LEVEL AMA RECAP - MARCH 2024

Foundation & The Evolution of LEVEL

March 25, 2024

On March 22, 2024, the Level Finance core team held an AMA for the community. The main topic of the AMA was the recent announcement of Foundation, our new decentralized trading platform which is set to redefine how users can trade cryptocurrency assets. Let’s dive into the details below.

The content has been edited slightly to improve grammar, informational quality and flow. The original AMA can be found in the Discord #ama-channel.

Table of Contents

Q&A SESSION SUMMARY

Q1: What is the motivation behind the development of Foundation? What distinguishes Foundation from existing DEXes such as LEVEL?

So let's imagine. As a user or trader, the seamless and efficient trading experience of platforms like Binance – fast, intuitive, user-friendly, variety of assets. Now, if we can do that, without the need of email logins or the concern for the safety of our fund.

Or as a developer like myself, we can develop a vault on Ethereum that can permissionlessly interface with Binance. This would allow for the implementation of advanced trading strategies such as market making or hedging, all within a decentralized framework. . Or the potential of crafting an exchange that not only taps into Binance's order book but also earns a portion of the broker fees. 

Our ambition for Foundation is not merely to operate just as an exchange but to evolve into an expansive, open platform - essentially a liquidity hub. This platform would empower developers to create their exchanges or other protocols atop our infrastructure, while traders could access our liquidity pool through any of these integrated platforms.

If comparing Foundation to any traditional AMM Dexes or oracled-based DEXes, the hybrid model adopted by Foundation, which blends elements of CEX and DEX, stands out with many advantages. From enhancing scalability, facilitates true price discovery, to addressing the fragmented liquidity issue.

Presently, we can see few exchanges are adopting this hybrid approach and gaining a lot of traction, naming a few like: Hyperliquid, Dydx, Aevo, Vertex. So for us, this signifies that we are going in the right direction.

The market is vast and continues to expand, with each exchange introducing its own unique offerings. What sets Foundation apart is our commitment to forging an open ecosystem that prioritizes transparency and decentralization. We believe this approach will not only differentiate us but also contribute significantly to the evolving landscape of digital asset exchanges.

Q2: What does Foundation mean for the current LEVEL DEX?

LEVEL V1, which is the current perp DEX using an oracle-based model, will continue to operate and we’ll continue development.

For example, we are planning to enhance it by incorporating on-chain price verification through Pyth, aiming to reduce latency and maintenance costs.

With the launch of Foundation, LEVEL will be the very first exchange integrated with its liquidity hub. This integration will enable LEVEL to earn a broker fee from each trade that occurs on its platform. By then, LEVEL will offer two seamlessly integrated trading options, with the default one being the orderbook exchange powered by Foundation.

And that’s pretty much just the beginning, the next couple weeks will be packed with updates and releases. 

Q3: How will LVL and LGO be converted to the Foundation ecosystem, could you explain the point system?

As per our plan, LVL holders will be able to convert their tokens to Foundation token on a 1:1 basis (relative to the future total supply of Foundation token).

For LGO holders, they will have access to Foundation token via Airdrop, based on the LevelUP NFT that they hold 

Additionally, you also can have an earlier exposure to Foundation Token by participating in our Foundation Point Program. These points can be earned in several ways: staking LVL, participating in pre-Validator pools with AVAX, trading on Level V1, engaging in the Foundation Testnet, and participating in Foundation's Social Campaigns.

We will be announcing a detailed plan for the Foundation Points system next week. The specific amount of FOND tokens allocated for airdrop to holders of Foundation Points will be determined only when the $FOND token is officially introduced.

Q4: When will the Foundation token be launched? When will the first exchange under Foundation launch?

We are getting ready to launch Foundation protocol in May, possibly in the later half. Level will be the first exchange integrated.

Following the launch, we will introduce a grant program designed to incentivize developers to build projects like exchanges, protocols integrated with our ecosystem.

Regarding the Foundation token ($FOND), we don't have any fixed timeline for that yet. We only have some KPI that we want to reach in term of traders, trading volumes before releasing the token. Potentially, it could be in Q3 or Q4 of this year.

Q5: What will be the usecase of the Foundation token?

With LEVEL, we take pride in having developed LGO, a token fully backed by real blue-chip assets (BTC, ETH, and stablecoins) and earning real yield from revenue on top. It was a significant innovation. However, the journey taught us valuable lessons about the challenges users faced in accessing LGO and the complexities involved in managing a dual-token system.

Having said that, with Foundation, our commitment remains at creating an ideal decentralized platform, truly owned and governed by the community. A key innovation in our approach is the introduction of a new concept: Clearing Members. These members will play a pivotal role in all decision-making processes related to the exchange and will also be responsible for managing the exchange's treasury (no worries, we will cover this in much more detail in our docs, articles and next AMA)

The Foundation token is designed to serve a dual purpose. It will function both as an incentive token and as a utility token for individuals or organizations aspiring to become Clearing Members of the Foundation.

This approach is intended to streamline our token system, making it more accessible and less complicated than our previous endeavors (LVL, LGO, LP, trading points), while still upholding the core values of decentralization and community governance. 

Q6: What happens to the treasury assuming not all LGO are redeemed? Will the Treasury get a role in Foundation?

Simply, LGO holders can rest assured that the option to redeem their tokens will always be available, with no expiration. The Level Treasury will have no role in the Foundation.

Q7: How will the Level team get allocation in the Foundation token?

To cover the development and operation cost of both Level and Foundation, our team primarily use the funds we've accumulated through LGO. For Foundation, we've decided not to allocate any tokens to the team. Instead, we will use our existing LVL allocations and convert to $FOND. We will also can get airdrops from LevelUP NFT as well.

Q8: What exactly is the LevelUP NFT?

Since LVL and LGO tokens will be either converted to FOND token or redeemed, LevelUP NFT represents a unique approach in delineating the current ownership structure of Level Finance. This tool is designed to ensure that even after a transition period, Level can function independently as a platform, potentially even without its own token. The LevelUP NFT acts as a record of ownership and governance for Level.

It's crucial to note that while Foundation and Level will have collaborative elements, they are intended to operate as separate entities.

Foundation will be governed by its Clearing House, while Level will be governed by the holders of LevelUP NFTs, maintaining separate governance structures for each platform.

Each LevelUP NFT will possess a unique attribute, termed 'Level Point'. This attribute is designed to represent the proportion of ownership that each NFT owner has in Level.

The specific mechanism of how LVL and LGO holders will be entitled to these NFTs will be revealed later

Q9: When will yield staking for LVL stop?

When the Foundation Points system is online and the staking option for LVL available then all yield staking on Level will stop.

Q10: What will be the final LVL circulating supply, at what point will LVL emission end?

The LVL emission will end when the Foundation Points system is online. This will happen in the later half of April 2024.

Q11: Will all LVL tokens in the DAO Treasury be burned?

Yes, entirely. In fact, all LVL in the Treasury as well as the undistributed LVL allocation for incentives will be burned.

Live Q&A (Community questions)

Q1: When yield staking for fees will be enabled for the new platform? 

The mechanism of yield staking for Foundation will be different as what it was for Level. At the moment, we don't have any date for that yet, since we don't even have a schedule for $FOND released. But once $FOND is released, there will  be a way to yield staking.

Q2: Level is operating purely as a business without any token moving forward, does that mean they will just accrue any fees to the developers? What will be incentive for anyone to use Level dex

The fees will be distributed to LLP (if trading on Level V1) and to Level Vaults. LEvel Vaults will be controlled by LevelUP NFT holders, they can decide to give all to themselves, or use part of it as incentives. Also, Foundation Points and $FOND token will be given to Level to incentivize trading via Developer Grant.

Q3: Hey there, what will happen with the vesting LVL and LGO part that are not vested yet or till that point.

The vesting (Normal vesting) for preLVL will cease after the Foundation Point system release. You can withdraw your staked LVL and claim the vested LVL. For the rest of the unvested preLVL, you will only one option which is Accelerated vesting

Q4: What amount of LGO  you need to hold to get an LevelIP NFT

We will have the detailed plan for this, but it will have Tiers based on the LVL converted or the amount of LGO redeemed.

Q5: What would be the roughly circulation supply of LVL after LVL is all burned and what would be the total fond token supply?

We can do a rough estimate like this. The Foundation point program is planned to on the 4th week of April. The current LVL in circulation now is ~ 14M tokens. So I don't think it will change much, just about 100k-200k more.

Q6: The LVL in the treasury will be burned, but will the LVL/USDT LP in the treasury be burned or redeemable?

LVL/USDT LP is in Liquid assets, not reserved. So it will not be burned, LGO holders can choose to do anything they want with them.

Q7: will fond tokens be inflationary with a max supply like LVL?

We haven't decided yet about the total supply of the token. But the conversion from LVL is 1:1 relative to the total supply so it's no different.

Q8: Are LGO holders  entitled to claim for LevelUp NFT on top of FOND tokens? What would be the conversion factor for LGO?

There are no $FOND tokens for LGO holders - they only can receive $FOND airdrop if they hold their LevelUP NFT. There will be multiple batches of airdrops, not one.

 

Q9: If 14m of LVL how much % will they represent in FOND

As 14 mil tokens represent about 28% of LVL total supply, it should also represent 28% of $FOND supply

Q10: The FOND token will be allocated for converting from LVL to FOND and LGO, as well as for airdrops. Will there be an IDO or a sale on CEX exchanges like LaunchPad?

We will not do IDO for sure. Similar to Level at the beginning, we will still have options for people to buy directly from the treasury with a vesting schedule.

Q11: all the fees acquired during this period will be distributed later to the new FOND holders?

If you mean trading on Level Finance, the trading fees on Level will go to the Level Vault as explained above. When trading on Level Finance and using the orderbook powered by Foundation, there will be 2 fees: The first one is platform fee, it will go the Foundation, and the second one is Broker fee which is set by Level, and will go to Level Vault.

Similarly, if other devs want to launch their exchanges, they can do the same. But they will need to register with us as a broker

Q12: Is the way LGO obtains LevelUP NFT by burning LGO? If it is burned, who does the corresponding assets in the treasury belong to? Is LVL also burned to obtain the LevelUP NFT?

LGO are redeemed then burned. When redeemed, assets go to the one who burn them.

the mechanism of allocating NFT will be done retroactively. Not instantly when you burn, convert or redeem tokens.