Dapp Rewards on Archway: New Possibilities and Use Cases
Archway is a new incentivized smart contract chain for Cosmos. It gives developers a simple way to build cross-chain applications, and plug directly into the growing universe of users, assets, and communities from across the ecosystem.
…but what do we really mean by “incentivized” smart contract chain? 🤔 Well, developer rewards are baked directly into the protocol itself.
Archway sees developers as critical network participants, and rewards them directly for the value they contribute to the underlying network.
With Archway, as a dapp generates usage on the network, it receives a share of transaction fees, inflation, and contract rewards — similar to how validators are rewarded in a typical Proof-of-Stake network.
Dapp Rewards: New Possibilities + Use Cases
When a new contract is instantiated on Archway, the developer specifies an “owner” address where all fees and rewards will be automatically deposited. From there, the developer and their community can allocate those rewards in whatever way they feel most benefits their ecosystem.
The possibilities are near-infinite, but here‘s a sneak peek at a few use cases we’ve been envisioning and hearing from the community:
🔁 Governance Token Rewards
A recent trend has seen dapps issuing governance tokens to incentivize and bootstrap early communities. Despite lacking any clear mechanism for value capture, many of these tokens have experienced stratospheric growth. Some merely grant voting rights, yet demand continues to be driven by speculation of ambiguous future rights to cash flows or assets.
In the Archway model, dapp developers can redirect their share of network rewards directly back to their governance token holders. Thus, transforming a standard governance token into a productive, yield-generating asset.
⛽ Sponsor Gas Fees for End-Users
Gas payments remain a stubborn obstacle to delivering simple, intuitive user experiences for dapps. Archway supports gasless transactions through a feature called pool accounts. This allows dapps to pull funds from a common pool to sponsor gas payments and completely abstract away that complexity and friction for their end users.
To fund the balance of the pool account, a developer can use the fees and rewards generated by the dapp itself. In effect, gas rebates alone provide a 50% discount on each transaction, while any additional inflation or contract rewards can be applied to further subsidize.
By recycling these funds back into the network, dapps get the option to dramatically reduce (or even eliminate) the gas burden for end users, unlocking a smoother onboarding process and stronger retention over time.
🌎 Offset Your Carbon Footprint
Over the course of 2021, the environmental impact of blockchains has become a material concern for many in the space. While Tendermint’s Proof-of Stake consensus engine is exponentially more energy efficient than other major Proof-of-Work chains, why not take it a step further…?
What if our smart contracts could be completely carbon neutral… or even carbon negative?
Through the wonders of IBC and trailblazing Cosmos-based projects like Regen Network, this is possible. Using IBC to send assets and call contracts across chains, developers could automatically redirect their dapp rewards toward purchasing eco-credits on Regen.
As transactions on Archway have a minimal eco footprint to begin with, it’s perfectly viable for a contract to actually achieve a net positive impact. And keep in mind — these protocol rewards are recurring, so this particular use case is sustainable in more ways than one. 🌱
📈 Boost Liquidity Mining Programs
DeFi projects could use the funds earned from Archway to boost liquidity mining rewards, a vital strategy for attracting new users and encouraging active participation.
For instance, a decentralized exchange (DEX) could distribute rewards on top of the fees already paid to their liquidity providers, while a lending platform could allow users to earn supplemental rewards for depositing and borrowing assets.
Similar types of matching and subsidy programs have been run elsewhere as temporary months-long promotions, but Archway’s recurring rewards model opens up unique opportunities to structure such boosted incentives on a continuous basis.
🎨 Pass Rewards Back to Creators + Artists
NFTs have exploded amongst the creative class, but not without a dash of controversy. Besides the aforementioned environmental concerns, these communities have expressed objections around how value is being distributed and whether creators and artists are receiving their fair share.
Undeniably, such stakeholders play an integral role in bringing users, assets, and transactions to an underlying network. So, how about giving them a commensurate share of the network and rewards?
For those NFT-focused dapps (i.e. marketplaces), developers can pass rewards to these users in all sorts of creative ways — boosting collective or individual royalty rates, funding a DAO that supports upcoming creators, contributing to initiatives that matter to the community (e.g., purchasing carbon offsets), etc.
💻 Fund Core Development Teams
Archway rewards could help developers bootstrap new projects without having to dedicate excessive time and focus to fundraising. The process of raising early capital can be difficult for developers of individual dapps.
Development teams often resort to private insider sales that skew early token distribution or are forced to rely on foundation grant programs. Rather than prioritizing the best technology and ecosystem for their dapp, they’ll choose based on available grants and get locked into a single platform.
Even after a dapp is launched, it can be difficult for teams to cover ongoing development costs as the industry is still nascent and winning business models have yet to materialize.
However, Archway rewards can counter some of these early financial pressures by allocating dapp rewards directly to core development teams. This funding source could serve as a supplement to help sustain projects and allow the team to focus on what really matters — shipping the best possible product, growing their user base, and supporting the community
🔗 Contribute to a DAO
Rewards generated by a dapp can be contributed to a community-owned DAO that’s focused on coordinating and funding critical work for its ecosystem. These rewards can be continuously deposited to the DAO’s treasury which allows members to collectively manage and deploy the assets based on specific needs of the project.
Such a DAO could vote to fund core development teams, sponsor events and hackathons, commission code audits, open bug bounties, launch education programs, subsidize third-party integrations, and so on. Anything and everything that could potentially benefit and impact the ecosystem.
The DAO itself can exist and operate as a set of smart contracts on top of Archway, so the entire process is automated and transparent throughout initial rewards collection, voting, grants distribution, and so on.
Giving members collective control over such a recurring funding source helps actively engage the community and progressively decentralize the project.
💸 Reduce DEX Fees
On networks such as Ethereum, DEX users incur two sets of fees: a network fee and a swap fee. The network fee incentivizes miners to operate nodes and the swap fee incentivizes liquidity providers (LPs) to provide liquidity to the DEX.
By deploying to Archway, DEXs could be constructed to effectively eliminate one of these fees. Instead, the DEX protocol could redistribute the earned gas rebates back to the LPs for providing liquidity to dramatically lower total transaction costs on automatic swaps and improve the user experience.
What’s next? It’s time to start building…
We haven’t even begun to scratch the surface of how dapps and their communities will ultimately adopt and utilize network-level rewards. The design space is wide open…
The time to build is now, and here’s all you need to get started on Archway:
- Testnets are officially live, with all of the core functionality around rewards calculation and distribution
- Archway’s developer CLI lets you compile + deploy CosmWasm contracts
- New frontend dapp examples and starter code templates are available, with more released each week
Any questions? Jump into our Discord and we’ll be there to help guide you through.
Archway is the best way for developers to launch decentralized apps & smart contracts on a global scale while earning automagic, on-chain rewards.
If you’d like to stay in the loop with what we’re building — be sure to sign up for Our Newsletter and join the Archway community via Our Twitter & Our Discord.
Due to US regulations, the ARCH token will not be available to US residents.
