Pencils Protocol is a one-stop comprehensive income platform for the Scroll ecosystem. The platform uses DeFi functions as a starting point and continues to expand into LRT, LaunchPad, AI, FHE, RWA and other fields based on functions such as Farming, Vaults, and Auction.

Recently, the Pencils Protocol ecosystem has made significant progress. One is that $DAPP tokens have completed IDO on a series of platforms such as Tokensofe, Bounce, and Coresky, and they are sold out in the short term. After that, they will be listed on platforms such as Gate and Bybit to open the market for trading, and simultaneously launch a series of Trade to Earn and Staking activities. Another is the launch of the Vaults product, which not only indicates that the Pencils Protocol ecological income system is fully open, but also that the ecological narrative will be fully stretched and develop in a broader direction, which will empower the DAPP token more deeply and is a major positive.

Vaults Product Fundamentals

Vaults is an important part of the Pencils Protocol ecosystem. It supports users to

Maximize returns through leveraged income aggregation and automated smart contract minimum threshold.

For example, in its leveraged mining function, users can deposit some assets (currently mainly LRT assets such as pufETH) and amplify their returns by choosing 2x leverage, which can convert a 10% annual return into a 30% return. The smart contract management complexity of the Vaults product puts funds into liquidity pools and downstream strategies while safely holding LP tokens.

Of course, Vaults' user-side product benefits are not limited to this. It has also further expanded with Mind Protocol and captured revenue for users in cutting-edge fields such as AI and FHE. Mind Protocol itself is a network that aims to provide security for different networks such as AI and FHE (such as Zama, Fhenix, Singularity, and Bittensor) based on a re-staking solution. Pencils Protocol will be an important partner of Mind Protocol, helping

The Mind Network ecosystem is verified, further strengthening the security of the AI ​​and PoS ecosystem, while providing higher returns for Pencils Protocol participants.

Therefore, when users participate in Vaults products, they will be able to realize multiple benefits and achieve differentiated competition. Users who hold $DAPP tokens are expected to increase their income, which will provide rigid demand for $DAPP tokens.

Product significance

Liquidity Hub: The Vaults product itself is a liquidity hub, which provides stable and high returns through the Farming Pool and enhanced returns through Vaults, attracting a large amount of liquidity. At the same time, this liquidity can be further used in different protocols and serve as a liquidity pool for different external DeFi protocols, which will not only drive Pencils Protocol to maintain a high TVL, but also promote the further prosperity of the Scroll ecosystem.

Improved capital utilization: With Pencils Vaults, large whales can securely manage assets without human involvement, which not only increases liquidity, but also makes the ecosystem more vibrant and profitable for all participants.

Enhanced Ecosystem Activity and Node Income: Every action within the Vaults system contributes to increased activity among nodes running on the Scroll ecosystem. As liquidity is actively transferred and deployed, nodes will generate more income, and the entire Scroll infrastructure will become more integrated into the larger DeFi framework, creating a thriving, interconnected DeFi network that benefits all participants.

Who will use Vaults & who will prefer to hold $DAPP tokens

Therefore, for the Vaults product, many roles have urgent needs.

Ordinary investment users would like to further increase their returns through Vaults products, and holding $DAPP tokens is the best way to do so.

The AI ​​and FHE projects in Mind Protocol hope to further increase the voting rate in the network through the Pencils Protocol product. These protocols are expected to provide users with $DAPP token incentives in the future, which is similar to Curve's "vote bribery" to improve network security, which will create rigid demand value for $DAPP tokens.

DeFi and LRT projects with liquidity needs hope to connect to Vaults products and capture liquidity from the huge pool of Pencils Protocol. Projects holding $DAPP tokens are expected to further increase their weight in Vaults products and attract greater liquidity.

Whale players expect to use Vaults products to manage assets and use $DAPP tokens as a catalyst to capture higher returns. The demand for $DAPP tokens from whale users remains huge.

So overall, just looking at the Vaults sector, the market has a very high demand for $DAPP tokens. At the same time, 30% of the revenue generated by the Vaults sector will be used to destroy and repurchase $DAPP tokens, which will further accelerate deflation. So from this perspective, the launch of the Vaults product must be a major positive.

As $DAPP is launched simultaneously on platforms including Gate, Bybit, Kucoin, Bitget, etc., it may be a new symbol, representing that the Pencils Protocol ecosystem will enter a new stage and the ecosystem will be fully launched, and the $DAPP token will also achieve an explosion.