Title of your idea
sENERGY - Harnessing DeFi to Propel the Future of Energy
To put it simply, we are all totally screwed if we don’t get our act together and support renewable energy. Having a token that tracks the top 20 renewable energy stocks helps accelerate the adoption of renewable energy, that’s a win for everyone and the planet. Plus, creating a token that gets behind something positive rather than the next degen hype project is great branding for blockchain. Right now there is a lot of FUD around how much energy blockchain consumes and this type of token/project can help steer that narrative in the other direction. One of the issues with some of the clean energy ETFs we have now is they are centralized and not nimble enough to adapt to an evolving market such as renewables.
Let’s bring our passion for disrupting centralized markets into the energy sector where we all benefit from a more sustainable future. Projects like Energy Web are helping to bring blockchain into solving the energy crisis but there is so much more room in our space to move the needle in such a critical sector that affects us all. The next generation of investors are seeking more than just financial returns in their investments and UMA gives us the tools to help create these new synthetic assets that we can use to improve the world and accelerate the adoption of good ideas. sENERGY could be the answer to how both the environment and the global finance sector can prosper at the same time.
Although this token by itself doesn’t solve a ton of problems, what it does do is open the door to engage with people about where our energy comes from and what type of a future we are going to live in. Achieving sustainability within energy consumption is the largest and most paramount problem our planet faces, and we’re already well behind schedule. If I’ve learned anything in my decade of conservation work it’s that if you want to inspire people to be involved in sustainability you need to make it accessible in their world. Just the fact that there’s a token where “Chads” can make some gains on the growth of renewable energy maybe enough to get them thinking about it more in their daily lives.
The timing of this token aligns perfectly with the massive budget the U.S. is allocating to reducing our carbon footprint on top of the countless other countries finally investing in renewables. We even have a Crypto Climate Accord with some of the top projects in blockchain getting involved. If that wasn’t enough we’ve designed a governance token with KPI rewards and an NFT series to help sustain the project.
Which metric will your synth track?
sENERGY is a synthetic token that represents an index composed of the top 20 stocks in the clean energy sector.
How will you get data for your metric
From NYSE, NYSE Arca and NASDAQ exchanges for each stock in the index. The initial price of the token would be based on a snapshot of closing prices at a certain date. The index would use a 2hr-TWAP to determine whether a position is collateralized or needs to be liquidated. These data sources are very reliable and a low-cost option.
What collateral would you use for this synthetic
USDC would be used as collateral and for creating the liquidity pool on Uniswap because it’s a very liquid market and using a stablecoin for something like this lowers the volatility and risk of a user’s position getting liquidated.
Describe how you would create this synthetic
We would work with a developer who’s worked with the UMA protocol and hopefully even with the Degerantive.Finance team to build the framework and contract for the token. As far as using the most accurate metrics possible the data from the NYSE, NYSE Arca and NASDAQ exchanges with the addition of a 2hr-TWAP should be reliable enough. Plus, with a 24-48hr settlement period, the data will be verifiable by multiple sources.
What issues might you encounter in the development of the synthetic
Coming to a consensus on the top 20 stocks to peg sENERGY to, we will need to define what counts as a renewable energy stock as there is some grey area in the definition. Of course, the token contract also needs to be rock solid but finding vulnerabilities in smart contracts isn’t our specialty and would need outside council on that potential issue.
How you would make sure that people who would find the synthetic useful could access it.
It would start with building a beautiful and simple website that also has a nice UX for the minting process (example below). The site would have an expansive knowledge base with helpful tutorials to alleviate any doubt in the user that they are using the Dapp incorrectly. The next phase before launch would be designing all the necessary marketing materials which would include bite-sized animations that illustrate the use case for sENERGY, walkthrough tutorials, and a nice stack of content ready for social media. We would also launch an NFT for liquidity providers, and sell a series of NFTs with 100% of the proceeds going to renewable energy projects. As a side note, I’m currently working on a conservation project that’s bringing solar energy to villages in Zimbabwe through a nonprofit I’m involved with so this idea isn’t out of leftfield.
The first 100 people that provided liquidity for at least 30 days get the first 100 NFTs which are the rarest. Then there would be a second NFT made for the next 250 users who provided liquidity for 30 days. We would then create a series of NFTs that highlight different types of renewable energy (I promise they will be fresh) and sell them with 100% of the proceeds going to support nonprofits helping to bring renewable energy to developing nations. I think people would rally behind an NFT made solely for the good of the planet and there haven’t been too many people that have done that in crypto.
Further Thoughts: Governance Token or KPI Option
I need to do more research on the KPI options that you can create using UMA’s protocol but it would be interesting if you could also create a kENERGY token that provided governance on what stocks made the index and also rewarded LP’s for certain KPIs based on the growth of renewables. I’m not positive on all the possibilities of a governance token but airdropping a certain amount of tokens each quarter based on KPIs would be a cool option rather than also creating an option token. Regardless, creating governance would help motivate the community/holders to continually evolve the index to maximize growth and exposure to the renewable energy market. If the governance token was called kENERGY I can picture the degens loving a token with a smiling Ken doll face… Like the suave version of the wallstreetbets kid or the depiction of all the Chads out there. Another area where rewards could be expanded is with $UMA and $YAM rewards for providing liquidity but I’m not sure how Degenerative.Finance was able to arrange that.
Distribution of kENERGY
By integrating Blockzero’s Claims Dapp we could have a place on the website where people could claim their kENERGY tokens. For the launch, we could aim to provide a certain amount of $kENERGY to current $UMA, $YAM, $uSTONKS, and Energy Web LPs. From there rewards would be distributed to LPs and sENERGY holders based on KPIs of the index.
Website & Logo Mockup
I know this wasn’t mandatory for the contest but my brain started envisioning how sENERGY could look as a brand so I designed this simple homepage mockup.