CoinMarketCap takes a deep dive into one of the newer prediction markets in the DeFi space.
TotemFi is an upcoming blockchain-based protocol that aims to revolutionize prediction markets through staking. TotemFi merges prediction markets with decentralized finance (DeFi) by supporting group and individual predictions via staking pools and rewarding participants with Bitcoin and TOTM token rewards.
The TotemFi team has the vision of creating an easily accessible, low-risk platform that tokenizes users’ educated guesses on certain assets and events in the future. Moreover, the platform will reward both individual predictors as well as the collective group based on the success of their bets.
The team is leveraging its backer DuckDAO’s ( a popular community-supported incubator) financial aid, expertise and marketing capabilities to help grow as the crypto incubator focuses on distributed fundraising.
The TotemFi aims to incentivize both early adopters and long-term participants in line with Aristotle’s Wisdom of the Crowd ideal that suggests that group predictions are often more accurate than individual ones. The platform will therefore foster and reward collaboration within groups, partly in order to create a robust and engaged community.
How TotemFi Works
At its core, the TotemFi protocol offers staking pools, starting with Owl (smallest), Wolf and Fox (largest) pools. Other parameters in staking these pools include the maturation period, stake amount and rewards.
To make a prediction, a user needs to deposit the protocol's native token, $TOTM, into one of the pools. Then, they need to place their prediction on the future price of BTC.
Unlike other prediction markets that only allow users to bet on a single price, TotemFi gives users the freedom to specify a range. However, the amount staked in a pool determines the prediction range. For example, depositing a maximum of 27,500 TOTM gives you a range of plus/minus $10, while depositing more than 75,000 TOTM allows for a range of plus/minus $2.
The longer the range, the higher the winning chances. The most accurate prediction wins the top prize. However, if a pool's weighted average turns out to be an accurate bet, everyone in the pool wins and shares in the spoils. If no user is able to predict the exact price at the time of maturity, the closest value to the exact price becomes the winner.
TotemFi does not penalize losses, allowing users to repeatedly predict the next BTC price without having to worry about losing their stake.
What Happens Inside the Pools?
A group of variables such as the bet maturation period governs what goes on in the pools. At first, all pools' maturation lengths range between 15 (Owl), 30 (Wolf) and 60 (Fox) days.
The pool size allocation and the contribution time limit are two critical trigger signals that help activate a pool. In other words, if the conditions of these two are met, the pool is ready for launch.
Each pool has different operating parameters. For example, Owl has a maximum launch time of five days, a total prize of 0.0100 BTC plus 4,500 TOTM, and a pool size of 125,000 TOTM.
On the other hand, Fox has a 10-day maturity launch time, a total price of 0.15 BTC plus 6,500 TOTM tokens and a 90K TOTM pool size.
TotemFi ensures that each staking process is smooth and transparent by relying on a blockchain oracle for BTC's price data.
How Are Rewards Distributed?
Every spot-on bet earns the winner both BTC and TotemFi's base asset. If there is more than one winner, the total price is subdivided, and position one takes 37.5%, followed by 20%, then 11%, down to the last position.
In case of a tie in any of the positions, the individual who was able to stake first is the winner.
TotemFi's treasury management weighs Bitcoin against the U.S. dollar in order to facilitate easy treasury management. For example, the Fox pool will have $2,000 worth of BTC.
The platform employs smart contracts to buy Bitcoin when a pool's prediction time limit is nearing an end. This protects the platform from exposure to Bitcoin’s volatility and eliminates the need for it to hedge against BTC. However, Totemfi also operates a BTC node to ease the distribution of Bitcoin to winners.
Other Yields
The project is capitalizing on the fact that yield farming is one of DeFi’s key pillars. As such, staking TOTM generates more rewards. However, the staking incentives vary depending on the staking period.
For example, maintaining a stake in a pool for 15 days leads to an annual percentage rate (APR) of 60%, while a 30-day maturity yields 65%. On the other hand, leaving the staked amount for 60 days gives an interest rate of 75%.
Note that staking and selling the native asset has a 3% coin burn requirement, with the proceeds going to available staking rewards, operational transaction cost, and funding future expansion.
Note that staking rewards start accumulating when an individual deposits their TOTM in a pool and before the pool closes for prediction purposes.
TotemFi's Native Asset (TOTM)
$TOTM is the protocol’s base asset, which provides access to the platform’s functionalities and prediction markets. TOTM also powers on-chain governance where holders can vote for or against system upgrades. Some TotemFi aspects that require community governance include prediction duration, pool size, reward distribution and new asset pools.
TOTM has a fixed supply of 10 million tokens minted during the first token generation event (TGE). The tokens' distribution caters for community development, staking rewards, advisors, liquidity pool, team, strategy, seed and public/private sale. The token was first listed on Uniswap.
Conclusion
Ethereum co-founder Vitalik Buterin once cited that prediction markets might be one of the most “underrated dapps.” The team behind TotemFi readily acknowledges this and in fact, they’re betting on it, so to speak.
TotemFi is setting itself apart from other prediction markets by merging with DeFi, giving lucrative payouts in Bitcoin on top of TOTM, providing access for developers to build on or integrate with its system and reducing user risk by not penalizing losers. Additionally, it has a simple design, an easy-to-understand prediction model and multiple pools to choose from.
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