SmartCoin, an innovative, self-feeding yield farm on Avalanche, went viral on Twitter during mid-October after generating jaw-dropping APRs. The project was underpinned by a fundamental hook that got everyone’s attention: when TVL doubles, APR% doubles. The project had many DeFi veterans intrigued—a self-feeding APR farm with a fantastic marketing machine that took no steps to obfuscate its Ponzinomics; if anything, it seemed to revel in them.
It is, however, one of the most fascinating projects in DeFi this year. Each mechanism the team (purportedly a group of academics) has implemented into the platform has been designed as either a case study on human behavior in Web 3, or as a way to solve for an unmet need in yield investing.
Upon initial traction and momentum, many pundits expected a hard rug. However, when the first wave of attention caused the price to go logarithmic, launching SmartCoin’s TVL to nearly $40 million at its peak, the team responded by burning a massive portion of their treasury. The world expected them to rug, and they did the exact opposite. This isn’t your typical DeFi farm. I suspect something ingenious is at work, here. In any case, Smart Coin has become one of the most bizarre, fascinating, and frankly, entertaining DeFi initiatives to date.
SMRT Marketing & Human Nature
The project founders’ extensive expertise in advertising and human psychology is perhaps the most impressive part of SmartCoin. Many investors who have operated in this industry for long enough can observe a common issue amongst almost every vanilla DeFi farm that comes to market—they tend to utilize sub-par marketing and consumer experience strategies.
Conventional DeFi platforms tend to have issues standing out in a sea of forked projects, spread across so many different chains. Passive engagement. Online UX/UI that doesn’t convert well. They also struggle with acquiring investors due to poor marketing.
SmartCoin, on the other hand, blew the competition out of the water by doing what so many developer-led projects in this space fail to account for—a marketing budget that is built to scale up, not just to merely maintain a status quo.
Their homepage is clean, fluid, and minimalistic. It immediately calls attention to portfolio gains, as well as a progress bar indicating the community’s shared goal: to double the APR by crossing a TVL threshold. But what their front end truly highlights is what has to be one the primary driving forces behind SmartCoin’s explosive growth—their impeccably-made promotional videos.
Again, human psychology is at play here. A British narrator with dulcet tones confidently explains the underlying mechanics of the project each step of the way, with a level of production value not often seen in this space, if ever. The academics behind SmartCoin have focused not just on the tokenomics, but the conversion rate as well. A DeFi project is dead in the water without network effect, and SmartCoin has made sure that their message is conveyed effectively and in a way that generates tremendous hype.
The hype extends beyond the general public and well into the upper echelons of the Avalanche DeFi community. SmartCoin’s Twitter account (@0xSmartCoin) has several key followers, including AVALabs DeFi Director Luigi D’Onorio DeMeo, @Cryptofishx, Co-Founder of Trader Joe (Avalanche’s largest DEX), @AVAXtr (Avalanche’s Turkish Twitter account), and Zhu Su, CEO Three Arrows Capital and AVAX bull.
The founders of SmartCoin are anonymous to the public, as is common in DeFi. Particularly in high-volatility yield markets, where investors stand to gain or lose large sums of money. It has been speculated (and inferred from a few of their Tweets) that the project founders are a collection of independently wealthy individuals from various public-facing sectors, so it stands to reason that they would be hesitant to doxx themselves until absolutely necessary. However, the identities of the core team have been privately revealed to RugDoctor via their KYC verification process, so a degree of founder authentication does exist.
Several naysayers on Twitter have branded SmartCoin as a rug, based on the notion that the project is unsustainable. An APR that doubles when TVL doubles appears to be unmanageable, and is a genuine concern within the community. However, the team has responded to every opportunity to take profit and run by doing just the opposite–either by burning treasury tokens, or releasing new platform features. They continue to hire staff on all fronts, and are actively recruiting more Solidity developers, community moderators and marketing staff to their team.
The Avalanche Connection
The SmartCoin documentation and official Twitter both mention a Harvard professor being among the founders. This could be completely fabricated. If true, however, it parallels the genesis of Avalanche in quite an interesting way. For Avax, Cornell University was the starting point for everything. Avalanche was part of a Cornell University incubator program. The study was led by Emin Gün Sirer, a Turkish-American Cornell professor, and a group of Cornell Computer Science Ph.D. students.
It’s worth noting that the @AVAXtr Twitter account follows SmartCoin, but the English AVAX account does not. Is it possible, then, that SmartCoin’s is led in part by Emin Gün Sirer? Given that Sirer appears to specialize on the software aspects of cryptocurrencies rather than the DeFi side—of which the SmartCoin team uniquely focuses on—it seems unlikely.
To summarize, SmartCoin does not appear to be a rug, although it is still entirely possible that they are playing a long game. However, given the team’s intelligence and the high-profile Avalanche players who are monitoring the efforts, it remains entirely possible that this endeavor is a PR stunt for Avalanche.
There is just enough of a trail of circumstantial evidence to lend weight to these claims, but all of these theories have yet to be proved. One thing is certain: the SmartCoin team is capable of building a massive community and movement from scratch, has some very interesting tokenomics models, and is clearly leading the field in terms of innovative marketing for DeFi.
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