Doug Crescenzi · Follow
Published in · 9 min read · Feb 22, 2022
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Authored by Doug Crescenzi and Jaime Fernando Delgado Saa
Pollen introduces a fully decentralized asset management protocol ushering in the evolution of community investing. The Pollen protocol implements an automated liquidity protocol and asset governance model designed to democratize asset portfolio management.
The model leverages collective intelligence and decision-making in order to outperform the wider market. Moreover, Pollen’s governance protocol fully decentralizes the process through meritocratic decision validation and community control.
The Pollen protocol uses collective decision-making, user portfolio signals, and governance mechanisms to create a participatory token economy. Unlike traditional index funds, Pollen asset pools are actively managed via decentralized governance, and asset allocations are continually rebalanced and optimized for markets that operate 24/7.
The Pollen protocol will first launch on Avalanche and soon come to the Ethereum ecosystem.
You can learn more about Pollen and how it works here.
When architecting the Pollen protocol we sought to satisfy the following objectives:
Secure: The world of DeFi is reliant upon trust in secure smart contracts and the underlying blockchains they execute upon. Writing error-free code is impossible, but we’ve used a collection of tools and processes that have helped to improve code quality and mitigate risk. In addition to having a thorough code review process and using security tools like Slither and MythX, we also have a set of audits scheduled in coming weeks— including a game theory audit. Security is a priority and fundamental to the success of the Pollen protocol.
Flexible, Modular, and Extensible: Building DeFi protocols is hard. Given smart contracts are immutable and unmodifiable, they need to treated with a great deal of care. There are two guiding philosophies when it comes to protocol development:
- Those that seek to remove the human condition and all human interaction at launch. I.e., remove the human failure point at the onset
- Those that wish to afford their communities’ the flexibility to govern and iterate upon their protocols in transparent and decentralized ways
We don’t believe either approach is right or wrong necessarily, but rather very much dependent upon the use case. We do however believe decentralization is a journey that takes time and faces many risks. Therefore, we architected the Pollen protocol in a way that makes it lightweight, modular, and extensible.
We feel the community’s ability to iterate upon the Pollen protocol makes it better positioned to survive attack (e.g., technical, regulatory, etc). This is particularly true when a protocol is first launched and most vulnerable. As the Pollen protocol’s adoption, strength, and resilience grows over time, the architecture affords the community the ability to secure and decentralize further.
Decentralized: We’ve taken steps to introduce an acceptable degree of decentralization at launch. As mentioned above, the protocol is modular which enables for multiple layers of segmented, decentralized governance. This segmentation is used to separate how the Pollen DAO and the fully backed Asset Pools are governed (more info below). Lastly, when it comes to counterparty risk and removing the Pollen team’s control over minting and burning Pollen ($PLN) tokens, we architected the protocol so that only the Pollen DAO contract itself is capable of doing so and that it is fully dependent upon the performance of users’ virtual portfolios.
Inclusive: There are unfortunately too many barriers to entry when it comes to DeFi today. Whether it be expensive transaction fees, top-heavy governance structures, broken tokenomic models, convoluted and confusing UI/UXs, etc. We believe Pollen introduces a new, profoundly rich DeFi primitive and aspire to make the protocol as inclusive as possible. To address inclusivity we are first launching the protocol on Avalanche’s C-Chain where transactions are processed very quickly and cost effectively. In addition to cheap transactions, Pollen’s open protocol is a merit-based system in which rewards are distributed to the top performers and brightest investor minds in crypto. The platform crowdsources market intelligence from investors across the spectrum. Governance is fully decentralized and enables any investor from any background to participate on a level playing field and to be rewarded equitably.
Regulatory Compliant: Lastly, when architecting the Pollen protocol we prioritized regulatory compliance. This can be difficult as regulators frequently do not explicitly explain how DeFi should be handled. We worked closely with a collection of legal professionals familiar with today’s regulatory environment who helped guide us around potential liabilities. In particular, their insights helped to identify the need to provide a layer of separation between the $PLN governance token and the fully-backed asset pool tokens (more info below).
Let’s take a look at the smart contracts that make up the the Pollen protocol.
- PLN Token: The Pollen ($PLN) governance token is at the core of all activity in the Pollen DeFi ecosystem. The main functions of the Pollen governance token (you can learn more about the $PLN token here):
- Allow users to actively manage virtual portfolios on the platform and, if they make good decisions, to earn $PLN as rewards. If they make bad decisions, $PLN will be burned.
- Allow passive delegators to delegate their $PLN tokens to the best performing traders and share $PLN tokens as rewards for good decisions made.
- Allow users to stake $PLN for extended periods of time in order to create fully-backed asset pools
- Pollen DAO: The Pollen DAO is used by the Pollenator community to manage and govern the Pollen ecosystem. The Pollen DAO contract acts as a proxy.
- Pollen DAO Modules: The Pollen DAO modules are contracts that contain the Pollen DAO’s implementation logic. They are segmented by the types of operations they execute (i.e., portfolio management, $PLN rewards / penalties, governance, price feeds, etc.) This makes the codebase and protocol structured in a way that is ultra-composable, readable, and intuitive. Pollen DAO modules can be added, removed, and updated through governance. When functions in the modules are called via
delegatecallthey execute in the storage of the Pollen DAO. - Asset Pool Factory: The Asset Pool factory smart contract enables users to launch and govern their own fully backed asset pools. All asset pools are launched independent of the Pollen DAO and are backed by $PLN tokens locked as collateral. The $PLN tokens necessary to launch an asset pool must meet a minimum capitalization threshold and be locked for a certain period of time. This is done to optimize for high-quality asset pools.
- Asset Pools: Asset Pools are fully backed portfolios of assets that are managed with different allocation strategies. Each asset pool contract that is deployed by the Asset Pool Factory acts as a proxy, similar to the Pollen DAO. When it comes to securing assets and rebalancing, the asset pools utilize liquidity pools to fulfill orders. Through governance, asset pool users can determine if they’d like to subscribe to investment intelligence or “signals”. These signals are generated using data from how the Pollen community manages their virtual portfolios.
- Asset Pool Modules: The Asset Pool modules are contracts that contain the implementation logic for the asset pools. Similar to the Pollen DAO modules, the asset pool modules are segmented by the types of operations they execute (i.e., portfolio management, governance, price feeds, etc.) Again, this makes the codebase and protocol structured in a way that is ultra-composable, readable, and intuitive. Asset Pool modules can be added, removed, and updated through governance. When functions in the modules are called via
delegatecallthey execute in the storage of their corresponding asset pool contract. - Asset Pool Tokens: Each asset pool has its own corresponding asset pool token contract. The asset pool tokens are used to represent the participation and value of an individual’s position in a particular asset pool.
The Pollen protocol has been architected in a way that makes it lightweight, modular, and extensible. To accomplish this we are using an upgradable proxy pattern in which both the Pollen DAO and the Asset Pool contracts act as proxies that delegatecall to different modules with implementation logic. When functions in the modules are called via delegatecall they execute in the storage of the Pollen DAO and Asset Pool contracts.
This proxy pattern provides the following advantages:
- It allows the community to easily upgrade the protocol and add/replace/remove functionality without having to redeploy existing functionality
- It enables the community to navigate around the 24kb smart contract size limit
- For both the Pollen DAO and AssetPool contracts, the community can add unlimited functionality associated with each of these addresses
- It structures the Pollen DAO and AssetPool contracts in a way that makes the protocol composable and easy for others to build on top of
- It makes the code more organized, structured, and readable
Modules can be added, removed or updated, providing the system with full flexibility. Those modules do not require a proxy pattern for this upgradability property. Instead, the modules are registered in the Pollen DAO and Asset Pool contracts and can be changed by updating the addresses that points to them, without the need for redeploying the Pollen DAO or Asset Pool contracts and keeping their respective storage slots as they are.
This lightweight proxy pattern was informed by EIP-2535: Diamonds, Multi-Facet Proxy, a proposed standard for creating modular smart contract systems that can be extended after deployment.
In order to prevent storage slot collisions, the Pollen DAO and Asset Pool contracts have their own corresponding storage contracts. These storage contracts have structs with all the variables used in the corresponding implementation contracts. A hash of the modules is used to set the location of the structs. Because the way structs are stored, every element in a struct will be stored sequentially, then everything is below the storage slot determined by the hash of the module name.
The Pollen DAO and Asset Pool contracts use their fallback functions to proxy function calls to the correct corresponding modules’ implementation logic using message signatures included in the calldata of the transactions. This makes the system more transparent (i.e., the functions in the modules can be called directly from the front-end), but requires including the appropriate module’s address with the implementation logic in the msg.sig.
The Pollen DeFi protocol addresses the $4.3 trillion market in the traditional finance world with a decentralized solution that unleashes the power of DeFi 2.0.
We built Pollen to provide an inclusive and safe way to participate in the ecosystem. The Pollen DeFi protocol delivers a new DeFi primitive that enables communities to grow and create fully backed asset pools that reflect their community’s interests and values.
Our mission is to rethink asset management from the ground up, reduce market risk, and provide a safe harbor for market volatility. Like AMMs, Pollen borrows from prediction markets to deliver an elegant protocol designed for markets that operate 24/7.
We see Pollen as an asset management and governance benchmark in the rapidly maturing Web 3.0 token economy.
Pollen is here to make DeFi better for everyone.
Pollen is a first-of-its-kind Virtual Trading Arena where the community holds all the power. Decentralized finance is designed to be by the people, for the people, and Pollen is acknowledging this by building the first, truly decentralized platform for measuring trading skill and on-chain reputation with its Pollen Virtual suite of products.
