This year has been one of the most ‘bullish’ cycles for the crypto market as more stakeholders shift their attention to value proposition over speculation. While the better part of the year was driven by the Decentralized Finance (DeFi) speculative outlook, this did not last long before fundamentalists returned to building viable products. Currently, there are quite a number of crypto innovations whose core is the financial services industry, an emerging trend intended to disrupt the traditional finance scene.
One such project is the HODLCommunity, billed as a game-changing new ecosystem to take control of your finances. This initiative leverages the Ethereum blockchain to run its smart contract, which, in turn, harmonizes the value and distribution of its algorithmic token dubbed ‘HODLC’. According to their whitepaper, HODLC is a community-driven social experiment intended to disrupt previously held concepts surrounding economics, value, wealth distribution, and capitalization. However, a project based on altruistic tokenomics will need an exceptional plan to deliver on its potential.
HODLCommunity: A Constellation of Assets
Today, the most common saving avenues are financial institutions such as banks and investment firms that have more muscle in pooling funds from various investors. This does not have to be the case in the era of Web 3.0, where decentralization is gradually shaping modern-day markets. HODLCommunity is just one of the projects that have since embarked on niche financial services based on a decentralized infrastructure. In this case, an ecosystem where users can save and accumulate wealth as per HODLC’s underlying tokenomics.
It is quite noteworthy that tokenomics has proven to be integral in the development of DeFi networks to avoid arbitrage situations, given some inefficiencies in the nascent market. The HODLCommunity’s tokenomics tout a new way to create value by defying the current challenges in already implemented models. The HODLC algorithmic token derives its value from the underlying smart contract. The growth rate of HODLC is tied to HODLC transactions; after each transaction, the value of HODLC increases by 1/100th of a cent. This is known as the Dynamic Value Increase (DVI). It further implements an Temporal Value Increase (TVI) model to ensure that HODLC’s value increases by the day. This asset was designed to avoid the high volatility typically associated with cryptocurrencies. With the maximum HODLC supply capped at 40 million to create scarcity, these tokens are available for purchase via the HODLdex.
HODLCommunity was conceived as a meta asset, a constellation with multiple assets sharing a commonality of properties whose core rules are associated with its value, handling, custody, and exchange. HODLC, the asset described above, is the foundation of this ecosystem. However, these tokens can only be bought or sold. HODLC owners wishing to further extract value from their tokens can benefit from the platform’s native ERC-20 token, HODLT.
HODLT: The ATV of stable tokens
While HODLC is an algorithmic token, the community can further derive an external value by using the project’s ERC-20 token, HODLT, a transferable stable token with utility features that is exchangeable for a fixed value by its associated smart contract. Unlike HODLC, which cannot be transferred or given to another person, HODLT has increased functionality. It can be used as a means of exchange or traded on centralized exchanges. HODLC owners have an option to lock HODLT into a certificate whose ownership can be transferred and whose value can be redeemed at any time.
The stable token was initiated by a community request for a HODLC asset they could transfer without invoking the HODLC sales mechanism. In response, the HODLCommunity team created HODLT, which has three defining purposes: convenience, utility, and a tool for upcoming features. The convenience of HODLT lies in its ability to facilitate the exchange of HODLC. The utility reduces speculative pressure on HODLC and generates value for the main network. HODLT also functions as a tool in the HODLCommunity’s upcoming HODLSwap feature, which is a means to convert an asset family stable token from one ledger to another. HODLT aims to continue HODLC’s reduced volatility.
Having said all this, if a community member wants to participate in HODLC’s growth, it’s not advisable to keep their HODLC in HODLT as HODLT does not participate in the value increases inherent in HODLC, nor does it participate in HODLC’s redistribution mechanism. HODLT, once issued, maintains a one dollar amount of HODLC, and the smart contract always repurchases the token for one dollar’s worth of HODLC. As more value will be realized in HODLC, buyers of this token are incentivized to convert their inactive HODLT into HODLC.
It should be noted that due to this stable value of HODLT to HODLC, when converting HODLT into HODLC, a small surplus will be realized within the system. This surplus is proportionally redistributed to existing HODLC owners.
Disrupting the Financial Services Industry
As is the case with most innovations, HODLCommunity has also been designed to solve prevalent shortcomings. Being a crypto-based project, the solution naturally focuses on the financial services industry and savings in particular. That said, the project paints a picture of what future markets might look like, should DeFi prove sustainable.
In the future, there are plans within the HODLCommunity ecosystem to create shockwaves in the traditional finance industry by integrating the HODLC value creation mechanism with products such as supplemental savings and private credit and loans. The concept of using digitals assets as an investment isn’t unique, but the underlying tokenomics of HODLC are, the clear difference being in the exposure, or lack thereof, to volatility.
Investors may be excited at the prospect of acquiring a stake in a decentralized financial product. The real revolution lies beyond that. It is easy to see that this project pushes toward the mass adoption of cryptocurrencies by creating an easy means of exchange between community members and by enabling merchants to accept the HODLT ERC-20 token as a means of payment. If “every time you spend money, you’re casting a vote for the kind of world you want” (Anna Lappe), this may be the revolution to get behind.
The Road Ahead
While there is still a lot of work to be done in terms of security and tokenomics models before the whole world adopts decentralized networks, the financial services industry is probably the most compatible sector with cryptocurrencies and blockchain technology. Therefore, it makes sense that crypto-focused innovators have been paying keen attention to the integration of both worlds. While it may take a while, it appears that the sun is already rising for DeFi products with a cutting edge.
The decentralized savings mechanism by HODLCommunity is an example of the evolving nature of finance. In the future, such ecosystems will define not only financial products but also tangible assets such as property and inventory. If the traditional finance industry doesn’t take its head out of the sand, HODLC may be the digital asset it doesn’t see coming.