What is Akropolis?
Akropolis is one of the earliest DeFi projects in the space. Its origins date back from the stormy 2018, when it started out as a pension fund on the blockchain. Since its humble beginnings, Akropolis protocol has gone a long way to become a fully equipped DeFi platform. Staying true to its mission, Akropolis is fully autonomous, meaning there's no central entity between the user and his financial operations.
Without a third party, previous limitations no longer exist. People from all jurisdictions can manage their crypto funds under the rule of smart contracts, governed by the community. Because smart contracts are neutral by nature, using Akropolis requires no KYC. Meanwhile, the community has a vested interest to ensure the sustainability of the protocol. AKRO token holders vote to adjust the protocol parameters, which helps the AKRO token appreciate in value.
As good as it sounds, DeFi protocols are constantly under the threat of hacks and exploits. Transparency is a wonderful feature when it comes to global coordination. Anyone can see how the code works before deciding to lock their crypto with Akropolis. Unfortunately, the bad guys are watching as well. In this race against the clock, sometimes the hacker wins. Such is the case with Akropolis protocol, who fell victim to an exploit. In 2020, a hacker exploited a reentrancy bug that enabled him to mint 2 million DAI. Despite being audited twice, developers missed this critical bug.
The bad part is that hacks erode users' confidence in DeFi protocols. Decentralization and transparency are quickly thrown under the bus when people lose money. On the good side, Akropolis added a Reentrancy Guard feature to prevent the same exploit from happening again. Whenever a hack happens, the entire industry gets to learn from their mistake and build a more secure protocol.
DeFi summer was rife with DeFi hacks and exploits. Akropolis was one of many protocols that had the misfortune of getting hacked. But it's not the end of the world. The Akropolis team and Yearn Finance have merged their development resources to offer better services. In this symbiosis, Akropolis gets to use Yearn's vaults for DCA strategies, and Yearn Finance gets access to new investment strategies and products created by Akropolis. The end result is a non-custodial open-source alternative to savings and high-yield accounts.
An important metric for the health of a DeFi protocol is liquidity. This metric represents how much money is in the protocol. If liquidity is high, this means users can withdraw their funds without experiencing high slippage. On the other hand, low liquidity signifies low trust in the protocol.
As of 2023, Akropolis has over $2M in deposited liquidity. Although Akropolis reacted to the bearish 2022, users have made consistent profits with the protocol. It can be said that the Yearn Finance partnership saved the protocol.
How does Akropolis work?
Akropolis offers a suite of financial services that can be used in a permissionless manner by anyone. Their two main products are based on yield generating returns.
Akropolis Vortex
Vortex is an on-chain basis trading strategy that aims to generate long-term, sustainable and rewarding returns while remaining market-neutral.
Basis trading is used in the context of future trading. It is an arbitrage strategy which takes advantage of the difference between the spot and future price of a commodity (the "basis").
To explain Vortex, it is important to underline the difference between TradiFi and DeFi. While TradiFi uses order books for matching orders, DeFi relies on liquidity pools. Because liquidity pools are decentralized, it means no third party has custody over the funds. This poses some technical challenges when it comes to implementing futures contracts on the blockchain.
To solve this problem, Akropolis uses perpetual contracts instead. Perpetual Contracts are similar to traditional futures, but, as their name suggests, have no expiration or settlement date. They continue perpetually until the position is closed.
Being market-neutral is a key strength of Vortex. Neutrality means Vortex is not exposed to any crypto vs. fiat price risk, just like when farming with stablecoins. Furthermore, it is proven to be sustainable, profitable across all market conditions and has historically outperformed many other market-neutral strategies and higher-risk yield farms.
As with any DeFi product, there are risks involved. Vortex may produce negative results if the funding rate on perpetual exchanges is consistently against Vortex, or if Vortex’s position(s) gets liquidated.
Akropolis yVaults
After Akropolis merged with Yearn Finance, they launched a new service that uses Yearn's famous Vaults. Unlike Perpetuals, yVaults are much simpler to understand. They are like savings accounts for your crypto assets. yVaults accept your deposit, then route it through strategies which seek out the highest yield available in DeFi.
The token you deposit in a yVault is the token you’ll receive yield, always automatically compounded into the yVault. A yVault may have many active strategies at the same time. A yVault may change its strategies capital allocation when it deems necessary.
How to make money on Akropolis?
Making money on Akropolis is as easy as depositing funds into a liquidity pool. Think of it as a savings account feature that you have full control over.
There is one important caveat: as of 2023, Akropolis is in beta mode, which means the service is not fully deployed. Users may experience visual bugs and even smart contract bugs in some extreme cases. Start out small in order to reduce the risk.
Using Akropolis can be though of as a passive income strategy, where the deposited funds are used to provide liquidity across the wider DeFi markets.
All you need is an Ethereum wallet like MetaMask and some ETH to pay for the gas fees.
Akropolis Vaults
Currently, the only available vaults are the yVaults. Here, users can deposit their funds and the Akropolis protocol will route them to the highest paying liquidity pools.
Since yVaults are outsourced from Yearn, there is a guarantee that the vaults are audited and battle tested.
Here's how to use the Akropolis Vaults:
Open the Akropolis app
Navigate to the "Vaults" tab
Select the pool of your choice
Input the number of tokens you would like to deposit
Click "Deposit" and approve the transaction
Your deposit will start accumulating APY from the moment your transaction is confirmed. In addition to the APY, users are also rewarded in AKRO tokens. These tokens are vested for a 12 month period, which means the will be claimable after the vesting period expires.
The 12 month vesting period prevents liquidity sniping, aka users who dump their AKRO tokens immediately and withdraw their liquidity. Users who keep their liquidity on Akropolis for a longer time will earn more AKRO tokens.
Akropolis Staking
After your AKRO tokens become claimable you can either choose to sell them, or stake the AKRO to earn more AKRO tokens and a portion of the protocol revenue. Unlike vesting, staked AKRO can be withdrawn at any time.
Here's how you stake AKRO on Akropolis:
Open the Akropolis app
Navigate to the "Stake" tab
Input the number of AKRO tokens you would like to stale
Click "Stake" and approve the transaction
Price Prediction for Akropolis — Can it hit $1?
Buying and hodling AKRO — the native token of the Akropolis — is one way of potentially making money on Akropolis.
The utility of AKRO is to secure the Akropolis protocol. This means the price of the AKRO token is tied to the amount of value secured by the protocol. Validator nodes have an incentive to buy AKRO tokens and spin up more nodes, which results in more AKRO rewards.
By looking at its current price, it’s natural to think about the chance of AKRO hitting $1 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the AKRO token by analyzing its tokenomics. Akropolis’ current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} AKRO tokens being in circulation today, that means a price of {PRICE} per AKRO.
How did we come to that calculation? It’s quite easy, the price of an AKRO token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each AKRO coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of AKRO at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for AKRO to hit that price.
At a price of $1 per token, that means the current market cap of AKRO would equal ${{CIRCULATING_SUPPLY} * 1}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. AKRO’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} AKRO which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of AKRO? Taking into account the current price of an AKRO token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. AKRO coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of an AKRO token. Doing the same calculation but with a price of $1 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1} for the AKRO protocol fully diluted market cap.
These are all crucial details to know when calculating if AKRO can reach the price of $1 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of AKRO depends solely on its growth as a network used by tens and hundreds of millions of users. Technically, it is possible for the price of AKRO to reach $1 by 2030.
If you’re looking to add some AKRO to your portfolio, the most trusted places to get some are Binance and Coinbase.