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KeeperDAO

KeeperDAO (ROOK) (announced in 2019) is a cryptocurrency that operates on the Ethereum ERC-20 Blockchain. KeeperDAO is an on-chain liquidity underwriter for DeFi (Decentralized Finance). KeeperDAO is a decentralized organization that provides liquidity to markets of smart-contract-based solutions, by providing the underwriting of contracts. These underwriting contracts are created in order to give an incentive for participation in the KeeperDAO.[1]

KeeperDAO (ROOK) is a protocol that economically incentivizes pooled participation in keeper strategies that manage liquidations, rebalances, and arbitrage on DeFi (Decentralized Finance) applications spanning trading, exchange, and lending.[2]

History

Amber Group and Talo Systems collaborated on the KeeperDAO project, which was first disclosed in December. Kullander's crypto trading and a market-making firm called Amber, while Taiyang Zhang, the CEO of DeFi protocol Ren, runs Talo, a blockchain research firm. The KeeperDAO project is co-managed by Kullander and Zhang.

Overview

KeeperDAO is a protocol that economically incentivizes pooled participation in ‘keeper’ tactics which manage liquidations and rebalances on applications spanning margin trading, lending, and exchange. This allows participants to earn passive income in a game-theory-optimal fashion whilst ensuring decentralized finance applications remain liquid and orderly.

KeeperDAO affords an adequate mechanism for large-scale arbitrage and liquidation trades on all DeFi protocols. KeeperDAO can be used for capturing any on-chain opportunity on Ethereum. This could be liquidating a position in Compound or dYdX, taking over a Maker CDP, rebalancing a SET basket, or taking advantage of arbitrage between Kyber and Uniswap.[3]

Using KeeperDAO allows people to pool their assets to earn passive income through liquidations, arbitrage, and other opportunities from all across DeFi (Decentralized Finance).

To ensure that KeeperDAO wins liquidations and arbitrage, it uses a game-theoretical optimal strategy to submit Ethereum transactions. This assures that KeeperDAO transactions will be prioritized over other people trying to win the same liquidations and arbitrages. This is known as a Priority Gas Auction (PGA). By using a game-theoretically optimal strategy to PGAs, KeeperDAO ensures that it is more profitable to cooperate than to compete; both KeeperDAO and potential competitors will earn better profits over time by cooperating. When KeeperDAO wins a PGA, funds are rebalanced through an on-chain rebalancer network.[4][5]

Team

The KeeperDAO project is a collaborative effort between Amber Group and Talo Systems. Amber is Kullander's crypto trading and market-making firm, and Talo is a blockchain research firm run by Taiyang Zhang, who is also the CEO of DeFi protocol Ren (REN). Tiantian Kullander and Zhang jointly manage the KeeperDAO project.[6]

Tokenomics

KeeperDAO (ROOT) has a circulating supply of 340 Thousand ROOK coins and a maximum supply of 1.07 Million. KeeperDAO (ROOT) is actively traded in the Bancor Network exchange. It has a market cap of $12,329,922 USD.[7]

The ROOK Token

ROOK is an ERC20 asset allowing token-holders to propose and vote on all protocol upgrades, as well as administering the profit share between liquidity pools and keepers, alongside new system proposals.

The initial total token supply is set at 1,000,000 ROOK. All ROOK tokens are unrestricted upon launch and should be counted as part of the circulating supply. However, since ROOK will move to an inflation model in the future, the exact total supply can not be determined at this stage.

Token Distribution

The KeeperDAO (ROOK) distribution refers to where newly emitted ROOK is sent. Generally speaking, governance regulates the precise allocation of ROOK amongst users. The end goal of the KeeperDAO token distribution is to incentivize participation in KeeperDAO, and to disincentive holding ROOK but not participating in any of its MEV mechanisms.[8]

The KeeperDAO (ROOK) tokens were scheduled to be distributed in the following sequences:

  • In the first quarter, 30% of emissions were distributed to liquidity providers, and 70% of emissions were distributed to keepers.
  • In the second quarter, 30% of emissions will be distributed to liquidity providers, and 70% of emissions will be distributed to traders (people that submit orders through the Hiding Game).
  • At some point during the second quarter, the Hiding Game will be expanded to include liquidations. At this point, 20% of emissions will be distributed to liquidity providers, 40% of emissions will be distributed to traders, and 40% of emissions will be distributed to borrowers/lenders.
  • Governance will decide on the distribution mechanism for the third quarter.

Liquidity Providers

A liquidity provider is anyone that has deposited Ethereum into the KeeperDAO liquidity pool. Liquidity providers earn a share of the profits earned by the liquidity pool. This share is equivalent to the amount of Ethereum that they have deposited compared to other liquidity providers. At any time, the liquidity providers have the right to withdraw their assets, including all profits that have been earned, partially or in full.[9]

Keepers

Keepers are responsible for arbitraging between DEXs and liquidating invalid accounts on Aave ($AAVE), dYdX, Compound, MakerDAO, among others. Fundamentally, keepers are on-chain profit seekers that require capital. The KeeperDAO liquidity pool allows keepers to borrow this capital, so long as it is returned within the same transaction.

A major challenge for keepers is engaging in Priority Gas Auctions problem (PGAs). KeeperDAO solves the Priority Gas Auctions problem, by incentivizing keepers to collaborate, instead of competing.

How it works

KeeperDAO is broken down into multiple contracts, each one with a distinguished responsibility. Every contract can be upgraded and parameterized independently, allowing KeeperDAO to evolve and improve over time.[10]

Liquidity Pool

The liquidity pool is the entry point for most users. It allows people to become liquidity providers by depositing and withdrawing assets to and from the pool. Tokens in the liquidity pool are made available to keepers, who participate in on-chain profit-seeking. KeeperDAO uses its decentralized governance mechanism to incentivize keepers to return as much profit to the pool as possible, as well as to collaborate (allowing them to maximize profit by avoiding PGAs). These profits are then shared between the KeeperDAO governance mechanism and liquidity providers.

Under-writers

DeFi protocols like Compound, MakerDAO, and others require user positions to be liquidated if their underlying collateral becomes worth too little. In KeeperDAO, under-writers are special contracts that "wrap" user positions using the KeeperDAO protocol. This allows keepers to safely close user positions without liquidating them, minimizing user losses, especially in volatile markets. In return, the underwriters charge a small fee. This fee is less than the user would have lost if they had not used the under-writer, but, because under-writers completely remove the need for PGAs, the fee can still be more than the keeper would have made through an "unwrapped" liquidation on the underlying protocol. This gives the best to both worlds: users minimize losses, and keepers maximize profits.

Yielders

Keepers, most times do not utilize all assets in the liquidity pool. To maximize profitability, KeeperDAO takes under-utilized assets and distributes them to yielders. These contracts are custom integrations that deploy assets to other yield-generating protocols. This could be through lending, automated market-making, automated portfolio management, and so on. Anyone can develop, test, and propose a yielder for integration into KeeperDAO, and the KeeperDAO governance mechanism is responsible for determining how many assets are deployed to which yielders, where the goal is to minimize risk and maximize returns.

How to buy KeeperDAO

  • Open an account on an exchange that supports ROOK.
  • Deposit funds into an account.

(Fund an account with a bank transfer, pay with a credit or debit card or deposit cryptocurrency from a crypto wallet to buy KeeperDAO)

  • Buy KeeperDAO.

(Complete the KeeperDAO purchase and then find the best wallet to store ROOK).[11]

How to sell KeeperDAO

  • Sign in to the exchange you have ROOK on. (If users store their KeeperDAO in a digital wallet, compare crypto exchanges to sell it on)
  • Place a sell order. (User needs to choose the amount of ROOK they do like to sell)
  • Complete your transaction. (Confirm the selling price and fees and close to the sale of KeeperDAO)

What to Think About When Purchasing KeeperDAO

Supply: The overall supply of ROOK is limited to 1 million at first. ROOK tokens become unrestricted and part of the circulating supply once they are released. It is intended for ROOK to transition to an inflation model in the future.

Liquidity providers vs ROOK holders: Anyone who has placed assets into the KeeperDAO liquidity pool in order to share in the profits is referred to as a KeeperDAO liquidity provider. Liquidity providers can earn ROOK by putting assets into the protocol, according to the Bankless Medium. In KeeperDAO, on the other hand, a ROOK holder has governance privileges and can propose and vote on protocol updates.

Rights in terms of money: There are currently no economic rights associated with ROOK, but a proposal to create fee rights for token holders could be approved by the community.

Governance

KeeperDAO is, unsurprisingly governed by the KeeperDAO team. The exact implementation of all contracts, and their parameters, is controlled by a decentralized governance mechanism. The ability to upgrade contracts means that governance can control the addition of new tokens, incentives, integrations, distribution strategies, fees, and more.

To incentive governance to do what is best for KeeperDAO, some portion of profits returned to the liquidity pool are taken as a governance fee. The exact specification for the governance mechanism is still a work in progress but will be deployed in future iterations of KeeperDAO. Until then, governance is done at the sole discretion of the KeeperDAO team.[12]

Hiding Game

The Hiding Game is a revolutionary concept that allows users and Keepers to hide and re-distribute MEV in a cooperative manner. This is accomplished by encrypting orders so that they can only be carried out by whitelisted Keepers. KeeperDAO is able to deliver the best Limit Orders in DeFi as a result of this. When these orders are fulfilled, they cost no gas, have minimum slippage, are MEV-protected, and give users ROOK rewards.

A trader can join the Hiding Game by submitting a deal through KeeperDAO's trading app, utilizing the Hiding Book API, or integrating with a partner. Their order will be routed through the Hiding Book, and any profit earned from the subsequent MEV will be put in the ROOK holders' treasury. The trader who places the order earns ROOK rewards proportional to the MEV generated by their order.

Benefits

By submitting a trade through the Hiding Game, a user gains several advantages:

  • The ability to submit limited orders
  • Get rewarded in ROOK token
  • Do not have to pay gas for their trades

Collaboration

The collaboration between WOO and KeeperDAO begins with a listing of ROOK on WOOX. Since its introduction in August, WOO X has quickly established itself as a one-stop shop for professional traders all over the world, with daily volume exceeding $2.5 billion. WOO X is a great off-chain option for discovering, buying, and trading ROOK, with best-in-class liquidity, minimum slippage, zero trading fees, and a customisable trading interface.

Furthermore, the WOO Network helps ROOK achieve more stable market behavior by offering institutional liquidity assistance through over 40 connected clients and exchanges.

WOO and KeeperDAO, on-chain

KeeperDAO applies its MEV-prevention expertise to the WOO Network's on-chain trading and market-making. The two teams are working together to see how WOO Network might participate in KeeperDAO's decentralized products, such as the Coordination Game and Hiding Game, in order to combine this best-in-class DeFi infrastructure with WOO's substantial liquidity and experience.

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