What an eventful year it has been for Aelin!
A year ago, Aelin was a mere concept from Kain's blog post about new protocols derived from the Synthetix Community. Now Aelin is a revolutionary fundraising platform that allows sponsors to raise capital and procure deals on behalf of investors - all on the blockchain.
The traditional sponsor model has evolved with most protocols using Aelin to distribute tokens directly to users, eliminating the need for sponsors altogether. Some of the biggest pools on Aelin have been conducted directly with protocol communities, paving the way for Direct Deals and other enhancements to the protocol.
The hardworking Aelin CCs have been busy releasing a host of exciting changes to the protocol. We'll explore some of these updates below before delving into the bright future of Aelin.
Aelin's Token Launch
The successful launch of the AELIN token through a pool on the Aelin protocol confirmed the many advantages of directly distributing tokens to a community. This distribution also demonstrated the benefits of spinning out of a large ecosystem, like Synthetix. Aelin acquired a large and dedicated following, and Synthetix stakers received Aelin tokens and participated in governance.
Old Aelin Tokenomics: Aelin's original tokenomics would have directly distributed deal fees (in deal tokens) to stakers. This model would have made staking prohibitively expensive because each staker would have received such small amounts of each pool or deal that claiming wouldn’t have been worthwhile.
New Tokenomics: An AELIN buyback mechanism where a 2% protocol fee on each deal token is escrowed for six months, then sold for AELIN tokens which are ultimately distributed to AELIN/wETH LPs, single-sided stakers, and the Aelin treasury.
45% to AELIN/wETH LPs
25% to single-sided AELIN stakers
30% allocated to Aelin treasury
Because some deals were completed under the old Aelin tokenomics but never distributed to stakers, an interim deal fee distribution (AELIP-31) was implemented. It takes 50% of the AELIN rewards from the initial buyback and sets it aside for historical stakers to claim (those staked during the deals).
UI V2 Update
The Aelin UI was completely redesigned to improve the user experience for investors and sponsors. Community input was crucial in shaping the development and design of the new app.
Sponsors can now easily create pools, raise money, and provide great deals to investors with just a few clicks. Investors will be able to find pools and deals and invest with ease.
Verified Pools allow the Aelin Council to confirm the authenticity of the creator of a pool and feature these verified pools prominently to users. This was a much-needed improvement to help users find the pool they were looking for. However, verified pools will be replaced with a more decentralized vouching system. The CCs are also evaluating drafting an AELIP for a verified affiliate model.
Aelin is a decentralized platform where anyone can create a pool and offer it to investors. There is no confirmation process for pools, so users must rely on their own research to determine the legitimacy of an investment.
NFT Gated Deals
Sponsors and protocols can now create pools that can only be accessed by holders of non-fungible token (NFT) collections. This opens up a world of possibilities for projects looking to raise funds from targeted communities who share their values or were early supporters. For example, a project could sell protocol tokens to early users holding community based NFTs at the same discount and lockup as VCs; or a protocol can target multiple NFT collections they want to be part of their community. These NFTs can only be used once to enter a pool, and pool creators can set a max investment per NFT owned. This new feature provides a convenient and innovative way for projects to raise funds from targeted communities and we're excited to see how it will be used.
Direct Deals were a heavily requested feature from investors and protocols because they greatly simplify the process of using Aelin.
Investors are now provided with the exact deal terms in advance and can accept them without needing additional transactions days later. This eliminates the chance of investors forgetting about the next step (deal acceptance) and missing out on the deal altogether. Additionally, since investors know the deal terms from the beginning they can more accurately determine how much they wish toinvest so there is less uncertainty around the deal in general.
Protocols now have complete confidence that all capital deposited into the pool has already accepted the deal. Furthermore, protocols will have even more control surrounding the deal terms as they can now set minimum raise requirements to ensure they receive a minimum capital level or the deal is canceled.
Overall, Direct Deals come with plenty of benefits and add to the overall customizability of fundraising on Aelin. This makes the platform even more attractive for investors and protocols alike.
Whitelist support for Deals with 100k+ entries
The custom, merkle-tree based allow list feature allows protocols to offer custom allocations to a large number of addresses. Protocols or large holders can run an off-chain script to generate a CSV file with tens of thousands of addresses and their corresponding custom allowances based on each wallet's activity on-chain or any logic the protocol desires. At the moment the limit is 40K+ wallets, with a recommended size of 15K wallets for performance, but in January an update will be released allowing for 100K+ addresses.
Little known fact: This pool was initially created for the Kwenta token distribution, which needed a way to set custom deal allocations for thousands of SNX stakers and early users of the Kwenta protocol.
Additional Information for Verified Pools
As more investors participate in Aelin Pools and the upcoming deals, it is clear that more information is needed to help understand what protocol or large holder is raising capital and why? Often this is because an early-stage project is raising funds, and there has yet to be token trading.
Due to this release, pools verified by the Aelin Council can include their website link, Twitter address, and mirror link to provide more information about their pool. This valuable addition helps provide more information about pools, so users do not need to look through the discord/tweets to find out more about a pool.
Aelin's launch on Arbitrum
All of Aelin's fundraising functionality, which has lived on Optimism and Ethereum Mainnet to this point, is now available on Arbitrum.
For those who don't know, Arbitrum is a "layer 2" network on top of Ethereum's mainnet. It is an optimistic roll-up, which means it can benefit from Ethereum's security while providing significantly cheaper transaction costs and much faster execution time.
This means Aelin's permissionless capital raises are now available to more users on another Ethereum scaling solution. Many protocols have expressed interest in raising on Arbitrum, and Aelin is excited to be the infrastructure these protocols use to raise much-needed funds.
Aelin protocol has big plans ahead for 2023. While the past year saw many improvements to the protocol, Aelin is not satisfied with moderate growth and adoption. The goal is mass adoption and increased capital flowing through Aelin contracts. This will be achieved through three avenues:
Increased outreach and business development
Continual improvements to our existing product lines and interfaces.
New and innovative product lines.
New Product Lines
The most notable changes to Aelin in the coming year will be two new product lines, both of which will accrue value to the AELIN token. One of the new products is an auction based pool, which will be integrated into the updated tokenomics. An AELIP with more information on this new, auction-based product line will be released later in January. The other new product is a new, innovative money lego for the DeFi landscape, which is still under development; more info about this product will be shared later in Q1. The Aelin CCs are very excited about these new products and look forward to discussing the AELIPs with the community when they are ready well before any releases to discuss and collect feedback.
UI v3 Update
The Aelin interface will be reinvented from scratch, similar to the v2 update. However, this time we will have more time and resources dedicated to the design phase of the project. The v2 UI was built in a rush since the v1 designs were mostly implemented by developers and were not user friendly. For the v3 design we are aiming to achieve best in class usability and design standards across every product line we offer. The logo and font will be updated and perhaps a rebrand of the protocol will be introduced as well.
Aelin Legal Counsel
Aelin has retained legal counsel from Lindgren, Lindgren, Oehm, and You. Legal counsel can help Aelin in its efforts to decentralize fundraising in several ways. Legal advice can help Aelin navigate the complex and constantly evolving regulatory landscape surrounding fundraising. This is particularly important as Aelin aims to onboard new protocols and sponsors onto its platform.
Additionally, legal counsel can also help Aelin in its efforts to promote decentralization. By working with legal counsel, Aelin can ensure that its governance structure is robust and fair, and that it is able to effectively decentralize decision-making to its community. This can help to increase trust in Aelin and enhance its reputation as a decentralized platform.
Aelin is a decentralized, permissionless protocol; however, while anyone can create a pool, not everyone can be trusted. Verified pools, outlined in AELIP-25 is the first iteration of generating trust for deals on Aelin. In the current system the Aelin Council verifies pools that meet the requirements in AELIP-25 and bumps these pools in the UI. However, the world is a big place and the Aelin Council is not meant to be a centralized entity that determines what pools can be trusted in the Aelin ecosystem.
The new decentralized vouching tool will remove the need for Aelin Council to verify pools, allowing community members to vouch for projects. In early January, wallets like vitalik.eth, kain.eth, etc… can go to the Aelin interface and directly vouch for projects. The top section of the home page will update with the pools vouched by the selected address.
Multiple Vesting Schedules for Deals
The current state of Aelin only allows for one vesting schedule and one fixed price. If a deal creator wants to offer different prices and/or schedules, they would have to create multiple deal contracts, all requiring the creator to determine the token amount at that price point up front, fragmenting the token quantities available for each price point. Creating multiple pools and deals isn't ideal and would lead to confusion from investors and sponsors.
By offering the ability for a deal creator to set multiple price points and vesting schedules, it fixes this token quantity fragmentation issue by allowing the creator to have one contract to manage the deal. The primary motivation is to increase the flexibility of deals, so that deal creators have more tools to create the deal that works best for them and allows them to offer more options for purchasers.
Vesting Schedule Transfers
Vesting schedule transfers have been disabled since the Aelin protocol launched. Not having the ability to transfer vesting schedules is a friction for users and also makes trading locked tokens impossible. That’s why vesting schedule transfers will be enabled by minting an NFT representing each investor's escrow schedule.
Any investor holding vesting schedules will be able to transfer these tokens whenever they want, with their escrow schedule updated after every transfer within the NFT. Any person who missed the investment window of a pool should be able to buy locked tokens either from an OTC deal or on a secondary market.
In 2023 we will be doing more research around trading markets for vesting schedules. The CCs at Aelin have some ideas to greatly increase the liquidity of vesting schedules. Expect more info around this in the second half of 2023 after both our new product lines have been released.
Laminar allocation for NFT Deals
In current Aelin pools, when there is excess interest in an investment round each investor gets deallocated proportionally. However, this benefits whales who have more capital than smaller investors. In an ideal world, larger investors would be deallocated more than smaller investors, allowing for a more widespread distribution of tokens to the community of investors.
The "Laminar allocation" is an upcoming allocation type for investors in NFT gated deals, when there is excess interest in a capped deal. In the proposed allocation, smaller investors are deallocated less than larger investors to ensure a wider distribution of deal tokens.
NFTs are scarce by nature; therefore, alternative allocation mechanisms in NFT gated pools are immune to Sybil attacks on the pool through multiple wallets creation. Thanks to this property, new ways to deallocate investments when there is excess interest can be created.
NFTs are often associated with communities with common interests who have already established strong social bonds. Investing with your NFT community is akin to investing with friends rather than competing against unknown market actors.
Laminar allocation is being built for sponsors who want more decentralization for their pool outcome and wish to prioritize equity among community members.
Lower Fees on OTC deals under 10 parties
Aelin is a protocol meant to be a coordination system between a protocol/ token holder and large numbers of community members, but it can also be used for smaller OTC deals. We found the protocol fee is too high for OTC deals under 10 parties, given the market. A new fee schedule will be proposed in an AELIP this coming year for private pools with less than 10 addresses.
NFT Gated Deal Updates
At the moment, Aelin’s NFT gated deals cannot handle the edge cases where a single ERC-721 collection holds multiple sub-collections, like POAP and Art Blocks. In this case, there is no way to differentiate between the sub collections, such as creating a deal for specific POAP events or sub-collections like Fidenzas or Squiggles. Support for projects like POAP and Art Blocks will be added to the Aelin protocol next year.
Business Development and Network Growth
Aelin has appointed Ser Link as the protocol business development lead responsible for communicating with platforms such as Arbitrum as well as protocols and large investors using Aelin for fundraising or OTC deals. Outreach is a huge part of Aelin’s growth strategy in 2023. Also, Aelin will be launching on the Polygon network in early January. Aelin is also actively talking to zkSync as well about deploying on their network after Polygon. Aelin is hyper focused on growth across all product lines in 2023.
Aelin launched at the beginning of 2022 as a novel, fair launch project coming out of the Synthetic ecosystem. Since the launch, many major updates have been released, including a redesigned user interface, the addition of verified pools, new pool types (such as direct deals), custom features (such as NFT gated deals and support for whitelists of 100,000 or more), and the launch of Aelin on Arbitrum. These updates have greatly improved the user experience for both sponsors and investors and have opened up new possibilities for projects to raise funds.
While Aelin has made lots of progress, the adoption to date is not satisfactory and measures are being taken to increase usage of the protocol and drive value to the AELIN token. Aelin will push forward with outreach across every chain and every product line we offer. We will be relentless in pursuing product market fit during the bear market. As early Synthetix developers who have moved onto the Aelin protocol, we understand that the bear market is where you innovate and build.
The future looks bright for Aelin as it continues to innovate and evolve. Some of the most exciting developments for the new year have been previewed at a high level here for now, but we are excited to release more details throughout 2023 as we continue to build and improve the protocol for both investors and anyone wishing to raise capital and/or distribute their token.