Creating value with HyFi pioneer Gain DAO: harvesting and disbursement

Have you heard of the pioneer of Hybrid Finance already? Meet Gain DAO! Gain DAO is a crypto-based pool, currently starting out with Ether. It is powered by machine learning optimized trading algorithms that are operating in traditional financial markets. This way, Gain DAO serves as a bridge between centralized and decentralized financial systems, leveraging their strengths and creating Hybrid Finance.

As a GAIN token holder, you benefit from the possible appreciation of the underlying base asset (Ether) and from algorithmic trading strategies intended to grow the amount of Ether in the Gain Pool. A monthly process called the Harvest allows token holders to redeem their GAIN for Ether. But how does this work exactly?

At the end of each month, GAIN tokens may be sent to a Registration Contract. Every month the DAO (decentralized autonomous organization) of GAIN deploys a Harvest Contract. The DAO then makes a request to the Broker to send a portion of the Gain Pool’s Ether to the Harvest Contract. This process establishes a price floor for GAIN by allowing it to be redeemed for Ether at the Spot Harvest Rate (SHR).

Spot Harvesting Rate

The Spot Harvesting Rate is a variable that determines how many GAIN tokens are needed to redeem 1 Eth in the Harvest. This means that the SHR can be seen as the relationship between all redeemable GAIN tokens and the total amount of Ether present in the GAIN pool. Locked (vested) GAIN tokens, however, are not considered as being in circulation for the purpose of this calculation.

The SHR is calculated by dividing the redeemable GAIN tokens by the total balance of Ether present in the GAIN pool. Let’s say for example that there are 10 000 000 redeemable GAIN tokens available. 1 percent of those tokens (100 000 tokens) are sent to the Harvest contract. The GAIN pool has a balance of 50 000 Ether at the end of the month. You can determine the SHR by dividing 10 000 000 tokens by 50 000 Ether. This means that the SHR is 200 in this case. For every 200 GAIN tokens that are sent to the Harvest contract, 1 Ether will be exchanged.

Disbursement

This process might sound clear, but what happens after this? How does the disbursement actually work? The DAO Manager will execute a withdrawal from the Broker to the Harvesting contract. At this point Harvest participants can redeem their share of the Ether. The GAIN tokens redeemed during a Harvest are then made available for exchange at the Spot Harvest Rate, allowing Ether to re-enter the Gain Pool.

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