Lifinity Flares
About Lifinity Flares
Lifinity Flares are a blue chip NFT which, while it will never 5X overnight, there’s a better than average chance they will 5X over the next bullrun. Flares were launched in Dec 2021 by the Lifinity team to raise capital to develop the Lifinity Defi Protocol which we will go into later. The Flares have no significant difference in rarity other than aesthetics and can even generally be swapped with flare from the ‘graveyard’ if you like the look of it.
The funds from the flare sales were placed into a separate pool which receives a percentage of the Lifinity protocol’s profits from trading fees each month. Over the previous six months these have ranged between 50 and 250 Sol per week, this as well as trading royalties are then used to sweep the floor of flares and locked into the ‘graveyard’. This provides consistent buy pressure on the flares until eventually all the listed flares will be bought, and the flare holders can essentially name their price.
About 600 of the flares have been bought back so far and the team is also investigating other revenue streams such as providing liquidity for NFT loan platforms with the bought back flares etc. particularly considering the royalty dramas although they don’t affect flares as much as other projects.
Flares can be 1yr locked or staked for a minimal amount of LFNTY (currently around 170 LFNTY or $70ish) until May 2023. This was a minor benefit the flare holders were provided but nothing you’d purchase a flare specifically for. The currently floor price for flares is around 9 Sol.
In my opinion, Flares provide a better than average way of holding a portion of your Solana bags. While they are still subject to the price fluctuations of Sol and have had their prices drop from 14 or 15 sol over the bear market, the constant buying pressure has had a major impact on keeping the floor price higher than a lot of other NFTs over the same period.
Lifinity Protocol
Lifinity is a DeFi protocol for Solana that has a few special features to make it one of the most profitable DEX’s currently around. It has been integrated into the Jupiter aggregator which provides a significant portion of its volume as it regularly provides the best prices for most pairs it holds. Lifinity uses the Pyth Oracle to provide prices for its pools so that it doesn’t have to rely on arbitrage like constant liquidity pools do. This mechanism combats the impermanent loss that virtually all other exchanges are affected by and can even result in what the team term Market Making Profit where the pools benefit from volatile market conditions and the value of the pool is increased rather than decreased.
Lifinity uses concentrated liquidity to provide depth to the pools without requiring large amounts of capital which it can do as it always knows the most current price point based on the Pyth Oracle. This means that Lifinity can do with a few hundred thousand dollars of TVL what other Dex’s need millions for.
This also allows Lifinity to stop trading when the market is having liquidation spikes and protects it from those situations where often the exchanges loose large amounts of money due to arbitrage bots.
Lifinity Tokenomics
A major difference that Lifinity has over its competitors is that it owns the majority of it’s underlying assets. As it need less TVL in the pools it can calculate the most profitable pool size and open or close the pools to LP providers so that the pools are large enough to operate effectively and provide the largest profit per share to the pool. This protocol owned liquidity saves Lifinity from paying out LP profits where the LP’s are not required and increases the amounts it pays back to the LFNTY token holders.
The base token of Lifinity is LFNTY, however there is somewhat limited utility in this form. The real utility comes from locking LFNTY on their website and converting into vote escrowed Lifinity or veLFNTY. Holders of veLFNTY receive a share of the profits from Lifinity every month which is paid out in the native token of each of the liquidity pools i.e. sol, msol, USDT. This is a major difference to other protocols which basically print their own tokens to provide rewards which has an inflationary effect on the token with constant sell pressure.
Lifinity reverses this trend by distributing 50% of the revenue each month to pay veLFNTY holders and using the other 50% to purchase LFNTY tokens off the market causing constant buy pressure on the token. Over the past six months the average monthly revenue for Lifinity has been about $110k USD.
The original token dynamics have been altered slightly since the IDO. veLFNTY is not tradable, however you can convert LFNTY to a four-year locked version called xLFNTY which is tradeable. This originally was not intended to have major uses apart from exiting positions if urgently needed (and at an expected premium). However, since the launch the team has found that there is a market for xLFNTY so have provided a pool to trade with. The overall outcome from a Lifinity perspective is that more LFNTY is locked providing stability for the team that they will have funds as required for pools. To adjust for this Lifinity now purchases either xLFNTY or LFNTY depending on certain price criteria which provide the best value outcome.
This is a brief simplified outline of the protocol and NFT project, Lifinity has much more detailed explanations on their discord and medium articles.
| Team Members | Role |
|---|
Community manager: Durden
https://twitter.com/durdenwannabe
The main reason I’m bullish on Lifinity flares and the protocol is that they have a very intelligent and mature team. The level of discussions on the posts often goes over my head, however since joining their discord for the past six months or so I’ve only gained in confidence that barring a collapse of the entire Solana protocol the team will be able to overcome any issues that it will come up against.
The protocol has been profitable over the past bear market, which has killed a number of other exchanges. I believe that once the trading volumes increase these profits will massively increase. The team has implemented a very thoughtful and innovative system which has the potential to provide a significant revenue stream in the right conditions.
I believe the current market conditions provide a good entry point for both Flares and Lifinity if you have available liquidity for a long-term store of value hold. Flares are not a good short-term flip option as they are an established market which has very little social presence and doesn’t actively try to increase this.
The main potential risks that I can think of are the reliance on the Pyth Oracle for their prices, and the small team which may be vulnerable to succession planning in the case of accidents etc. The team are aware of the reliance on Pyth and they have a good relationship with Pyth and measures in place to protect against potential exploits.