it's efficient, and it's also the biggest DEX of Harmony. The routing of the DEX is $JEWEL centric (as well as the LPs) meaning that the swaps will necessarily go through Jewel to reward the liquidity providers.
You should also know that during swaps 1/3 of the trading fees go to xJewel holders (single side staking in the Bank), I'll come back to that later.
It is also in the marketplace that you can find the vendor which allows you to exchange quest items for gold coins (even if I don't advise you to do that since the items will most probably have a use)
There is also Crier Milo, which allows you to follow the latest updates & Stylist Sandra (Future customization of the characters ?)
The Gardens
Allows you to claim your LP rewards and to manage your different LPs position.
The emission rate of jewels is deflationary, everything is indicated here: https://docs.defikingdoms.com/how-defi-kingdoms-works/the-gardens
Reward according to the epoch (1 epoch ≈ 1 week)
It is also important to note that there is a lock ratio for the jewels distributed to the liquidity providers, the more you advance in time the more jewel unlock yield farming.
The Unlock Lock ratio decreases by 2% each epoch, i.e. every week the garden yields 2% more jewel unlock than the previous week.
At the time of writing, when you are LP you get 31% jewel unlock for 69% jewel lock.
(Jewel locks will be progressively unlocked from July 2022, and it is likely that the mining profession will allow them to be unlocked prematurely). There is also a penalty for people who withdraw early from the pools :
The Bank
When you bank, your JEWELs are converted into xJEWELs which represent your bank staking, at a current ratio of 1 xJEWEL = 1.603 JEWELs.
This ratio cannot decrease in any way, and it will increase according to the trading fees, the number of hero summons and probably many more things in the future. So as time goes by, the price of xJEWEL will increase in relation to JEWEL, knowing that initially it was 1:1
At the moment, the APY of the bank is about 50%, but it can vary depending on the number of stakers & the income.
The bank takes 1/3 of the tradings fees from all LPs and redistributes them to those who have staked their jewel in the bank. 10% of the jewel used to summon new heroes are directly redistributed to the people who have staked in the bank.
To conclude, it is also through the bank that are organized different airdrop (land, amulet...) and it is where in addition to offering a lot of benefits for those who deposit their jewel in the safe, also offers a controlled selling pressure to the protocol because the yield farmers are incentivized to let their jewel sleep rather than sell them, we can speak here of a soft lock-up win-win for the users and for the protocol
The bank is therefore an ideal solution for people who are relatively bullish on the protocol and who do not want to manage their position every day.
The heroes
They are all NFTs, they can be traded (so sold / bought / transferred) or they can be rented for summoning.
They have their own characteristics : a generation, a class, a subclass, a profession, a type, an element, a gender, a global level and a rarity level, characteristics and predispositions, summon limit, stamina, XP, mana pool, life and to finish this long list, an ID.
Heroes are the game keystone they bring :
- Questing
- Breeding
- RNG
- Economy
- Soon PVE & PVP.
I will come back to the strategy to adapt to summon heroes according to your needs in part III.
To summarize, this infographic is an all-in-one that every DFK player must have at hand, there is everything you need for the professions on the left (what is the best race in relation to the profession and which stats to prioritize)
At the top, there is the % of chance to summon the different rarity of the game according to the rarity of the parents.
Below, there is the tree of the basic advanced elite and exalted classes, noted that when you make a breeding with a warrior and a knight for example, you have 20% of chance to obtain a paladin.
And finally, we get the summon cost according to the generations as well as the cooldown, also noted that when you breed with 2 heroes, it is extremely important to take a look at the summons of the parents (among other things) because the summons of your baby will be "summon remaining of the parent with less of summon - 1".
If you breed two gen 2 with 9/10 and 3/10 in summon you will get a gen 2 2/2
There is obviously much more to say about the heroes, but I'll come back to that later as for the history, shortly after the beginning of the game, 2000 gen0 heroes were sold in FCFS.
Gen0 are probably the most broken because they have their own character, they have infinite summon, and they are at least rare, but gen0 can't be only basic classes.
The professions
The professions or quests are where you can put your different heroes to work.
There are 4 different professions at the moment:
At the time of writing, profession quests allow you to gain XP, profession skills and profession items. It is highly likely that quest items will be used later for item crafting.
As seen before, the heroes have characteristics and a profession, the characteristics will be primordial to increase your yields / improve the quality of what you loot according to.
The profession allows you to do more quests, for example a miner with 25 stamina will be able to do 5 quests of mining (cost in stamina = 5) while he can only do 3 quests of drilling (cost in stamina = 7).
As for the professions themselves, many have many guesses about their future use
Forager : Will allow making equipment for PVE / PVP
Miner : Will allow unlocking the JEWELS Lock obtained with the LP
Fisher : Will allow increasing some stats for the time of a fight for example, or to heal the heroes
Gardener : Will allow increasing the yields of the LP with boosts
Each quest has a chance to bring back different items (we will come back to this in the last chapter), a range of XP and a chance to upgrade your profession skill.
This is what we find here :
Different races have some predispositions to have high priority stats.
Tavern
The tavern is the place where you can sell / buy / rent heroes, it inherits like the display of heroes many filters which allows you to see very quickly interesting offers.
You also have the possibility to view all existing heroes with the second NPC and transfer your heroes.
Other small details :
Inbreeding does not work.
You can breed with one male and one female, two males or two females, it doesn't matter.
There is still a lot of mystery around the summons, what is sure and certain if you go down this road is that you will be confronted with the RNG.
As much as this can be a very good thing, it can also be very confusing.
It is sometimes a wise option to buy a hero with specific characteristics at the tavern rather than trying to summon him.
Because yes, even if both your parents have good classes, professions and stats, it is possible that the baby will not inherit the characteristics of its parents, or at least not completely. There is and will always be a part of RNG, and to eliminate it as much as possible, you should take two "perfect" parents with the right class and subclass, a card rarity higher than legendary and still, despite all these efforts and the cost that it can represent your breeding could have all that match but a different profession.
But this is also where RNG can work wonders, it will happen, or it has already happened to experienced summoners to breed a little wonder when you don't expect it at all, with parents without any rarity, stats not at the top and this is what makes all the magic of the Summoning game.
Another important thing to know, depending on the breed of your hero (basic, advanced, elite, exalted) the cost in tears will be different, if you want to make summons with 2 basic classes, it will cost you 20 tears, 2 advanced 80 tears, 2 elite 140 tears.
The cost of summon increases according to the generation and the number of summon left as shown on the table. There is a 20% chance of summoning the superior race (e.g. Paladin) when you breed with a warrior and a knight.
Last point to keep in mind, when you summon in the portal, you will get an egg that you will have to reveal, if you don't do the reveal within 5 minutes you will be obliged to pay 18 $JEWEL
Meditation Circle
This is where you can lvl up your heroes, each lvl up costs 0,1 jewel x the current level of the hero + materials.
Passing a level allows you to increase the stats, each hero has a primary and a secondary stat, when you pass a level there is more chance that these stats rise in priority to the other stats.
Find all the info here : https://docs.google.com/spreadsheets/d/1jfG6E6otW1V6ZLQycF5DumoBr_LrpQaz7cTmDPpwV2s/edit#gid=655220330
When a hero passes a level, he gets all his stamina back.
There is also a bonus every 5 levels proportional to the rarity of your hero :
It is essential in my opinion to take two things into account when you level your heroes, although at the beginning it is "negligible" given that if you make a mistake, you can easily correct it in 2/3 levels afterwards.
The profession → This is what everyone will focus on at the beginning, personally I focus the profession when it is feasible for the heroes of rarity common/uncommon/rare i.e. I max the stats that have a strong growth according to the race and that match with the profession.
Example: I have a summoner forager, I will prioritize dex & int.
The PVP/ PVE → A lot of people are currently neglecting this part of the game, which is normal since at the moment it's pure speculation and hasn't even been released.
However, the best PVP/PVE heroes are being forged now, and those who take the right bets now will most likely be the most successful.
It is therefore essential for me to maximize the strong stats of your legendary / mythic heroes, i.e. stats that match their usefulness in combat (I will come back to this in part III).
For example, for a legendary ninja I would tend to max whatever his profession str + lck + agi.
Why would you say that? Because the str will most probably be the stat associated to the power in melee, the luck the probability of critical hit and the agi the capacity to attack several times. (Once again I'm not making anything up, information is given here on the stats https://docs.defikingdoms.com/learn/gameplay/stats)
This fits perfectly with a ninja and his "preferred stats" in my opinion.
Docks
It is a simple integration of Multichain in game.
Note that the jewel is available on : Harmony - Avax - Matic & Fantom, blockchains where the game aims to expand.
III / HEROES
I had originally planned to dedicate a whole part to heroes and skills.
But someone beat me to it, and his work is of immense quality, I'll just redirect you to this article by Petrify : https://medium.com/@Petrify/defikingdoms-combat-stats-speculation-eabd90368a4f
A few words about the heroes, though.
There is only one dimension with heroes on DFK atm, the quest dimension, and 99% of people are looking to get good heroes for quests, or buy good parents to make good little heroes.
But my opinion is that profession quests will be a small part of the game in the near future compared to pvp/e.
That's why I invite you not to stay focused only on quests, read carefully the article above, and be ready when the blood starts to flow.
Then, for me there are 3 viable solutions to build a good team depending on the budget of each.
The first one, which will require the least budget, is to buy the good heroes of profession on the floor or almost, which do not have summon and which are of generation 3 - 4 or 5.
You won't be able to summon new heroes with them (at least I strongly advise against it, you will end up paying 100 jewel for 1 summon) but on the other hand they will make very good characters for the quests.
The second one is mid budget, it's to look for people 1 or gen2 with a max of summon, good stats and the profession that match to be able to summon heroes in your profession/characteristic range. There will be a part of luck, the gen 1 who gather these characteristics are generally not given, but if you are relatively lucky & that you choose your parents suitably you will be able to obtain extremely powerful children for pvp/e.
The third and most expensive solution is to buy gen 0, focusing on the class and subclass if possible.
Every 72 hours you can summon a gen1 10/10, it's even more expensive than solution 2 since there will be more summons in the process, but having gen0 is to have the "freedom" to sell heroes you are not interested in at a good price or use them for questing (gen 1 10/10 usually sell very well no matter what the stats are) while keeping the good/very good summons to grow your army for pvp/e.
There is another variable to take into account if you take this path, it's the price of gen0, it's a real investment & consequent, if you think they are overpriced useless to venture in the approach according to me, to do only if you think that gen0 will at least stay on the floor of your purchase.
IV / ROI
In this section we will only talk about what a player generates on DFK who uses everything live to generate ROI.
We will assume a jewel price of $7.5, a gold price of $0.02 and constant APRs over a year.
For the demonstration, we will start with a player who has 10k $ in LP, 5k $ in bank, and 24 heroes (6 miner 6 gardener 6 forager & 6 fisher)
He does his quests 3 x / day.
This demonstration is purely theoretical since I omit a lot of parameters in the equation (notably the price fluctuation and the IL), it only aims to show the potential of the protocol (if only in yield) with a correct management and judicious choices.
His heroes are only "quest" heroes so let's assume a floor of 60$JEWEL per hero and no particular boost for quests.
His LP position is distributed as follows:
25% (2k5$) JEWEL / LUNA (700% APR)
25% (2k5$) JEWEL / MATIC (800% APR)
50% ($5k) JEWEL / ONE (750% APR)
Unlock ratio (share of non-locked jewels compared to locked jewels obtained during farming) : 1/3 : 69%.
For the LP we will take several paths:
The COMPOUNDOOOR, which will compound his position every day.
The BANKOOOR, who will put his jewels from LP at the bank every day.
The DUMPOOOR, who will just dump his rewards for $.
For the bank we will consider that our player will keep his long term position.
For heroes we will convert to gold and resell all rewards.
Our different LP's we earn per year:
JEWEL / LUNA → $17,500 ($2333 JEWEL) of which 31% unlock is $5425 (723 JEWEL) free & $12,075 (1610 JEWEL) lock.
JEWEL / MATIC → $20,000 ($2,666 JEWEL) including 31% unlock i.e. $6200 (826 JEWEL) free & $13,800 (1840 JEWEL) lock.
JEWEL / ONE → $37,500 ($5000 JEWEL) of which 31% unlock is $11,625 ($1550 JEWEL) free & $25,875 ($3450 JEWEL) lock.
For the bank : We have 5k$ or 666JEWEL lock in it which brings us about 50% apy or 7500$ (999JEWEL ) after one year
Heroes:
We have 24 heroes, and consider that only the fisher & forager quests are available.
This means that 6 heroes will do 90 quests forager, 6 others will do 90 quests fisher / daily & the 12 others will do 108 quests forager daily.
Taking into account the above elements and excluding the tears and runes (which still represents a significant amount) // we will take the egg at 200 JEWEL or 1500$ and 75.000 gold.
We obtain :
1 quest forager = 0.575 + 0.451 + 0.602 + 0.903 + 0.5025 +1.02 + 0.69 +7.5 = 12.24 gold
1 fisher quest = 0.575 + 0.451 + 0.451 + 0.903 + 0.51 + 1.02 + 0.552 + 7.5 = 11.962 gold
Based on probabilities, of course you will never get this figure, you can only get close to it on a very large sample of quests.
As a reminder in my calculations I take a price of jewel at 7.5$ & a price of gold at 0.02$.
Per day we have (90+108) * 12.24 + 90*11.962 = 2,423.52 + 1,076.58 = 3,500 gold / daily
That is 70$ daily or 9.33 JEWEL.
So we get an average APR of 255%.
Considering our team of 24 decent heroes bought from the floor only for their trade, after one year our team which cost us 1440 JEWEL (10,800$) will have brought us 3405.45 JEWEL (25,540$)
Compoundooor path :
For someone who wants to take the compounding path, it means that every day, he will convert a part of his jewels in matic and will add that in his LP.
So we assume 31% of 800% of apr compound, which gives us 248% of apr to convert into apy which gives us 1084% of APY.
Thanks to the magic of compounding, we get 1084% of APY (compounding) + our 552% of APR remaining lock which gives us a total of 1636%.
If we do this for the 3 pools of our player we have :
LP JEWEL / LUNA ($2k5) → 770% APY + 483% APR → 1253% → $31,325 / yearly
LP JEWEL / MATIC ($2k5) → 1084% APY + 552% APR → 1636% → $40,900 / yearly
LP JEWEL / ONE ($5k) → 915% APY + 517% APR → 1432% → $71,600 / yearly
Bankoooor path :
If our player decides to take this path, he will bank his farming rewards daily, and while not the most sensible path in terms of risk/reward for me it also allows for airdrops.
By taking the APR of the bank and not the APY to avoid a relatively complex calculation, we get REWARD DAILY * APR * 365 = 8,49 JEWEL * + 40% * 365 = 1,239.54 JEWEL (9.292.5$)
Dumpoooor path :
If our player decides to take the dumping path daily, he will have an entry of $63.6 / day or $1,910 / month & $22,923 / year
The balance of all this according to the different paths:
(Considering the total, removing the $JEWEL in bank, LP and selling his heroes)
The compoundor will get at the end of one year 31.325 + 40,900 + 71,600 $ (of which 44,585$ unlock) + his initial stake of 10k$ + 7k5$ from bank + 25k54$ of farming with the quests + his heroes sales = 10k8$
So we get 98,425$ and 99k$ lock in one year for an initial investment of 25k8$.
The bankooor will get at the end of one year 75,000$ (of which 23,250$ unlock that he will have saved in the bank) + 16k8$ from the bank + 10k$ from LP + 25k54$ from quest farming + 10k8$ from hero sales.
So we get 86,390$ + 51k750 lock in one year for an initial investment of 25k8$.
The dumpooor will get after one year 75k$ (of which 23k250 unlock) + 10k$ from LP + 7k5$ from bank + 25k54$ from quest farming + 10k8$ from hero sales.
So we get 77,090$ + 51k750 lock in one year for an initial investment of 25k8$.
I would like to remind you, even if I specified it several times, this simulation is based on fixed prices (which is untenable over a year) does not take in count the Impermanent Loss nor the fluctuation of rates, nor the fluctuation of assets in the liquidity pool, does not take in count the airdrops, the reduction of the lock drop, does not take in count the potential jewel unlockable via quests.
In short, this simulation was only meant to show the different advantages of each strategy, depending on whether you are bullish or not on the assets you deposit in the pool AND especially bullish on the JEWEL.
My goal here is not to be an opium dealer, otherwise I would not try to remind you of the paragraph above, investing involves risks, take all the parameters in count when you make a strategy.
A final word on the roadmap:
I'm pleasantly surprised by the ability of the DFK team to honor its promises, chain releases and implement mechanics as well and I can't wait to see the new updates that are coming in Q1 2022, maybe one day this article will get a v2 when a lot of new stuff will be released.
There is also for me still so many things to discover, little tricks, the mechanism of summon that I have to analyze in detail... It's incredible how much there is to theory craft on this protocol even if for the moment the gameplay is just "few daily clicks".
I really like the crosschain aspect that the game will take, I hope one day to see it on a Layer 2 of Ethereum.
However, there are still some small grey areas for me that I hope will be cleared up soon:
- Will the deployment on AVAX be done in good conditions, do they worked with Avax for this ?
- The cost of tx is not at all the same on Avalanche, I think notably for the quests which require a good number of computation, will all this be optimized for AVAX?
- The pvp/e balancing ? It's a recurrent problem in many games, and in a P2E, there is no right to make mistakes, if something is not balanced, it can be very expensive.
No doubt the team has already thought about this, but I thought it was important to say it.
I'd like to finish on a very big s/o to all the DFK community, guild & DAO which allowed me to learn, to progress and especially to meet great people these last months.
I will probably forget some of them in the list, but I am very proud to be part of this incredible community.
Some tools / tutorials :
- https://defikingdoms.com/tutorial.html
- https://docs.defikingdoms.com/
- https://medium.com/@Samichpunch/index-of-samichpunch-defi-kingdoms-articles-dda9e50327ef
