Colony Labs is a liquidity pool which brings the features of traditional venture capital to the DeFi world. It focuses on developing and investing in the Avalanche ecosystem, which is done by providing financial aid to existing and developing projects on the network.
It is led by a team of finance and technology experts who have extensive experience in their respective fields. The CEO and CIO are partners and co-founders at ExoAlpha, a hedge fund exposed to the leading cryptocurrencies. They were also both early investors in digital assets.
The Vision of Colony Avalanche Projects
The Colony exclusively focuses on the Avalanche network, and as a partner with the AVAX network, it plans to invest its funds in developing the ecosystem.
Avalanche is one of the most popular platforms for building decentralized applications, or dApps. It is in the same category as Ethereum since they both rely on smart contracts. However, Avalanche has many advantages over Ethereum, including dramatically lower transaction fees.
Avalanche also has one of the fastest transaction times in the industry. It is based on the proof-of-stake validation method instead of proof-of-work, which makes it more energy-efficient and eco-friendly than the industry’s leading competitors.
The Colony will focus primarily on early-stage investments in new DeFi projects on the network.
The focus on AVAX will accelerate the advent of Web 3.0, and decentralized apps are a big part of this revolution. This is because they are instrumental in enabling the crypto world to realize its ultimate goal of across-the-board decentralization.
By focusing on developing new dApps to replace outmoded applications, the Colony will contribute to bringing about the next generation of web applications and the internet.
In fact, the Colony itself intends to develop into a decentralized organization as it grows. We will detail this further in the section about the roadmap.
How Colony Labs Works?
As mentioned above, Colony is a liquidity pool, and it holds assets and invests them in different projects. These projects are either start-ups or established protocols/projects on the Avalanche network. This also makes it one of the best platforms to invest in DeFi cryptocurrencies. Following the DAO model, the community has a say in which projects receive the funds.
Members will also receive multiple airdrops from these projects as rewards for early investment. This helps diversify the token holder’s portfolio simply by playing a part in creating liquidity for the system.
Other rewards for participating in the liquidity pool will flow through the Colony’s native CLY token.
The CLY Token
The CLY token powers the Colony. The token holders provide the funds for the system, and in return, the system allocates them tokens that they can use to earn rewards.
Members can also use them as governance tokens. When the system hands over power to the members, these tokens will represent voting rights. The powers given by these tokens will include choosing which projects receive funds from the Colony. Governance decisions may also involve other long-term concerns about the Colony’s fate.
The system will also be able to repurchase these coins, which should appreciate in value. So, members could also cash out by trading their CLY tokens for other digital assets or fiat currency.
Finally, members can also stake their CLY tokens to earn AVAX coins as rewards. At the time of writing, AVAX coins are at an all-time high as the popularity and adoption of the Avalanche platform grows.
Fund Allocation Program in Colony Networks
As of now, the fund allocation is divided into four main parts.
The Validator Program
One-tenth of the total funds of the system will be deployed in AVAX tokens. The system will stake these tokens and may also invest the funds in subnet validation. These tokens should fuel the transactions on the network, and they should also help it scale.
Funding Indexed Projects
Another one-tenth will go to indexed projects, which will be among the top ten on the Avalanche network, based on market capitalization. However, token holders will have the power to vote a project in or out, which will further extend control to the community members.
30% of the fund will go to protocols built on the Avalanche platform, and boosting the liquidity and capital of these projects will encourage their growth and development.
Early Stage Investments
The remaining 50% of the funds will go to new projects and start-ups on the AVAX network. This will incentivize new ideas and give them the initial boost they need to develop effectively.
With that said, this allocation plan is a tentative one, and the Colony community will have the authority to change it as the system gradually decentralizes itself.
The Roadmap of Colony Blockchain
The Colony is set to launch in late 2021. This step includes launching their application and developing their community through CLY tokens’ public and private sales. The Avalanche network has invested in the Colony during the seed round, solidifying their partnership with this project.
The next step will come in the first quarter of 2022. Funds will start flowing towards the projects and protocols on the Avalanche network, following the allocation plan detailed above. Accordingly, we should see investments in start-ups as well as indexing of the top ten established projects on the AVAX network. Besides, the Colony has already established a long term partnership with CryptoMinati Capital, among other investors.
Then, in late 2022, the project will move towards integrating the DAO model. The Colony will have its own subnet on the AVAX platform, and the DeFi structure should be brought into place. The process of transferring control to the users will speed up by this time, and at the same time, the system will also use deflationary mechanisms, including burning tokens. This should appreciate the value of the community’s assets.
Lastly, the DAO expansion should be completed in the first quarter of 2023. Using its own subnet, the Colony will launch its pillars for sustained growth. There will also be further solidification of the system’s tokenomics.
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Last Words – Colony Crypto 2021
The Colony can be a powerful force in driving the development of the internet into the age of Web 3.0. Incentivizing the replacement of older systems makes the Colony a valuable entity in the crypto space. As it grows, it will help innovate and give momentum to new ideas for the future.