Duckpools: A Lending and Borrowing Protocol on Ergo

Explainers
community
Ergo Platform

January 22, 2023

As innovation on the Ergo blockchain continues, another vital decentralized application within the ecosystem is emerging. Ergo already offers several dApps, such as NFT marketplaces, a DEX, raffles, mixers, games, etc., but the addition of a lending and borrowing protocol will bring an important DeFi utility to the blockchain.

What is Duckpools?

Duckpools is a pool-based lending and collateralized borrowing protocol on Ergo. This dApp enables users to earn a yield on their ERG holdings, providing the coin with additional utility. Currently, Ergo native assets such as Ergopad, Neta, and EGIO can be staked with a preset APY. However, Duckpools aims to add a similar utility, whereby a user can stake their ERG and increase their position through the yield that they receive upon lending their ERG. This is important because Proof of Work coins have traditionally not been staked. Additionally, users can borrow ERG from this new protocol. Duckpools is currently operating in beta and interested parties can test the product for themselves via the website.

Why did Duckpools choose to build on Ergo?

As per the Duckpools whitepaper (Section 1.2), the Ergo Platform was chosen for a variety of reasons. Firstly, the Duckpools team wanted to “[solve] Ergo’s need for a foundational lending protocol that could be used to enable ecosystem growth.” Furthermore, “[we] wanted to showcase its development process. We firmly believe that developing on Ergo is simpler, faster, and more scalable than developing decentralized applications on other blockchains.” Due to these factors, the Duckpools team also believes that they can build this protocol for “a fraction of the development cost.” This is especially important when the crypto space is currently mired in a deep bear market and funding sources are scarce. The Duckpools team have highlighted that it is not their team that allows for fractionally priced development, but the Ergo Platform’s core protocol. This means that it is not necessarily their coding prowess per se that allows for cheap development, but the way that the base layer of the blockchain has been designed.

What types of unique features does Duckpools offer?

Duckpools will bring some revolutionary features to the Ergo ecosystem. One of these features is that all revenue will go to a treasury that will be entered into a DAO type structure. This revenue will be shared with Duckpools token holders, while also empowering the community in how Duckpools will operate. As part of their roadmap, the Duckpools team will release a detailed budget on how funds will be spent to develop additional tools on the lending protocol. These features will add UI improvements and increased functionality for the user.

It is also worth noting that Duckpools will increase the borrowing power of members in the ecosystem. Duckpools will be the first to allow native assets to act as collateral for a loan. It will also be the first protocol on Ergo that allows an investor to short or long ERG and native assets. These pools will be permissionless and open source, thus staying true to Ergo’s first principles. Additionally, users will keep full custody of their funds - a feature that is not always offered to customers on centralized exchanges.

Tokenomics

Duckpools will offer a token sale to fund the development of the protocol, and the dApp will provide governance responsibilities to holders of this token. Once launched, users will have the power to vote over all of the protocol’s decision-making and finances going forward.

As per the Duckpools whitepaper (Section 3.1), all platform revenue will be directed to the token treasury. Only Duckpools token holders will be able to utilize the benefits of governance.
The Duckpools team offered the following quote on the formation of the DAO and corresponding governance features:

“Whether they decide to simply airdrop revenue to token holders, or use funds to develop new platform features - we as project founders will pass on both the responsibility and profits of the Duckpools protocol, in its entirety, to the community.”

Conclusion

As the Ergo ecosystem continues to develop real-world utility for users, dApps like Duckpools are helping to build the bridge from traditional finance to decentralized finance. The ability to lend and borrow cryptocurrency in a decentralized and private manner creates real value in the crypto industry. This type of DeFi tooling has the potential to enhance the lives of ordinary citizens and create a level playing field within the financial world - one that removes our reliance on centralized banks and monopolitized finances.

For more information about Duckpools, join their Discord or browse their Twitter.

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