The First PoW-mineable Synthetic Assets on Harmony ($dkONE, $dkBTC)

5 min readJun 29, 2021

TL;DR

$dkONE — The first elastic supply cryptocurrency designed to mimic the price of Harmony $ONE. Intended to be used as a synthetic asset to bootstrap liquidity and bridge the $ONE token to other blockchains. Obtainable by staking $DAIKI or proof-of-work yield mining.
$dkBTC — Non-custodial elastic supply BTC analog designed to be used in the Harmony-based DeFi ecosystem that mimics the price of BTC. Obtainable by staking $DAIKI or proof-of-work yield mining.
Elastic-supply token — Token that automatically adjusts its supply by increasing or decreasing every token-holder’s balance with relation to its price and the asset it’s pegged to.
Proof-of-Work (PoW) Mining — Methodology used by Bitcoin and other cryptocurrencies to secure a blockchain and ‘mine’ tokens. A number ‘nonce’ must be found which when hashed with other data will result in a digest ‘D’ which is less than target ‘T’. The difficulty of ‘mining’ commodities automatically adjusts to the total computational power that is actively mining.
Yield Farming / Staking — Practice of locking or staking liquidity to generate returns or rewards.
PoW Yield Mining — Practice introduced by Daikiri Finance for the first time in DeFi to use computational power to obtain rewards in Yield Farms.
PoW-mineable Synthetic Assets: $dkONE and $dkBTC, the first elastic supply tokens distributed through proof of work.

The First Synthetic Assets on Harmony: $dkONE and $dkBTC

$dkONE is the first decentralized elastic-supply cryptocurrency pegged to the price of Harmony ($ONE) . $dkONE is not a stablecoin, but rather a non-custodial ONE synthetic analog designed to be used as a staking derivative to bootstrap liquidity, incentivize liquidity providers, and bridge the $ONE asset, as a synthetic, to other blockchains.

$dkBTC is a non-custodial elastic BTC analog designed to be used in the Harmony-based DeFi ecosystem. It relies on elastic parameters built into its smart contracts in order to maintain and mimic the price of Bitcoin as an index.

Both assets will be obtainable through Yield Farming and the new practice introduced for the first time in DeFi by Daikiri Finance: Proof-of-work Yield Mining.

What is an elastic-supply token?

An elastic-supply tokens is one where the total supply is not fixed, but instead automatically adjusts periodically. These supply adjustments are called “rebases” and occur to expand or contract the total supply of tokens, increasing or decreasing every token-holder’s balance. The adjustments occur depending on the price elastic asset against the asset it’s pegged to. For example, if the price is below the 1:1 peg with Harmony, it will have a negative rebase, contracting the supply; on the other hand, if the price is above, it will have a positive rebase, expanding the supply.

Rebases

The rebase is a function of the contract that can be called everyday by anyone. When it does, the mechanism automatically adjusts the supply based on the last 24 hours time-weighted average price of $dkONE or $dkBTC against the asset it’s pegged to.

Examples:

If the price >1.05, supply is increased.
If the price is <0.95, supply is contracted.
If the price is between 0.95 and 1.05, the supply stays the same. This is called a “neutral” rebase.

Proof-of-work Yield Farms

Another alternative to obtain $dkONE and $dkBTC is to mine by using Proof of Work, similarly to how Bitcoin, and other cryptocurrencies, are mined. With Proof of Work, miners compete to find a special number, called “nonce”, to solve a puzzle, and the miner that finds it first gets the reward.

The mechanism by which $dkONE and $dkBTC are PoW mined requires a “nonce” number to be found which when hashed with other data will result in a digest “D”, which is less than target “T”. The difficulty of “mining” is then automatically adjusted to the total computational power that is actively mining. This system is based on the mechanism implemented by 0xbitcoin, allowing assets on Daikiri Finance’s Mixology Pools to be mined using Keccak256 (sha3) algorithm using the following methodology:

keccak256(nonce, minerEthAddress, challengeNumber) < difficultyTarget

The mining software selects random numbers with the objective of finding a valid nonce. If the above statement evaluates to true, then the nonce is a valid solution to the proof of work. The challengeNumber is a recent block hash. Every round, the callengeNumber updates to the most recent blockchain block hash so future works cannot be mined in the past. The miner’s Address is part of the hashed solution so that when a nonce solution is found, it is only valid for that particular miner, so man-in-the-middle attacks cannot occur (also allowing pool mining). The difficulty target becomes smaller as more hash power is added to the network.

How to obtain $dkONE and $dkBTC?

$dkONE and $dkBTC will be obtainable through two mechanisms:

PoW Yield Mining.
Staking $DAIKI in Mixology Pools.

$DAIKI farmers will be able to stake their $DAIKI tokens, as well as other tokens, in Daikiri Finance’s Mixology Pools to obtain $dkONE and $dkBTC.

On the other hand, Daikiri Finance has created the first PoW Yield Farms in the DeFi ecosystem, which will allow users to “mine” tokens from farms, by using their pc’s computational power. $dkONE and $dkBTC will be the first elastic supply tokens to be mined through this new mechanism, thus ensuring a democratic and fair distribution.

Stake $DAIKI to earn $dkONE and $dkBTC

During the distribution phase of $dkONE and $dkBTC, the tokens will be obtainable in Daikiri Finance’s “Mixology Pools”, by staking $DAIKI tokens. With this mechanism we reward $DAIKI token-holders and create additional demand for the $DAIKI token; at the same time we incentivize holders to lock $DAIKI liquidity, thus taking a part of supply from circulation. We increase demand, and reduce supply, of the $DAIKI token.

$dkONE Tokenomics

Total Tokens: 100,000,000

Distribution Duration: 12 months

$dkONE/block (staking): 3.17097919837646

$dkONE/block (PoW Mining): 3.17097919837646

$dkBTC Tokenomics

Total Tokens: 5,000