Comprehensive analysis of comprehensive project Dinosaur Eggs from the perspective of product mechanism, business model, token economy, risk and investment logic.
Original title: “A quick look at Dinosaur Eggs: Is it a multi-project mechanism stitching, or a paradigm upgrade of DEX? 》
Written by: Xu Xiaopeng
Core investment logic : Dinosaur Eggs has an ingenious token and mechanism design, plans for the interests and responsibilities of multiple participants, the direction of incentive distribution of token output, and the combined use of heterogeneous (NFT) and homogenized assets. All have eye-catching designs, and there is a high degree of coordination among the core product modules. The two businesses that it has disclosed: Swap and Social, one new and one old, are in line with the general trend of the industry. There may be a lot of room for growth in the project.
Main risks: The project has been launched in a short time and there are many uncertain factors. Specific risks include project mechanism derailment, contract risk, project governance level moral hazard, and competition from imitating the market.
Valuation: Compared with the blue-chip Swap on BSC from the perspective of static PS (market-to-sales ratio), Dinosaur Eggs has a very low valuation, which is only 1/40 of Pancakeswap. However, considering that it is in a period of high inflation and the project development time is relatively short, this valuation can only be used as a rough reference. This research report will focus on qualitative mechanism and product analysis.
Project overview
Business Scope
The Dinosaur Eggs project is a comprehensive project deployed on BSC. According to its official documents, the business areas that the project has disclosed include Swap and social networking. The first product to be launched is Dinosaur Swap, which focuses on trading. Its social products are not yet online.
Project innovation
Judging from the project’s online products and official documents of the project, the main innovations of Dinosaur Eggs compared to other swap projects are as follows:
The design of the token model is complex and exquisite
From the token model of Dinosaur Eggs, you can see the shadow of many well-known projects, including Curve’s governance lock-up (veCRV), DODO’s membership system (vDODO), Bakery’s NFT module, Kswap (Swap project on Okchain) transactions Mining, even some MEME type token transfer and burning mechanism. So far, the entire mechanism of Dinosaur Eggs is operating relatively smoothly, and there is a high degree of coordination and strengthening effects between the product modules.
The in-depth analysis of the project token model and business mechanism will be detailed in the [Token Model] section of [Business Analysis].
Introduction of NFT and various scenarios
Dinosaur Eggs has designed a richer functional scenario for NFTs. Among the two types of NFTs (“Governance Dragon” and “Meat”) that have been officially disclosed and launched, its main function is to obtain project agreement income and act as a market maker. LP income acceleration props. In addition, the project has built-in NFT second-hand trading market, and fragmented these two types of NFTs to improve the liquidity and turnover rate of NFTs.
The NFT second-hand trading market of the project, the currently online NFT types are “Greek Dragon” and “Meat”
Differentiation of market transaction pair selection
In the initial stage of the project, VAI (over-collateralized stablecoin issued by Venus, the largest lending project on BSC) was selected as one of the trading tokens in many liquidity pools. Previously, due to the severe imbalance of supply and demand, the stable currency VAI has long been out of the anchor price of 1$. After the start of the Dinosaur Eggs project, VAI was quickly pulled to around 1$, and remained unanchored in the following days. In addition, the project also uses XVS (Venus’s governance token) as one of the main tokens in the liquidity pool. Since then, Venus has started to interact with the Dinosaur Eggs project on Twitter many times.
In the liquidity incentive pool of Dinosaur Eggs, VAI is one of the main tokens
Project history
Token price trend
The project went live on October 2, 2021, and the current operation status is less than a week. Its core token DSG, as the early core mining material (commonly known as “shovel”), was contended for more than 3,000 U.S. dollars before the project officially started mining (the project party only pre-added 20 DSG tokens). After the start of mining, DSG was once pushed up to around US$18. Following the inflation of a large number of tokens, its price dropped to around US$0.58, and then rebounded and remained at around 1.3-1.8 in the past 3 days.
The price trend of DSG within a week of its launch. As the inflation rate gradually decreases, the trend tends to stabilize. Source: https://dex.guru/
Project events
Although as of today, the project has been online for less than a week (10.2-10.7), the Dinosaur Eggs project has very frequent actions and its Twitter updates are also extremely intensive. Specifically:
October 2: The project goes live
October 3
- Open the liquidity mining incentives for NFT fragmented tokens, and improve the liquidity of NFT fragmented assets
- Announcing the contributor support plan, indicating that the community fund will be used to provide rewards to contributors in safety, artistic creation and community ambassadors
- Received retweets and attention from the Venus project, the content is the liquidity mining rewards of VAI and XVS
October 4
- Adjusted its DSG reward distribution coefficient for the first time, lowered the incentive amount of liquidity mining, especially the stablecoin liquidity pool, and increased the reward distribution of transaction mining
- Indicates that all rewards accumulated by the official member address will be given to other members (members refer to users who pledge DSG, that is, holders of vDSG, see the “Token Model” section for details)
- Lower the invitation threshold of the membership system and encourage invitation behavior
- Announced a partnership with Babyswap on BSC
October 6
- The first CEX to list DSG tokens, Lbank
- Announced that it will lower the threshold for the use of its LP revenue acceleration token “Meat”
- Start the liquidity and transaction mining incentives of Babyswap token Baby
October 7
- Announced the opening of RACA (the NFT track project on the BSC, with the deep participation of Musk’s mother) token liquidity incentives and transaction mining incentives
- Adjust the reward coefficients of liquidity mining and transaction mining again, and use its core token DSG as a market-making counterparty asset
- The number of members in the membership system exceeds 1500
On the whole, the project party took a lot of actions in the first week of launch, especially in its incentive distribution and optimization and business cooperation.
Business conditions
The core data of Dinosaur Eggs is as follows:
The author believes that the two most noteworthy indicators are the LP capital turnover rate (daily) and the membership enrollment rate.
LP Funds Turnover Rate (day)=24-hour trading volume/market-making funds, which is used to measure the turnover efficiency of market makers’ funds. The higher the turnover efficiency, the higher the return on the market maker’s fund handling fees and the higher the agreement income.
Dinosaur Eggs’ LP capital turnover rate is significantly higher than other DEX platforms that use the AMM mechanism. This is mainly due to its transaction mining mechanism and unique token incentive strategy (see: Token Model). In addition, because UNI V3 adopts the custom function of market-making price range, the utilization efficiency of market-making funds is also significantly higher than that of the traditional AMM platform.
Another indicator, membership enrollment rate = DSG deposited into the membership system/total DSG supply. The higher the membership enrollment rate, the higher the user retention rate of the entire system. Dinosaur Eggs’ token lockup indicator is 37.9%, which is less than The CRV token lock-up amount of Curve, the originator of the token management lock-up mechanism, is very close. Since Curve launched DAO, its circulating token lock-up volume has been increasing, currently at 41.76%, and Dinosaur Eggs has achieved impressive results within one week of its launch.
Of course, it should be noted that after the locked position, Curve’s CRV has two functions of governance and obtaining agreement income dividends, while DSG can only obtain the income distribution of the agreement after the locked position. Currently, there is no governance function.
Curve’s CRV lock-up amount, data source: https://dao.curve.fi/releaseschedule
Team background & investment institution
The core team of Dinosaur Eggs is temporarily anonymous and has not disclosed the core personnel information of the project, but the project has been audited by Certik. The project adopted a fair start-up method, there was no financing, pre-sale, and the team did not reserve the original share in advance.
Business analysis
Industry and competitors
According to the positioning of the project by Dinosaur Eggs in the official documents, the project is a comprehensive project that includes Swap, Social and other businesses, and is called “Dinosaur metaverse”.
Dinosaur Eggs’ project homepage, in addition to Swap (Defi), also reserved entrances for social and other products
However, in addition to swap, other product sectors have not yet determined the launch time, and the specific product form and direction have not been disclosed.
At present, the order of the explosion of blockchain commerce is: Decentralized Finance (DeFi), NFT-based collectibles (artwork, avatar, trading platform) market, Gamefi (but with a larger scale except Axie) And there are fewer projects with stronger sustainability).
The social track of the blockchain is currently at a stage where everyone is looking forward to it, and industry giants are making a big push (decentralized project representative is Aave, and centralized organization representative is Twitter faction) but there are fewer representative products, and the industry’s Product The market fit has not been clearly verified and remains to be seen.
In the Swap field on BSC, Pancakeswap’s user volume and business volume are both in the absolute leader position, occupying a large number of mainstream asset trading volumes. The rising star has the Babyswap project selected for the third phase of MVB, trading with long-tail assets. And market-making services.
Although the business volume of Dinosaur Eggs is relatively fast, its trading pairs and the number of partners are at an early stage, and there is not much overlap with Pancakeswap and Babyswap’s trading partners. It will not pose a direct threat to BSC’s leading projects in the short term. , But with the development of subsequent projects, it will inevitably face business competition with the first and second-line SWAP projects.
Token model
Compared with traditional Swap projects, Dinosaur Eggs’s token model is mainly different in the following aspects:
The types of tokens that can capture protocol income are more diverse
There are both homogenized tokens (FT) DSG and heterogeneous tokens (NFT) Money hungry-dino (Chinese name is “greedy dragon”), and DSG can be minted into vDSG, a member equity token, greedy for money The levels and parameters of Dragon NFT are different.
A level 6 greedy dragon that is placing an order for sale in the NFT secondary market, source: https://dsgmetaverse.com/#/nftdetail/market
The following will explain the above token types:
1.DSG
DSG is the core token of the project. Its total amount and output model are similar to Pancakeswap’s cake. The total amount is unlimited. The output is regulated by governance (currently DAO is not online). In the future, deflation will be achieved through output regulation and increase scenarios.
Currently, there are 88 DSGs per block, and the daily output is 2534400DSG.
The role and value capture of DSG mainly come from:
- Directly capture the transaction fee income of the trading platform: part of the transaction fee will be used to repurchase and destroy DSG
- Cast vDSG, join the Dragon family member: Cast vDSG at a ratio of 100:1, get additional transaction fee distribution, DSG transfer burning distribution, NFT trading platform transaction fee distribution, NFT synthesis and other membership rights
- Transfer burning and deflation: DSG has a transfer burning mechanism, each transfer deducts five ten thousandths, of which three ten thousandths are directly destroyed, and two ten thousandths are allocated to vDSG pledgers
- Used for NFT synthesis and card slot purchase
- You can use DSG to purchase various NFTs in the mall system
- Governance: After the DAO module is online, it can be used for proposals and voting
But the above is still only a small piece of the agreement value. If you want to capture more agreement value, you need to use DSG to cast vDSG.
2.vDSG
vDSG is cast by DSG according to the ratio of 100:1. The agreement value that can be captured by holding vDSG includes:
- The entire membership system receives 18DSG rewards per block
- An additional 0.025% of the platform’s 0.3% transaction fee will be allocated, and the DSG will be repurchased and distributed to vDSG holders
- DSG deducts two ten thousandths of each transfer and distributes it to vDSG pledgers
- Obtain the distribution of transaction fees on the NFT trading platform
- The DSG paid for upgrading the greedy dragon and purchasing the card slot (see “Token Model” for details) is distributed to all members
- The fee for using Meat NFT is distributed to all members
- Members with more than 1vDSG can invite other members to mint vDSG. 10% of the vDSG minted by the invitee will be used as the member weight of the inviter, but the rights are not redeemable or transferable, and will be redeemed by the invitee and the inviter Permanently disappear after vDSG
- When other users redeem vDSG, the rate-based refund fee will be distributed to vDSG holders who have not withdrawn in the form of vDSG.
Member system interface of Dinosaur Eggs, source: https://dsgmetaverse.com/#/vdsg
3. NFT: Money-hungry Dino
The total amount of Gailong NFT is 20,000, of which 15,000 will be produced in the form of egg fragments (a homogenized token) in the Yilong Farm within 60 days through farming. 10,000 egg pieces can be exchanged for a Gailong Egg NFT , Greedy Dragon Egg NFT can be regarded as a blind box, after opening it will randomly get 1-6 level of Greedy Dragon NFT.
Fragments of Greedy Dragon Egg Shells (FT), Blind Greedy Dragon Egg Boxes (NFT) and Level One NFT, Source: Dinosaur Eggs Official Documents
The higher the level of the dragon, the higher the “Dragon Prestige Value”. The end user pledges to share 0.3% of the transaction fee based on the Dragon Prestige value.
DSG, vDSG, NFT and NFT fragmented tokens, why does the project design such a complex multi-token system to capture the value of the agreement?
There may be more complicated motives behind it, but the author believes that there are three more obvious benefits:
More diverse token systems, the introduction of NFT tokens, and the combinability between tokens can enhance the “gameplay” and “immersion” of the entire system. During the few days when the author dived in the project community, there were not a few users who said that the project was “fun”.
The combined use of homogenized tokens and NFTs may leave room for the combination of the project and other projects, as well as the social business sector in the future.
The existence of NFT provides more transaction scenarios and creates additional agreement revenue.
Dinosaur Eggs’s multiple sets of token description and association mechanism, drawing: community user xdord
Introduction of multiple game systems
The core business of Dinosaur Eggs on Swap can be divided into 4 parts: market making, trading, membership system, and NFT system. In these four types of business sectors, the project parties have fully introduced game design. Specifically:
- Market-making game: The game between market makers through the amount of funds is similar to the traditional market-making logic, so I won’t go into details here.
- Transaction game: Introduce game through transaction mining mechanism. Transaction mining refers to the fact that the project provides token distribution rewards for trading activities, and users get the token reward distribution according to the proportion of their cumulative transaction volume. The higher the cumulative transaction volume, the higher the token reward. In this mechanism, the user’s past cumulative transaction volume is similar to “mining power”. But as long as the user chooses to withdraw DSG, its past cumulative transaction volume will be cleared. During this clearing process, the total computing power of the system will also decrease, that is to say, the percentage of computing power of other users who have not raised DSG rewards It has been improved, and the extractor needs to accumulate computing power from scratch through new transactions. The user who extracts the reward later will get more DSG, but they also need to bear the risk of DSG fluctuations accordingly.
The transaction mining page of Dinosaur Eggs, source: https://dsgmetaverse.com/#/trading
Member system game: DSG’s membership system is inherited and transformed from the vDODO membership system of another well-known swap project DODO. Holders become project members by casting DSG into vDSG, and most of the project’s agreement income will be distributed to vDSG holders in a proportionate manner. In other words, DSG holders cannot directly capture most of the income of the agreement. They must use DSG to cast vDSG to maximize the growth dividend of the agreement. This idea is consistent with the idea that only veCRV can obtain agreement income in Curve. On the other hand, while receiving distribution profits, the responsibility of vDSG users is to absorb the fluctuations in the price of project tokens. To achieve this goal, Curve’s approach is achieved through the lock-up time incentive: the longer the user locks the CRV, the higher the proportion of governance rights and dividend rights they receive; the vDSG approach is through “exit burn” The mechanism is implemented, unlike CRV that cannot be redeemed after it becomes a veCRV. vDSG can be redeemed as DSG at any time, but there will be an exit penalty when redeeming. The penalty is dynamic. The current proportion of unlocked DSG in circulation is Higher, the higher the exit penalty rate, and vice versa, the lower. It is important to note that most of the fines for withdrawal will be allocated to other vDSGs that have not withdrawn. In other words, vDSG holders who do not withdraw will not only receive most of the income of the agreement, but also most of the fines paid by the withdrawal.
NFT system game: There are currently two main types of NFTs disclosed by the project (the official plan has 4 types), one is the income-based NFT-the greedy dragon, and the other is the LP income-accelerated NFT-the game logic of meat and meat It is similar to market making and will not be repeated here. This article mainly talks about the game logic between the greedy dragons. The function of Greedy Dragon is to distribute the daily fee dividends, but this system has two special mechanisms: 1. Synthesis. Two greedy dragons of the same level can be combined into a higher greedy dragon. The power value of the higher greedy dragon is a random interval, but must be greater than the sum of the two dragons of the lower greedy dragon. 2. Combination. After the user has collected the full set of greedy dragons of level 1-6, he can purchase a card slot (pay DSG) to pledge the entire set of greedy dragons. At this time, the overall dragon power value (dividend weight) of the greedy dragon combination will be the original 1- 5 times the sum of level 6 dragons. Under this set of logic, if users want to maintain an advantage in the dividend competition of the greedy dragon, they must synthesize and strive to obtain a complete set of greedy dragon pledges.
No longer “liquidity is king”, multiple sets of incentives are implemented simultaneously
As a fair start project, how the tokens are distributed is of utmost importance. Trading projects represented by Pancakeswap mainly invest the token incentives to liquidity providers and the pledgers of Cake tokens (commonly known as “mine yourself”). The incentives of Dinosaur Eggs are more inclined to traders (through transaction mining) and members (through the membership system).
Dinosaur Eggs’ token output distribution plan has much higher incentives for transaction mining than liquidity, source: official documents
In my opinion, this may be a better incentive method, because the increase in transactions itself will directly increase the market maker’s capital turnover speed, create greater fee income for them, and incentivize traders while also indirectly incentivizing them to do business. Market business: Full incentives for members can increase user retention and participation, and contribute more long-term value to the agreement. The direct subsidy for liquidity is not satisfactory in these two aspects. Of course, no set of token incentive model is perfect and does not need to be adjusted. The best incentive scheme must be adjusted continuously with the changes of the product and the market. Perhaps this is also the fact that Dinosaur Eggs has conducted two incentive weight parameters within 5 days of its launch. The reason for the update (see “Project Events” above for details).
Token summary
The token model of the Dinosaur Eggs project is large and slightly complicated. We can see the shadow of the token economy of many excellent projects. However, the designer of the project’s token did not “simple” multiple mechanisms. It has a relatively overall overall design, and uses “games” to ensure that the contributions and benefits of multiple participants to the project are relatively balanced, and jointly promote the development of the project.
Competitive advantages
As of today, Dinosaur Eggs, as a project that has been online for less than a week, is actually too early to talk about the “moat”. However, its complex and well-designed token model has obvious mechanical advantages over other Swap projects.
In addition, the team’s sensitivity to project operations and the speed of adjustments are impressive.
Considering that the project is currently only one of the businesses online, the subsequent combination of its design in Social and other NFTs and existing mechanisms is also crucial to the overall development of the project in the future, and may become the “winner” of the project.
Project risk
As an early project, Dinosaur Eggs also faces many risks, including:
- Project mechanism derailment: The existing mechanism and token design of the project are huge and complicated, and the degree of correlation between various modules is extremely high. Although it is currently operating well, the follow-up mechanism will still face the test of more complex situations. For example, if a large number of members withdraw with the “burn mechanism”, and a large number of transaction mining users withdraw profits and smash the price of the currency, will it cause an irreversible “death spiral”? Can the consensus of the project be supported at present? This remains to be seen.
- Appearance of imitations: If imitations of similar mechanisms appear in the short term, the flow of the project may be diverted.
- Contract risk: There are many modules in the agreement, and there is a certain contract risk in the combination and calculation of the modules.
- Project governance issues: At present, there is no specific DAO plan for the project. The team has strong control over the project, and its governance and moral standards are one of the biggest “single points of risk” for the project.
Valuation level
5 core questions
What business cycle is the project in? Is it the maturity period, or the early and mid-term development?
The PMF (Product market fit) of Swap projects has been fully verified. The Swap module of the project is currently operating stably, but there is a lot of room for adding trading pairs. And the other product modules of the project have not yet been launched, and the project is in a very early stage of development.
Does the project have a solid competitive advantage? Where does this competitive advantage come from?
The project mainly relied on the relatively excellent token design and combination mechanism to achieve the cold start and rapid development of the business, and the team’s acumen and adaptability were also excellent. However, it remains to be seen whether the above advantages can be maintained in the fierce competition.
Is the long-term investment logic of the project clear? Is it in line with the general trend of the industry?
The medium and long-term investment logic of the project is to be optimistic about the Swap track and the Social track under exploration. The Swap track is very wide (despite competition incentives), while the Social track is favored by many leading players and has great potential for long-term development. But the business model is still being explored. On the whole, the two businesses that the project has disclosed, one new and one old, are in line with the general trend of the industry.
What are the main variables in the operation of the project? Is this factor easy to quantify and measure?
At present, the main focus is on the operation of the project mechanism. It is necessary to comprehensively observe the core indicators of the project’s LP capital turnover rate, membership ratio and other core indicators, as well as the project’s pressure-bearing capacity in a negative spiral. Externally, it is necessary to observe whether there is a strong competitive imitation and the actual diversion situation.
What is the management and governance of the project? What is the level of DAO?
At present, the DAO module of the project has not yet been launched, and there is no timetable. The core team is mainly responsible for the promotion of the project.
Valuation level
The project is in the very early stage of development, and both the potential for development and the uncertainty of operation are very high. #Project quick overview research report also focuses on the business or mechanism innovation of the project, and underestimates the valuation analysis. Therefore, we only use PS (market-to-sales ratio) as a horizontal comparison indicator to compare Dinosaur Eggs with Pancake, a benchmark swap project on BSC. The lower the PS value, the lower the project’s market value relative to its agreement revenue.
From the perspective of static PS, Dinosaur Eggs is very underestimated compared to Pancakeswap. The PS of Pancakeswap is 39 times that of Dinosaur Eggs. Of course, as mentioned earlier, Dinosaur Eggs, as a newly launched project, has much greater uncertainty than a mature blue-chip project. Until its mechanism and competitiveness are fully verified, it is difficult for the market to overestimate it at the beginning. value. In addition, Dinosaur Eggs is also facing greater inflationary pressures. As of October 8, its daily inflation rate was around 17%.
Valuation summary
Dinosaur Eggs’ existing competitive advantages mainly come from excellent token and mechanism design, and the team also has good acuity and responsiveness. The project is in the absolute early stage of development. On the one hand, it has great potential, but it also faces great uncertainty. From a valuation perspective, the PS valuation of Dinosaur Eggs is much lower than that of the mature project Pancake, but it can only be used as a rough reference.
This research report is especially grateful to the Dinosaur Eggs community user xdord for sharing information and providing a logical diagram of the token economy.
Data Sources:
https://pancakeswap.finance/info
Reference article:
Social track analysis: Aave and Twitter are competing for decentralized social media. What will the “next-generation social network” look like?
Curve in-depth research report: In- depth analysis of Curve’s path to attack: business model, current competitive situation and current valuation
