Editors update:
“Explicitly 3” defined our core identity and philosophical stance during the build phase. That identity has now been realized in a live protocol. The principles outlined here: sovereignty, anti-fragility, endogenous value, are now engineered. See the realised architecture here: DeFi’s Little Secret: The Blueprint for a Sovereign Currency.
Explicitly 3.
This article addresses the question; ‘what is 3.finance?’
Exploring and defining purpose, before highlighting a few real world use cases we expect to become realities with the help of 3.finance in the years ahead.
A custodians light introduction.
Gravity, a Concept Architect, has lead and self funded the 3.finance project from inception. Gravity offers the following by way of an introduction:
Change.
I observe in order to imagine and reimagine; as I have done here.
Three years ago this April, DeFi change my stars, I hope forever.
I walked away from the corporate world and made it my mission to apply my skills in the direction of DeFi’s accessibility and adoption.
Two years ago this April, I began a line of research that lead me down the deepest rabbit-hole I’ve ever experienced, to discover a truth I now believe underpins much of what is wrong in society today.
A truth I believe DeFi will solve.
Truth.
As I see it, all sovereign currency today is created and lent with the understanding that settlement is guaranteed by the future taxation of a population beholden to a state or government.
Problem.
Sovereign debt, created by the few, backed by the many, is improperly incentivised, making it vulnerable to abuse & misuse.
Solution.
What if a new sovereign debt were backed by the productivity of a protocol… Not a population?
What if this new sovereign debt were decentralised by design?
What if this debt became DeFi’s sovereign currency?
What would the world look like then?
I do not believe debt is our problem, I believe mismanagement is. — Gravity.
Paradigm shift.
3.finance is a house of three distinct protocols, three separate directives (one per protocol), and three clear bodies of work:
- Body 1. That which wants to create.
- Body 2. That which wants more of itself.
- Body 3. That which wants to destroy.
3.finance is not ONE thing, but it is trying to DO one thing. That is, it wants to be DeFi’s reserve. — Gravity.
To be a reserve.
First. It must be reiterated, 3.finance seeks to provide DeFi with a currency, not an asset. Moreover, the project seeks this currency to be and remain sovereign, so that in time, it may be recognised as DeFi’s reserve.
Establishing an understanding of each of these terms as I understand them myself is therefore an important place to begin:
Assets.
Something we humans collectively believe will be a good store of value over long periods of time.
Currencies.
Something we humans individually trade between ourselves as a good and equal representation of value.
Sovereign.
From the context of DeFi: An anti-fragile state of complete isolation from external controls and influences.
Reserve.
A social contract built of confidence, established through consistent, dependable and impartial actions witnessed over extended periods of time.
Additionally, the following terms and observations are offered as insights to my approach and method of execution.
Value.
Often applied arbitrarily, few speak to the origins of the word. Here is my understanding as to the origin of all value.
By offering our time to assist others, that which we receive in lieu of our effort is by virtue a representation of our (stored) life energy.
—
Life is therefore the origin of all value.
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However, as ‘life’ is ironically a variable we humans seem to find rather difficult to measure, and owing to the fact that the word ‘life’ is commonly substituted with the word ‘time’, hence forth, I shall apply the same.
Volatility.
Why are ‘assets’ not utilised as currencies?
Observation.
Volatility, like stability is a matter of perspective, a battle of two faces, where the loudest voice at any given time prevails to inform or infer opinions as to the magnitude of what’s perceived to be volatile or stable. Ultimately, it depends on who’s voice you gravitate to.
Confidence.
How do we decide what is and isn’t a reserve?
Observation.
The thing we all choose to price our time in, is that which we have bestowed the most amount of confidence in. Confidence is derived through collective and consistent action. By saving and trading in a thing, we give it value and thus; a voice.
A currency, has no true value outside of the confidence bestowed upon it by those people who choose to store their ‘time’ energy in it.
A reserve, is nothing more or less than the prevailing collective action of a populous choosing to save and or trade in it.
Have the foundations of sovereign debt really fallen to levels that can only be defended by a monopoly on violence? — Gravity.
Reserve 3.0
The best anti-fragile systems are not those designed to be strong or stable at the beginning of their existence, they are those that accrue strength and stability as they age and mature. — Gravity.
Body 1 — that which wants to create.
During system startup; a period defined by the distribution of 3Fi tokens, Protocol one: The Guild, will be set to ‘delivery mode’. Meaning, in addition to fulfilling it’s primary directive of debt creation, The Guild will also be allocating 3Fi tokens to participants on a first come first served basis.
Body 2 — that which wants more of itself.
Assets received from Guild services will be periodically claimed by the 3.finance treasury before being deposited into Compound Deposit Pools (CDPs), where Signals (protocol two), compound all rewards received into more of the same assets deposited into CDPs.
The 3.finance team will determine the best compound strategies to execute until controls are passed to governance post module 3.
Body 3 — that which wants to destroy.
Signals have a second state: ‘3.NFTs’. This enables deposit positions to be locked and converted into NFTs. These NFTs (3.NFTs), liquidate rewards earned by deposited position into a settlement asset (3CRV). 3.finance itself will periodically compose 3.NFTs with protocol held assets (PHAs), in order to meet demand for debt settlement.
Accrued 3CRV are passed to the Reserve (protocol three), where its primary directive is executed: the settlement (destruction), of debt.
Controls to compose and decompose 3.NFTs will be passed to governance post module 3.
Use cases.
The 3.finance ecosystem intends to provide solutions to a number of use cases and over time these are expected to expand and evolve to meet the needs of the market.
Here are a few we’re most excited about:
- Portfolio management.
- Bulk purchases and sales.
- Wrapped token arbitrage.
- Wrapped token stability mechanisms.
- Lending guarantees.
- Overdrafts.
- Long term lending options.
- Startup loans.
- Project based bonds.
- Running lines of credit.
- Liquidation protection mechanisms.
Next.
We begin exploring the layers that define our solutions. Beginning with a look at our version of a compound engine and how we believe it will unleash a new paradigm of priorities amongst existing DeFi narratives.
Did you know, this publication has its own NFT? Find and mint this articles NFT here.
Want more?
Explore our growing universe…
- 3.Finance : Where you’ll find our public web apps.
- 3.Discord : For access to our team and forums.
- 3.Twitter : To follow our public announcements.
- 3.Docs : Learn more about the 3.Finance project and its ambitions.
“If you want to go fast, go alone. If you want to go far, go together.”
— Martha Goedert.
