What Can the Community Expect from the ISPO?
Today, we are thrilled to officially announce Ardana’s upcoming ISPO (Initial Stake Pool Offering) with DANA through our Ardana Stake Pool Alliance (ASPA) partners.
We have recently witnessed a consolidation of staked ADA in only a few SPOs (Stake Pool Operators), many of which operate multiple stake pools. We believe in the original vision of Cardano as a decentralized blockchain, and SPO diversity is critical to that tenant. Thus, one of the primary objectives of the ISPO will be to provide fair and decentralized incentives to both our smaller and larger ASPA member pools.
Ardana plans to focus on providing incentives to delegators with a long-term vision, not just liquidity providers farming mercenary capital. Patient delegators can expect a higher rate of incentives as a reward for their loyalty. An example of rewarding long-term loyalty would be an individual delegating for 5 epochs may earn something like X DANA per epoch, whereas delegating for 20 epochs may earn 1.15X DANA per epoch. We at Ardana are considering all approaches towards fostering long-term reward incentives and will announce more details surrounding the model we have chosen in further articles.
What is an ISPO?
An ISPO is one of many ways for a crypto project to raise funds. It’s a relatively new crypto fundraising method that first appeared on the Cardano blockchain. Unlike an ICO (initial coin offering), where investors spend their money on the project’s tokens, ISPO investors keep control of their money even after it has been delegated.
In the ISPO model, developers set a variable margin, collect the rewards, and pay their delegators with their utility tokens.
Users may be curious as to how an ISPO works. In essence, stake pools are identified for the ISPO where ADA holders must stake/delegate their tokens for a certain length of time. At the end of an ISPO the project team rewards ADA delegators with utility tokens from the project. ISPO stake pools can be community-operated or set up by the project team dedicated specifically for an ISPO. If a project team creates their own stake pools, they will also typically collect a percentage of regular ADA stake pool rewards to fund their project. With this model, project teams collect ADA rewards from running ISPO stake pools while simultaneously paying delegators with project utility tokens.
SundaeSwap first created the ISPO model in early 2021. However, they did not use the novel method since the team consecutively postponed the launch of their staking pool twice. MELD first utilized the ISPO design on July 1, 2021, and set a course to use the model to source funds for their project campaign.
Ardana’s ISPO Incentives
As mentioned above, one of our ISPO goals is to provide balanced, decentralized incentives for our smaller ASPA member pools, which may include tiered multipliers similar to MinSwap.
Overall, Ardana aims for a well-balanced distribution that promotes pools equally and ensures the ISPO benefits the network. In addition, the team will educate and prevent pools from becoming oversaturated and rally to encourage growth in the smaller pools. In this instance, the collaboration between pools will be key.
For example, if a pool is becoming near-saturated, the pool operators should use their platform to promote other smaller pools. This approach will benefit Ardana and the community as a whole. We will put the health and security of the ecosystem at the forefront while also finding solutions to empower others. This will be achieved by helping small pools grow and prosper while simultaneously raising awareness of the importance of decentralization. Future articles will cover the mechanics of the DANA ISPO in greater detail.
The ISPO Model and Decentralization
ISPOs are more equitable, decentralized, and secure, building on the advantages of IDO (initial DEX offerings). Above all, ISPOs are more inclusive, and the best part is that anyone may participate simply by delegating their ADA.
The DEX should assist small single pool operators and play a strategic role in raising the ecosystem’s minimum attack vector (MAV). The MAV graph can be seen here. However, MAV also only looks at the top 20 or so pools. Effective K, as explained by Nuclear Engineering Professor Dr. Liesenfelt here, is a better measurement.
There is no risk posed to an investor by delegating their ADA coins through an ISPO, unlike IDOs, where investors must spend their capital to receive the project’s tokens. In addition, ISPOs allow for ADA delegation, making them an efficient way to raise funds.
Through ISPOs, investors gain early access to tokens before product launch and avoid giving away their stake from ADA. Also, depending on the project, the participant may receive other rewards in addition to receiving their tokens.
Overall, this approach leads to greater decentralization and even better community engagement.
Conclusion
Ardana’s Initial Stake Pool Offering is an exciting opportunity for early adopters to support Ardana through the Cardano blockchain. An ISPO offers interested parties the opportunity to participate in an upcoming project not by purchasing a token, as is common with ICOs, but by contributing their ADA to a Cardano stake pool.
Users who wish to participate in Ardana’s ISPO can delegate their ADA to one of Ardana’s ASPA members for any period of time. Delegators will then receive rewards based on the duration and quantity of ADA stakes with further specifics to be announced shortly on the upcoming ISPO. Stay tuned.
About Ardana
Ardana is Cardano’s stablecoin hub, bringing the necessary DeFi primitives needed to bootstrap & maintain any economy to Cardano. Ardana offers an on-chain asset-backed stablecoin and a decentralized stable-asset DEX. The stablecoin is verifiably backed by an excess of on-chain collateral and will enable borrowers to take leverage on their ADA or other supported assets. The DEX is a highly capital efficient exchange enabling swaps with minimal slippage & fees while providing low-risk yield opportunities to liquidity providers.
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