Pencils Protocol: Optimizing DeFi yields on Scroll

In the vast landscape of DeFi projects, Pencils Protocol emerges as a comprehensive solution on Scroll – a promising Layer-2 solution for Ethereum. What is Pencils Protocol? What benefits does this platform offer investors? Let’s delve into the details in this article.

Table of Contents

What is Pencils Protocol?

Pencils Protocol is a DeFi (Decentralized Finance) platform built on Scroll, a Layer-2 solution utilizing Zero-knowledge Rollup (zkRollup) technology to enhance Ethereum’s scalability. This platform provides users with a diverse suite of DeFi tools, including Staking, Yield Farming, and Auctions, helping optimize returns from digital assets.

Scroll is a Layer-2 solution designed to inherit the security of the Ethereum mainnet while providing superior scalability with significantly lower transaction fees. zkRollup technology allows Scroll to process a large number of transactions off-chain, then aggregate and verify them on the Ethereum mainnet. This helps reduce the burden on the Ethereum network while providing a smoother user experience with fast transaction speeds and low gas fees.

Pencils Protocol leverages the advantages of Scroll to provide users with a secure, efficient, and cost-effective DeFi platform.

Compared to other DeFi platforms, Pencils Protocol stands out with:

Zero-knowledge technology: Ensures security and privacy for transactions.
Scroll ecosystem: Provides a stable, high-speed, and low-cost operating environment.
Diverse features: Caters to diverse investment needs of users.
User-friendly interface: Easy to use for both beginners and experienced users.

Key components of Pencils Protocol

Pencils Protocol is designed to be an “all-in-one” DeFi platform on Scroll. To achieve this goal, the platform offers the following core components:

Auctions

Pencils Auctions is a decentralized auction system that allows projects on Scroll to launch new tokens fairly and efficiently. Through the auction mechanism, projects can reach the community, raise capital, and distribute tokens transparently.

Benefits of Pencils Auctions

Fair and transparent: All users have the opportunity to participate in auctions.
Community reach: Attracts the attention of a wide range of users.
Effective capital raising: Helps projects easily raise capital from the community.

Staking

Pencils Staking allows users to earn passive income by staking (locking) supported digital assets on the platform. Currently, Pencils Staking supports the following assets:

ETH (including Native ETH, WETH, LSDs, LRTs)
WBTC (BTC-collateralized tokens compatible with EVM)
Stablecoins
Scroll token (after Scroll officially launches)
Pencils token (native token of Pencils Protocol)

How to Stake on Pencils Protocol

Connect your wallet (e.g., MetaMask) to Pencils Protocol.
Select the asset you want to stake.
Enter the amount of tokens you want to stake.
Confirm the transaction on your wallet.

Benefits of Pencils Staking

Attractive returns: Earn competitive interest rates from staking tokens.
Safe and secure: Assets are protected by zero-knowledge technology.
Flexible: Withdraw tokens at any time.

Pencils Vaults

Pencils Vaults is a Yield Farming product that offers users a variety of yield-generating strategies, including leveraged Yield Farming. Users can deposit tokens into different Vaults to participate in automated investment strategies and optimize returns.

Types of Vaults

Stable Vaults: Suitable for investors who prefer safety.
Medium-risk Vaults: Balance between profit and risk.
High-risk Vaults: High profit potential but come with high risk.

Benefits of Pencils Vaults

Portfolio diversification: Participate in various Yield Farming strategies.
Profit optimization: Leverage to increase profits.
Time-saving: Investment strategies are automated.

Pencils Points

Pencils Points is a reward system for users who actively participate in the Pencils Protocol ecosystem. Users can earn points through activities such as:

Staking tokens
Participating in Yield Farming
Participating in auctions
Inviting friends to use the platform

Benefits of Pencils Points

Receive token airdrops: Users with high points will be prioritized to receive airdrops.
Participate in Launchpad: Opportunity to participate in potential IDO projects.
Receive exclusive benefits: Transaction fee discounts, gifts, etc.

Tokenomics of Pencils Protocol

Pencils Protocol has officially launched its governance token called DAPP. It plays a crucial role in the operation and development of the Pencils Protocol ecosystem.

Details about DAPP

Token name: DAPP
Total supply: 100,000,000 DAPP
Blockchain: Scroll

Token allocation

Utilities of DAPP

Governance: DAPP holders have voting rights on important protocol decisions, including changing system parameters, adding new features, and allocating funds.
Staking: Stake DAPP to receive block rewards and participate in governance.
Rewards: Earn DAPP by participating in platform activities such as Staking, Yield Farming, and Auctions.
Access to exclusive features: In the future, DAPP may be used to access exclusive features on Pencils Protocol.

Development team and investors

Although the full identity of the development team has not been disclosed, the project is led by experienced individuals in the blockchain and DeFi space. Michael Ipovich, Head of Partnerships at Pencils Protocol, is a representative who frequently appears at events and AMAs (Ask Me Anything) with the community.

On the investor side, Pencils Protocol has attracted the attention of many leading venture capital funds in the crypto industry. The project’s seed funding round successfully raised $2.1 million with participation from:

Animoca Brands: Investment fund focused on metaverse and blockchain games.
OKX Ventures: Venture capital arm of OKX exchange.
Gate.io Labs: Investment arm of Gate.io exchange.
Presto Labs: Investment fund focused on DeFi and Web3 projects.
Galxe: Web3 identity and community management platform.
Sandy Peng: Co-founder of Scroll.
Ryan Li: Founder of Cyber.
Ashely Xiong: From V-Fund.
Lucia Zhang: From Arcanum Capital.

The support from these reputable investors not only brings financial resources but also strengthens the community’s belief in the growth potential of Pencils Protocol. They play an important role in supporting the project strategically, connecting partners, and expanding the ecosystem.

Recently, Pencils Protocol completed a strategic funding round with an undisclosed amount, attracting participation from investment funds such as Taisu Ventures, Bing Ventures, DePIN X, and IBC Group. This shows that the project is receiving increasing attention from the investment community and has the potential to become one of the leading DeFi projects on Scroll.

Development Roadmap and future of Pencils Protocol

Pencils Protocol has made significant strides in a short period. Since its launch, the platform has attracted great interest from the DeFi community with impressive TVL (Total Value Locked) growth.

Key development milestones

May 2023: Completed seed funding round with $2.1 million from major investment funds like Animoca Brands and OKX Ventures.
September 2023: Launched Pencils Protocol on Scroll testnet.
November 2023: Changed name from PenPad to Pencils Protocol.
February 2024: Deployed the “Pencils Mine” program, attracting tens of thousands of users.
July 2024: TVL reached nearly $90 million.
September 2024: Completed strategic funding round with an $80 million valuation from Taisu Ventures, Bing Ventures, etc.
September 2024: Launched $DAPP token on Bounce Launchpad.

Future development plans

Expand the ecosystem: Collaborate with other projects on Scroll to provide more DeFi products and services.
Develop new features: Add features like lending, borrowing, derivatives trading, etc.
Improve user experience: Optimize the interface, provide detailed documentation.
Expand the community: Organize events, AMAs, airdrops, etc.

Growth potential

Pencils Protocol has strong growth potential in the future due to the following factors:

Layer-2 development trend: Scroll is a promising Layer-2 solution that is expected to attract many users and projects in the future.
Expanding DeFi ecosystem: The demand for DeFi products is increasing, creating favorable conditions for the development of Pencils Protocol.
Support from major investors: The project is backed by reputable investment funds with experience in the blockchain field.

With these factors, Pencils Protocol is expected to become one of the leading DeFi platforms on Scroll and contribute to the development of the DeFi ecosystem in general.

How to use Pencils Protocol

Connect your wallet

Visit the Pencils Protocol website.
Click the “Connect Wallet” button in the upper right corner of the screen.
Select the type of wallet you want to connect (e.g., MetaMask, WalletConnect).Confirm the
connection on your wallet.

Staking

Select “Staking” from the menu bar.
Choose the asset you want to stake (ETH, WBTC, Stablecoin, Scroll token, Pencils token).
Enter the number of tokens you want to stake.
Click the “Stake” button and confirm the transaction on your wallet.
You will start earning interest immediately.
To unstake (withdraw tokens), select “Unstake” and enter the number of tokens you want to withdraw.

Yield Farming

Select “Vaults” from the menu bar.
Browse the available Vaults and choose the one that suits your risk appetite.
Click on the Vault you want to join.
Enter the number of tokens you want to deposit into the Vault.
Click the “Deposit” button and confirm the transaction on your wallet.
You will start earning profits from the Vault’s Yield Farming strategy.
To withdraw tokens from the Vault, select “Withdraw” and enter the number of tokens you want to withdraw.

Auctions

Select “Auctions” from the menu bar.
Browse the ongoing auctions.
Choose the auction you want to participate in.
Enter the number of tokens you want to bid.
Click the “Bid” button and confirm the transaction on your wallet.
If you are the winner, you will receive the project’s tokens.

Important notes when using Pencils Protocol

Always double-check the Pencils Protocol website address before connecting your wallet.
Secure your wallet carefully and never share your private key with anyone.
Thoroughly research the assets, Vaults, and Yield Farming strategies before investing.
Understand the risks involved in DeFi and only invest what you can afford to lose.
Follow Pencils Protocol’s announcements and updates on their official channels.

Pencils Protocol is a promising DeFi platform on Scroll, offering users a comprehensive suite of tools to optimize returns from digital assets. With the combination of zero-knowledge technology, the Scroll ecosystem, and diverse features, Pencils Protocol is poised to become one of the leading DeFi platforms in the market.

The backing from major investors like Animoca Brands and OKX Ventures further strengthens confidence in the sustainable development of Pencils Protocol. With a clear development roadmap and a growing user community, Pencils Protocol is on track to assert its position in the vibrant DeFi market.

Are you ready to explore the world of DeFi on Scroll with Pencils Protocol? Join the platform’s community today to not miss out on attractive investment opportunities!

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