In recent times, there has been a growing interest in how to increase one’s “passive income” and how to increase one’s idle income has become an issue to consider. Dotkey was birthed out of this trend.
What is Dotkey
Dotkey is a cross-chain network providing liquidity for Staking, built on top of the Polkadot network, which takes advantage of Staking as an early stage to provide liquidity in the form of Staking derivatives.
As a DeFi project in the Polkadot ecosystem, Dotkey introduces voucher tokens, which users can exchange PoS tokens for voucher tokens to gain liquidity and rewards at any time through the Dotkey protocol.
Uses of Dotkey
Dotkey provides an intermediate layer between Staking and the application layer. It allows Staking and the application layer, which are originally built on the underlying protocol, to become compatible with each other, thus solving the problem of competing Staking and DeFi revenues.
The mechanism allows users to convert PoS tokens into credentials via Dotkey parachain at any time through the Dotkey protocol, and each PoS token will correspond to a different credential, such as vDOT bridge to Polkadot tokens, vETH bridge to Ethereum tokens, etc.
Simply put, users only need to hold the credentials to receive Staking rewards. By providing the liquidity of the credential tokens, the liquidity and security of the PoS network can be satisfied at the same time, thus solving the contradiction between the liquidity and security of the PoS network. Then, according to the cross-chain characteristics of the credential token, it is built on parachain so that it can get Staking rewards to solve the problem of getting Staking rewards in the cross-chain scenario.
Dotkey’s application scenarios
1. Hedge the lock-up risk of Staking and buy and sell anytime without waiting for weeks for the lock-up date.
2. To carry out Defi collateral lending, and will cooperate with projects such as Boca Ecology Acala in the future to support collateral lending of voucher tokens.
3. Support DApp operation of tokens in other parallel chains.
Dotkey’s economic model
Dotkey’s mission and vision is to provide liquidity for 80% of pledged assets. dotkey will provide its users with services in the form of shared Polkadot security, and while providing other PoS chains with pledged liquidity, other chains are indirectly transferring their consensus security to Dotkey.
Independent PoS consensus maintenance is expensive, and when an independent master network is running, if the total amount of assets locked in that network exceeds its market value, hackers will have enough incentive to attack the independent master network and transfer assets, which will not only kill the project outright, but also cause a chain reaction of attacks on the security of other networks it supports.
So when running an independent master network, the maximum number of assets that can be locked in that network is its market value, which in turn makes Dotkey will share the consensus security of Polkadot or Kusama instead of maintaining a separate set of PoS networks, making the assets locked in Dotkey’s network more secure.
Dotkey will set aside a percentage of credential tokens as payment for the cost of parallel chains or parallel threads. As the number of slots increases, this cost drops significantly compared to the cost of maintaining a separate main network, making it easier for Dotkey to capture the value generated by the network for its users.
Dotkey’s Goals
Dotkey reduces the friction between community collaboration, pass circulation and contract incentives by building an adaptive economic model that enables various players in the ecology to obtain effective incentives, while enabling a more reasonable allocation of the limited computing and storage resources on the chain, so that a positive feedback loop is formed between the three, which in turn forms a fast-spinning collaborative flywheel.
