Charged Particles amalgamate Decentralized Finance (DeFi) and Non-Fungible tokens (NFT). It was introduced in January 2020. Owing to the merging of DeFi and NFTs, NFTs can become yield generating digital assets. It is a truly decentralized and no fees protocol. The NFTs offer financial leverage, nesting capabilities, charitable functionality, programmability, and much more.
The protocol provides users with the ability to deposit ERC-20, ERC-721, or ERC-1155 tokens (Any tokens) into an NFT. Thus creating the concept of nested NFTs and enabling every NFT to hold digital assets. At present, the protocol is positioned on the Ethereum Mainnet and Polygon network.
NFTs act as a basket for holding a number of tokens. NFTs like e.g. Art, Collectible, Virtual Real Estate, In-Game items, and any NFT can be deposited with tokens.
Users can also transfer tokens into another user’s NFT making your NFT act as a wallet.
How does it work?
Users can mint NFTs or ‘Particles’ through the Charged Particles Protocol. These NFTs are non-custodial and owned by the NFT creator and held in their wallets free to be traded, transferred, or sold besides that these NFTs can be Charged.
Charged Particle protocol allows users to deposit any ERC tokens into the NFT or a primary asset like DAI, USDT, USDC and thus equipping them with a Charge.
Owing to the recent integration with AAVE, assets deposited in the NFTs if supported by AAVE will turn into a yield-bearing asset (eg, aDAI) and interest will be accumulated on the asset supported by AAVE deposited inside the NFT.
Hence, yield-bearing aTokens can be held inside NFTs but that’s not it. Several LP tokens, Speculative tokens, Governance tokens, or Social tokens can also be held inside a scarce NFT. In fact, it can also hold NFTs minted anywhere.
Principal and Interest accrued on the digital assets deposited in the NFT will not be released unless the owner releases them. Particles can be Time-locked and in that case, the assets held in the NFT cannot be removed until the designated time lock period has ended. For withdrawing the principal before the designated period is over the NFT will have to be melted or destroyed but the interest can be withdrawn at any time.
The Charge on the Particle or NFT is the amount of interest earned on the primary asset deposited in the scarce NFT. The Charged Particle can be Discharged by removing the accrued interest.
Value of a Charged Particle
= Intrinsic Value (underlying asset, DAI)
+Speculative Value (a non-fungible rarity)
+Accrued Interest value (accrued in aDAI)
The value of charged particle is the sum of the primary asset deposited, interest earned over it, and the value of the NFT.
The Charge AKA interest earned on the intrinsic value can be programmed. DApps or smart contracts decide how to deal with the charge accumulated in the NFT. Users can also dictate how the interest earned will be disbursed using a custom mechanic that can be designed around the charge a token has for eg. 30% of the interest to be transferred to a charity, 20% of the interest for repayment of a loan borrowed and rest of the interest to the user’s digital wallet.
The Charged Particle Protocol has thus created a new class of NFTs and a new DeFi earning mechanism.
Use Cases of Charged Particles
A. Vesting Capsules
An NFT in which tokens are nested and time-locked for a fixed vesting period is a vesting capsule. The tokens inside the vesting capsule are locked until the vesting period is not over and only after that period can the owner release the tokens. The vesting capsules can be traded without the release of the tokens deposited inside the NFT.
B. Governance Vessels
NFTs can also hold governance tokens inside them giving them governance rights in proportion to the tokens energized inside.
C. Gift Baskets
Users can gift their friends or families NFTs holding different tokens to introduce them to the world of DeFi and NFT.
D. Promotional NFTs
NFTs customized with company tokens and optionally time-locked make for exciting giveaways, community prizes, etc thus promoting the company.
E. Interest Bearing NFTs
Tokens supported by AAVE deposited in scarce NFTs are automatically transformed into yield-bearing assets by converting them into aTokens.
F. Nested NFTs
Charged Particles Protocol allows the nesting of NFTs created anywhere to be deposited into the scarce NFT thus creating a new class asset of Nested NFTs contained in a single NFT.
In games using NFT-based items, the power of any in-game item can be dependent on the charge available in the NFT item. Thus making ordinary items or assets in the game strong.
Role of Charged Particles
Multiple artists can collaborate on the creation of a collection of nested NFTs and the protocol provides a new tool for the artists to create NFTs.
Static NFTs are transformed into financial tools that store interest-bearing tokens. With the configuration of time-locking, it also acts as retirement funds, college funds, trust funds, etc.
Anyone can build a dApp layer on the Charged Particle Protocol as the protocol exists as open-access smart contracts on the Polygon and Ethereum Blockchains. Developers are offered grants to encourage them to develop dApps using the Charged Particle Protocol technology.
Collaboration between Charged Particles and EPNS
The Charged Particles Protocol is a unique blend of the most popular trends in the crypto space i.e., NFTs and DeFi but the collaboration will give it an extra ‘Charge’ and let its users stay in sync with the protocol. This collaboration will facilitate the creation of a robust communication channel between the Charged Particles Protocol and its users. The decentralized push notifications sent to the users of the Charged Particles Protocol increase the user engagement with the platform. The users will be poised to receive decentralized real-time notifications relating to:
A. Tokens deposited in the NFT
B. Interest or Charge accrued on the Intrinsic Value
C. Expiry of the time-lock period
D. Programmed disbursement of Charge
E. Interest thresholds hit
This collaboration will enhance the functionality of the Charged Particles Protocol and the EPNS Protocol. Together the new unique asset class created by the Charged Particles Protocol will gain more attention through this collaboration and more users will be made aware of both the protocols.
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