Dogecoin holders have made significant profits in the last few days because the sole application of Dogecoin was transfer of value. However, Dogecoin holders can now take benefits from a new project called as Dogechain. It is a Layer-2 solution that brings NFTs, DeFi and Games to the Dogecoin token holders. It is an innovative effort to bring more practical value to Dogecoin holders which already has a vibrant community.
What is Dogechain?
Dogechain is a blockchain built using the Polygon’s Software Development Kit. Based on the Ethereum Virtual Machine it is a blockchain that will enable NFTs, Defi and Games for the Dogecoin holders. It is intended to bring more use cases for the dogecoin cryptocurrency. The aim was to offer diversified usage to Dogecoin holders who have been just hoarding their coins without much use.
1. How does it work?
How does it work?
Dogechain supports the usage of Dogecoin on its own blockchain by wrapping them. Users will receive wrapped Dogecoin tokens that they can use in the Dogecoin Blockchain. Since these tokens will be EV compatible, they can be used on the DApps available on the Ethereum Blockchain.
Further, Dogecoin can be used for Gas Fees in Dogechain.
Please note that both Dogecoin Blockchain and Dogechain are two separate and independent blockchains.
2. Dogecoin’s Shortcomings
Dogecoin was created as a meme coin, a crypto that would show the downside of the ICO trend. It has a Scrypt-based mining algorithm that uses the energy-intensive Proof-of-Work to create transactions and reward new coins. It consumes a whooping 3.28 TWh of energy as of July 2022 which can power almost 650, 000 homes.
Yet another shortcoming is the single usage of Dogecoin which is to make transactions. Dogecoin natively cannot be used for any other application. This seems pretty redundant because there are several cryptocurrency networks such as Ethereum, Solana, Polygon, and many others who support Defi (crypto lending and borrowing), blockchain games, and NFTs. Such features have become standardized in the Web3 industry and cannot be left untouched.
Further, Dogecoin can process an average of 30 TPS. Such a transaction speed creates a bottleneck for large-scale usage where people are envisioned to transact cryptocurrency for daily purchases.
Solutions to These Shortcomings
To achieve cross-chain compatibility of Dogecoin Blockchain and Dogechain, users need to use a Bridge which will wrap their Dogecoins. These wrapped Dogecoins can be easily used on the Dogechain ecosystem.
Dogechain intends to be the problem solver by attending to many shortcomings of Dogecoin in the following ways:
PoS: Dogechain has a Proof of Stake consensus mechanism that can not only solve the high energy consumption of Dogecoin but also can provide faster and more efficient scaling solutions. Further, it becomes less expensive for validators who do not need to buy expensive equipments.
NFT: Dogechain will feature an NFT marketplace where buyers and sellers can exchange NFT with $DOGE and can even pay the gas fees in wrapped Dogecoins. Users can also take part in Metaverses through Dogechain-based NFTs.
Defi: Users can exchange Dogecoin with other cryptocurrencies in decentralized exchanges like Uniswap. They can also stake wrapped Dogecoin in Dogechain as the latter supports Proof of Stake. They can further take advantage of lending, borrowing, staking, and liquidity farming with their Dogecoins.
Dogechain intends to bring these features as additional services to the Dogechain holders. They describe the current status of Dogecoin as a “one-trick pony” in their whitepaper. The implementation of the solution is done as a Layer 2 solution but not in the traditional sense.
4. Governance
The architecture for governance is a feature that truly distinguishes a truly decentralized platform from a centralized one. Decentralization being a core feature of governance must be independent of any single entity’s power to overwhelm the entire system.
The Dogechain Governance will be based on a community-driven approach. Its whitepaper lists that voting will take place via a special $veDC token, which cannot be bought on any exchange. It will be accrued by community members as they continue on the chain. It will also be a non-transferrable token.
5. Native Currency
$DC will act as the native currency of the platform once launched. It can be used for staking to become a validator or voter. The entirety of $DC tokens will be minted upon launch. They will be used to reward those who stake their wrapped Dogecoin and $DC coins. Further, they can also be used to pay gas fees. Another coin on the blockchain will be the $veDC token which is purely restricted to Governance.
6. Use Case of Dogechain
The sole purpose for launching the Dogechain is the additional usage of Dogecoin. Users who have Dogecoin can now bridge their tokens to Dogechain and use their coins on a lot of stuff like:
Buying and Selling NFTs
GameFi on EVM based DApps. Since Dogechain is an EVM based blockchain, not much additional code is required to make EVM based games and DApps available to users.
Pay for Gas Fee. All the activities in the Dogechain blockchain from NFTs, DeFi to even smart contract creation uses wrapped Dogecoin as gas fees.
Staking: Users can stake their wrapped Dogecoins on the Dogechain blockchain and become validators. However, users will receive their rewards in $DC tokens(the native token in Dogechain). Users will also receive additional rewards in $veDC governance tokens. The governance tokens cannot be bought. It can only be accumulated.
Yield Farming. DeFi has a very good demand in cryptocurrency world. Dogechain users can stake their wrapped Dogecoins and earn interest and rewards. They can move their funds between different protocols which will be available in the future and make good gains.
The Technology behind Dogechain
Polygon SDK
Dogechain relies on the Polygon Network’s Edge Framework to develop its standalone blockchain
The blockchain also features EVM compatibility which will help it run EVM-based DApps which are already on the market
Dogechain whitepaper also promises its own smart contracts
There will be 21 nodes initially and will expand as more validators come
All transaction fees will be either in $wDOGE(Wrapped Doge) or $DC (native token)
To be a validator, one needs to stake 10 Million $DC(native token). Community approval would be necessary after staking to become a validator. The token will be launched later
A separate $veDC token will be used for governance. It has a vesting schedule of up to 4 years after launch. After 4 years, a person holding $veDC will gain as much as 4x their initial number of tokens held
Now let us understand how Dogecoin will be used with the Dogechain blockchain.
Dogecoin Blockchain and Dogechain are two separate blockchains. They are independent of one another and are only tied through a cross-chain feature called Wrapping.
Wrapping is the conversion of one type of coin/token to another using a simple lock and release concept. It is used to transact value between two blockchains. Let us understand it through an example.
Dogecoin relies on a Proof of Work mechanism whereas Dogechain is based on proof of stake. To make Dogecoin compatible with Dogechain, it is necessary to use an innovative concept called Wrapping.
Say, when a coin “A” of Blockchain “Alpha” needs to be used in Blockchain “Beta” for any purpose. The coin “A” is locked in a wallet and an equivalent value (equal in value to coin A) is minted on Blockchain “Beta”. This is called Wrapping.
In the case of Dogecoin and Dogechain. Dogecoin (PoW) will be first locked in a wallet. The same value of token will be minted in Dogechain (PoS). This token will be called Wrapped Dogecoin. It will operate in the same way as Wrapped Bitcoin (wBTC).
Dogechain Tokenomics
The Dogechain Token that was launched on 24-25 August 2022 has the following Tokenomics:
Fully Diluted Mcap: $100M
Circulating Mcap: $500k
Initial Token Price at Listing: 0.0001
Total Token Supply: 1 Trillion
Circulating Token Supply: 5 Billion
Contracts Address: 0x7B4328c127B85369D9f82ca0503B000D09CF9180
How to buy, store or sell Dogechain $DC Tokens?
Dogechain tokens ($DC) are only available via airdrops that took place on 24 Aug. Dogechain took to Twitter on the same stating,
#DCLaunch takeoff! 🚀
We're thrilled to announce the launch of our native $DC token on #Dogechain.
🔹 Contract address – 0x7B4328c127B85369D9f82ca0503B000D09CF9180 pic.twitter.com/cyB9NC4Ngn
— Dogechain💜 (Giving away a Tesla) (@DogechainFamily) August 25, 2022
How to get $DC Tokens?
Note that you need to deposit at least $100 worth of Dogecoin or else your Dogecoins will be lost forever.
To buy DC Tokens, you can follow these steps:
Visit QuickSwap (a Decentralized Polygon-Based Exchange)
Connect your Metamask, Walletconnect, Venly, Portis, or Coinbase Wallet
Your wallet should contain $wDOGE(Dogecoin Wrapped token that you got from Dogechain Bridge)
Select $wDOGE in from and select $DC in to
Go ahead and your wallet will have the equivalent value of $DC Tokens
How to Sell $DC Tokens?
To sell DC Tokens go to Quickswap and do the exact reverse of the previous activity, i.e.,
Connect your wallet.
Select from $DC to $wDOGE
And Convert.
How to Store $DC Tokens?
The best wallet to store DC tokens would be either your already installed Metamask Wallet or Coinbase. If you do not have a Metamask wallet, go ahead and create one. Here is our guide to help you.
How to use Dogecoin on Dogechain?
Users who wish to use the Dogechain blockchain need to hold Dogecoin to be able to do activities such as lending, borrowing, and staking. The method for such activity is:
Users need to lock their $DOGE on the Dogechain Bridge.
They will then receive $wDOGE (Wrapped Dogecoin) which can be used to lend, borrow, stake, or participate in Governance
Staking $wDOGE will result in $DC awards whereas staking $DC will make users receive $veDC awards
Users who are willing to exit Dogechain can destroy their $wDOGE and claim an equivalent number of Dogecoins
Free Benefits for a Dogecoin Hodler
Dogecoin holders who wish to participate in the Dogechain blockchain will receive free $DC tokens. The allocation will take place via airdrop which is supposed to happen in late 2022.
It is interesting to note that the users of Robinhood do not need to deposit or bridge $DOGE anywhere. They just need to hold $DOGE to receive $DC tokens.
Is it legit? Are there any Potential Risks?
Dogechain is a real project with practical applications. From a user point of view, it seems a completely real project with realistic use cases. However, as with any cryptocurrency, users need to exercise precaution and only invest that much that they do not need immediately for any other purpose. As the date for Mainnet launch is not announced yet, any rescheduling can be expected later. Therefore, users should exercise due diligence before investing.
It is also to be noted that Dogecoin has disavowed all claims that it is anyway related to the Dogechain platform calling it a Knockoff token.
A Twitter user claimed that the DC founder had started selling DOGE that he received via airdrop address. Though this might be a way to raise funds for expansion. We suggest that our readers exercise precautions before investing.
Conclusion
Dogechain will bring a better use case to Dogecoin, which till now had the sole purpose of transacting value. It uses the innovative concept of wrapped coins to ensure cross-chain compatibility.
Further, the blockchain being a PoS mechanism can help bring more value to Dogecoin. Further, EVM compatibility brings immense possibilities. The use cases of NFT, Defi, and GameFi will benefit a lot of Dogecoin holders if utilized properly.
Finally, it is upon the end users to decide if the platform brings any real value to them or if will it just be another grain in the sands of Web3.