Paribus Report by Jesse

This week has been a real ride on the crypto coaster with many projects reverting back to prices not seen since June. Bitcoin is no different as it continues to inch closer to $40k. While we can only assume this is due to some good old-fashioned China FUD and newly injected regulatory uncertainties in the USA. We can only speculate as to why the market has acted this way and when it will turn around again. Getting into this week’s review, we’re looking at a new project that wants to utilize the Cardano ecosystem to propose lending and borrowing services to users.

Introduction

Paribus is a new protocol that offers DeFi holders and investors a platform to extend the reach of their digital assets and positions. A Cardano-based lending/borrowing system that aims to support conventional and unconventional crypto assets to allow for its users to unlock liquidity and interact with the markets without having to liquidate assets. Paribus believes that if there is intrinsic value, this value can be leveraged. While forward-looking, Paribus is focused on existing applications in both non-fungible and fungible tokens and provides a consolidated destination in which users can easily and freely take part in this financial revolution. To date, DEXs and lending platforms have led the charge while exotics are slowly gaining traction. For Paribus, they’re building upon what already exists and continuing to iterate forward in the face of existing opportunities and in anticipation of demand. Non-fungible tokens, liquidity positions, and synthetic assets deserve DeFi applications wherein holders have the opportunity to truly capitalize on their value. Research has led the team to a place where a cross-chain, interoperable, Cardano-powered marketplace that enables NFT lending, staking, synthetic assets, and the opportunity to leverage liquidity positions is comprehensive and potent. Paribus operates using “pools of assets” with algorithmically derived interest rates, based on the supply and demand for a given asset. Paribus wants to offer a wide range of features that will ultimately add strength to its value proposition as one of the earliest DeFi protocols on Cardano. Due to Cardano’s nature and ability to plug into existing blockchains, Paribus by default will use and extend this capability to unlock liquidity across a spectrum of assets.

As per the nature of decentralized and DAO projects and in the spirit of open-source development, all of Paribus source code will be made public and free to use after audits and rigorous testing. Paribus will of course inherit all de facto standards of dApps such as being non-custodial, trustless, permissionless, and course censorship resistance. Cardano will allow the Paribus protocol to remain chain agnostic and simultaneously connect innumerable assets across multiple blockchains. Cardano’s interoperability removes restrictions and allows value to flow freely. Traditionally, valuations are derived from historical purchases and comparables that exist in a fluid marketplace. This value is denominated in an agreed-upon currency. NFTs do not have this history and could be valued against USD, Ethereum, or any number of assets. Essentially, NFTs need price discovery and while this is happening as the number of enthusiasts and subject matter experts grows with the rising number of speculators. Paribus’s NFT loan markets could go a long way in determining the realized value of NFTs and crypto is an ideal breeding group. Users can ultimately determine the exchange currency, the loan duration, the loan-to-value ratio, and interest. A rare item may have consensus value but it is worth knowing what someone is willing to lend against it and for how long. The evolution would likely mirror the loan markets with added emphasis on the characteristics of the asset itself. Current trends and market demands would likely exert great influence on the market. While Paribus is following this development, there are many variables to consider, such as duration of the lease and the willingness leaser to subject themselves to what would likely be customized agreements until the market takes shape.

Traditional lending markets silo individuals and limit available resources and products. Paribus pools the collective resources of participants to create a single resource in order to amplify liquidity and create a vibrant marketplace. While non-fungible makes for great copy, there is a need for fungibility that can gather and pool resources. Flexible deposits, withdrawals, buying, selling, borrowing, and lending are actuated instantly and unlike traditional money markets, no maturity is required for loans. This cannot happen without like-for-like synthetic assets. Valuating unique assets requires reference in order to gain exposure to the underlying asset so interest can accrue accordingly. With enough borrowing demand to warrant the marketplace, interest can be realized by the passive holding of an asset. This is resultant from exposure to an underlying asset. Theoretically, almost anything can be replicated in a synthetic manner, so long as there is no need for the physical asset to settle a trade. One can trade an asset if the rules are in place that allows for a mirrored asset to substitute for the real thing. In turn, single assets can have virtually unlimited instruments as permutations in legacy finance. Unlike NFTs, holders of a given crypto asset will be able to put their tokens to work by supplying the Paribus network and earning interest. Where there is inherent value, this value can be leveraged as users retain the upside of a given asset while creating additional returns via Paribus’ lending marketplace. This is trustless and requires no active management on the part of the user. The speed and fee structure of Cardano offers decided efficiencies for any entity, dApp, or token holder.

As Paribus aims to unlock liquidity, cross-chain compatibility is one of the imperative features the team is working on. They’ve decided to utilize bridging technology already being used and tested within the crypto space. However, where applicable Paribus is looking to utilize Inter-Blockchain Communication (IBC) protocol to connect multi-verse ecosystems such as Cosmos through partners that have integrated the protocol into their “chains”. Certain assets utilize a model called “Jump Rate” which is derived from the famous jump-diffusion model introduced by Robert Cox Merton an American economist. The idea behind jump models, in general, is to introduce rate hikes “should” certain market conditions be met like when a utilization rate goes above a certain threshold. Such rises in interest rates, in turn, builds a positive feedback loop for liquidity for any given monetary policy. “Lenders” can be thought of as liquidity providers within the ecosystem and earn interest in return for doing so. The platform will provide Deposit APR based on factors such as utilization rate. Lenders can at a rough level estimate their earnings based on the Deposit APR for a given asset. As a “Borrower”, Paribus will operate strictly as a collateralized loan platform. Meaning any borrower must deposit assets in order to borrow against it. As a result, borrowers are indirectly also liquidity providers to assure the platform is sustainable and self-sufficient. Every borrower is subject to paying a small one-time fixed platform fee as well as the interest accrued over the period of the loan. The fee mechanism operates autonomously based on variables and changes within its pools after each transaction. A “Controller” smart contract is used to establish the interactions between the other associated smart contracts and the protocol. The controller is used to whitelist different assets and enable their use in Paribus. This whitelisting process is needed to ensure that the market for an asset is liquid enough, that a valid oracle price feed and collateral factors are given. Oracles are needed in the ecosystem to provide the protocol with these reliable decentralized price feeds. “Liquidators” ensure that outstanding loans are liquidated if the value of the collateral deposited is no longer enough to cover the loan. Additionally, pTokens represent a user’s balance in the Paribus ecosystem. They allow you to earn interest or serve as collateral based on the value of the underlying asset.

The Token

Operating in the Paribus ecosystem is the native PBX token. Owners of PBX can create and vote on various proposals with the goal of improving the protocol. Creating this feedback loop will help incentivize positive changes and further the relationship between the protocol and the stakeholders. An additional feature of the PBX token is its fee-sharing aspect. Holders will be able to gain a percentage of fees generated. This will be distributed proportionately to those who have more tokens. Stakeholders benefit by receiving value for holding and encouraging continual holding. Paribus has a total token supply of 10B PBX distributed as 1.4B Seed Round ($0.0002), 2.1B Private Round ($0.00027), 500M Public Round ($0.0003), 3.3B in Ecosystem, 1.5B Foundation/Team, 700M Advisors both with a 6-month cliff, then 10% released monthly for 10 months, and 500M for Liquidity Provisions. From the sale of tokens, Paribus raised a total of $1,000,000 USD throughout all sales which carried a 7-month vesting schedule for Seed/Private and a 1-month vesting period for Public participants.

The Founders

Paribus has no company or registered entity at this time. Founders of the project are CEO Deniz Dalkilic, COO Wilson Davis, CPO Janusz Żółtański, and CTO Simon Kruse. Each individual bringing some experience with software or blockchain to the table. With no public information, any specifics regarding VC influence and early participants are not available at this time. What has been made public is Paribus partnerships with Orion Protocol, Charli3, Cardstarter, and GeroWallet.

Market Impacts

Paribus only recently had their TGE for the PBX token on September 16th, 2021. Releasing to the market around $0.22 is a substantial gain for even public round participants in the token sale. While only half the public tokens have been released and half releasing next month, the price has already begun to reflect the selling pressure for early participants as PBX now sits around $0.11 finishing its first week. With Uniswap and Kucoin being the only listings available for PBX there’s still data being aggregated for the Total Circulating Supply as the project dumped from $50M in daily Volume down to $6M. Additionally, there’s not too much going on in the way of social media surrounding the project. Carrying a Twitter following of just over 10k and Telegram group of the same weight the project had gained some initial interest prior to TGE. But, this has seemed to die down for the time being. Additionally, there is not a single line of code written for the project made public, despite promises by the Team to have the code audited and available shortly following TGE.  

Concerns

While there’s definitely some polish to be found with Paribus there are some concerns about the function of the protocol itself. Similar to the previous Cardano ICO’s tokens have been issued on Ethereum instead of Cardano. This makes some sense in the case of a project operating already on Ethereum that wishes to migrate over to Cardano. But it makes no sense for a project like this to fundraise with only a signup form to participate in the Protocol at a much later unknown date and an empty codebase. 

Another concern is with CEO Deniz and his ability to follow up on the protocol’s promises. Unless you’ve been around for a while, you might have never heard of BountyX. As most of you are aware, I’ve authored the Airdrop section for the last few months and am a seasoned bounty hunter. Providing social media articles for dozens of projects over the years BountyX was a site that provided insight into currently available project bounties. Unfortunately, the site was only operational for a very short timeframe during the 2017 crypto bull market. It was abandoned shortly afterward in 2018 and hasn’t had a single decent bounty available since then. In fact, the site has remained in “beta” status for quite some time. Seeing how poorly managed it was with such a simple process required to update and provide value leaves me with serious concerns about Paribus management. To make matters worse the site released BNTY tokens and never did a single thing with it, causing an overall loss of -97% to holders. I fear that Paribus will be no different.

Conclusion

Most lenders that participate in these protocols have no plans to sell their crypto assets so it makes sense to use a system that enables individuals to capitalize on their inherent value. When completed Paribus could likely be an additional outlet to earn a passive income while your underlying assets continue to appreciate in value over time. What is a bit unclear is where Cardano comes into the picture with not a single project operating in the Cardano ecosystem that is even able to be collateralized into a loan service. This plays into my previous concerns with the leadership of the project and the uncertain outcome of the project. I would strongly suggest that you invest considerably more time than just this report when evaluating whether or not Paribus would be a good investment for you.

Until next time, remember that the only guarantee is BTC. So keep stacking that Satoshi.

-Jesse Koz

Follow Jesse on Twitter

Related Articles

Wealth Mastery – Issue #64

➡️ Issue 64 (September 22, 2021):
– My thoughts on taking risks in crypto
– How to make money on airdrops
– Report on Paribus, a new token in the Cardano ecosystem
– How to earn good yields using Ethereum layer 2 Arbitrum
– AMA with the team from Reserve Protocol on how they are using stablecoins to empower regular people in developing nations.
– Latest token sales, airdrops, trending coin report and my portfolio analysis

Wealth Mastery #81

Issue 81 (January 19th, 2022):
– I share my thoughts on competition in the NFT market space and why we should all be watching lower market cap layer ones in 2022.
– Jesse has a deep dive for you on Avalanche’s Trader Joe
– Defi Dad has a tutorial for you on two very hot Avalanche based farms.
– Rekt Capital has the latest technical analysis for you on the market.
– Sam has a report for you on the best layer ones and twos for NFTs.
– Matt has a report for you on Solana gaming coins.
– The team from Numbers join us to discuss their decentralized photo networks.
Hot new token sales.
– Rebecca has all of the latest news for you.
– Jesse has a ton of hot new airdrops for you.
– Rebecca breaks down this week’s trending coins.
– My latest portfolio updates.

Wealth Mastery #71

➡️ Issue 70 (November 11, 2021):
– Dopex options exchange review
– Blankos game guide
– 67% APY on Polygon’s Entropyfi
– Altcoin TA
– Defi insurance
– Metaverse NFTS
– Interview with Polka Dot based Parallel Finance

Wealth Mastery #79

Issue 79 (January 5th, 2022):
– I share my thoughts on taking profits, NFTs, Near Protocol, and the new round of parachain auctions on Polka Dot.
– Jesse has a deep dive for you on Injective Protocol.
– Defi Dad has a tutorial for you on how to earn big yields on Harmony.
– Rekt Capital has the latest technical analysis for you on the market.
– Sam has a report for you on NFT Daos.
– Matt has a report for you on Daos. (All about Daos this week!)
– The team from Decimated join us to discuss their hot play to earn game!
Hot new token sales.
– Rebecca has all of the latest news for you.
– Jesse has a ton of hot new airdrops for you.
– Rebecca breaks down this week’s trending coins.
– My latest portfolio updates.

Wealth Mastery #80

Issue 80 (January 12th, 2022):
– I share my thoughts on coins to watch and the recent Arbitrum drama.
– Jesse has a deep dive for you on the fantasy NFT card game Gem Guardian.
– Defi Dad has a tutorial for you on how to earn yield on Near.
– Rekt Capital has the latest technical analysis for you on the market.
– Sam has a report for you on ImmutableX and why it matters for NFTs.
– Matt has a report for you on stablecoins.
– The team from Rain Maker, a gaming infrastructure player, join us to discuss how they are working to bring more players into crypto gaming.
– Hot new token sales.
– Rebecca has all of the latest news for you.
– Jesse has a ton of hot new airdrops for you.
– Rebecca breaks down this week’s trending coins.
– My latest portfolio updates.

Responses