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![](https://gimg2.gateimg.com/image/article/1727417536dapp.png)
## Q1. How does your Scroll Native Gateway enhance asset utilization? And share its key highlights with the audience?
Core Products:
Two main pillars:
1.One pillar is yield aggregation. We have two different product lines under this category tailored to different user risk appetites.
-Yield Farming provides low risk, stable opportunities for risk-averse users to earn yields and multilayer rewards. 
-Vaults product being a more innovative hub for risk seeking users to chase for leveraged yield through our diversified strategies including leveraged farming, on-chain synthetics, exotics options, delta natural, and other specific risk exposure opportunities.

2.The other pillar is Auction & Shops: we not only offer various types of token asset launch, but also support non standard token assets like game components, NFT, nodes, and RWA. It serves as the entry of users' traffic by providing lucrative early access opportunities.

We are backed by top institutions in space such as OKX Ventures, Galxe, Animoca Brands etc. and we recently also announced a new fundraising of 80M valuation by Taisu, DePIN X, Bing Ventures, and more.

🚀Strong social traction:
-No.1 Native dApp on 📜 Scroll
-No.3 Farming dApp across all chains
-TVL as of Sep 2024: $350M+
-Our active zk-verified users numbers: 550K+

## Q2. Could you provide more details about the utility of the $DAPP token and how it benefits users within the Pencils Protocol ecosystem? And what deflationary mechanisms govern the good circulation and supply of $DAPP?
**Governance:** $DAPP tokens serve a vital role within the Pencils Protocol ecosystem, offering both practical utility and potential upside. Users can stake $DAPP to earn governance tokens ($pDAPP) at a 1:1 ratio. And vote on the important decisions of the protocol. 

**Token Farming: **To encourage long-term community engagement, the $DAPP token staking program will launch after TGE. Token holders can stake $DAPP in Pencils Protocol Farms to receive $pDAPP, which may then be further staked or provided as liquidity for DEX for users to participate in the ecosystem. 

**Auction Platform Collateral: **To list assets on the Auction Platform, sellers are required to stake $DAPP. This staking mechanism serves as a safeguard against malicious activities, with the community overseeing the auction process. Instances of misconduct, the staked $DAPP is redistributed among community members.

**Point System Rights Mapping:** Early participants in Pencils Protocol will receive Pencils points, which correspond to rights in $DAPP. In the future, $DAPP will replace some of Pencils’ functions. $DAPP holders will also enjoy priority access to new farming methods and preferential policies. These privileges include higher leverage multiples and priority access to exclusive, limited strategy products.

**Virtual Shop:** In the Virtual Shop, users can leverage $DAPP (the platform currency) for trading margin in NFTs, Real-World Assets (RWAs), points, and derivatives, expanding the utility and application of their holdings within the Pencils Protocol ecosystem.

**Deflationary Mechanism:** A Growth Engine for $DAPP Token Value

One of the most exciting features of our Vaults Product is the allocation of 30% of vault revenue to be sent to a void address as $DAPP. This deflationary mechanism will contribute to the long-term appreciation of the $DAPP token. Additionally, the remaining 70% of the revenue will <a href="/vi/price/<a href="/price/flow-flow" target="_blank" class="blog_inner_link">flow</a>-flow" target="_blank" class="blog_inner_<a href="/vi/price/link-ln" target="_blank" class="blog_inner_link">link</a>">flow</a> into the ecosystem and community development fund, which will provide incentives for different stages of growth, supporting the ecosystem’s sustainable development and future user engagement.

## Q3. How will Pencils Protocol's new Vaults Product boost earnings through asset leverage and liquidity mining? 
Yield Farming provides low risk, stable opportunities for risk-averse users to earn yields and multilayer rewards. 

Vaults product being a more innovative hub for risk seeking users to chase for leveraged yield through our diversified strategies including leveraged farming, on-chain synthetics, exotics options, delta natural, and other specific risk exposure opportunities.

Pencils Protocol aims to unify various stages of yield sources in the new Vaults product line: 
1.Upstream rewards from the supporting chain (Scroll, one of the largest L2 on <a href="/vi/price/<a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">ethereum</a>-eth" target="_blank" class="blog_inner_link">Ethereum</a>) and restaking infrastructure, LSD, LRT, such as StakeStone, Puffer, Kelp, Etherfi etc for ETH staking assets; and Solv Protocol for solvBTC assets. Yields are based on diverse user activities, including borrowing, lending, and leveraging. 

2.Downstream rewards, we are expanding into AI and FHE (Fully Homomorphic Encryption ) ecosystems. Assets deposited into Pencils Protocol will provide certificates that grant voting power—what we call 'remote voters.' These remote voters will act as a Proof-of-Stake (PoS) mechanism for AI and FHE projects including Zama, Fhenix, Singularity, BitTensor, Myshell and more, which bring extra layer of rewards to our users. 

In essence, Pencils Protocol unifies DeFi, AI, and FHE within a single ecosystem by our Farming and Vaults product lines. 

## Q4: Compare to other Defi, please explain the merit of using Pencils Protocol
As we wrap up, I want to highlight a few key points about Pencils Protocol and why it stands out in the DeFi space. First, let's talk about DeFi and Yield Aggregation. Our platform offers unique opportunities that cater to both risk-averse users and those looking for more adventurous strategies.

For those who prefer lower risk, our yield farming options provide stable, reliable returns and multi-layer rewards. This makes it an attractive choice for users who want to earn yields without taking on too much risk.

On the other hand, our Vaults product is designed for those seeking higher returns. It acts as an innovative hub for users willing to chase leveraged yields through a variety of strategies. We’re talking about leveraged farming, on-chain synthetics, exotic options, delta neutral strategies, and other targeted risk exposure opportunities.

One of our main goals at Pencils Protocol is to unify different sources of yield within our new Vaults product line. Here’s how we do it:
Upstream rewards come from supporting chains like Scroll, which is one of the largest Layer 2 solutions on Ethereum. We also incorporate restaking infrastructure and LSD/LRT protocols, such as StakeStone, Puffer, Kelp, and Etherfi for ETH staking assets, along with Solv Protocol for solvBTC assets. These rewards are based on various user activities, including borrowing, lending, and leveraging.

Downstream rewards are expanding into exciting areas like AI and Fully Homomorphic Encryption (FHE) ecosystems. When you deposit assets into Pencils Protocol, you receive certificates that grant voting power—what we call 'remote voters.' These remote voters function as a Proof-of-Stake mechanism for AI and FHE projects, including Zama, Fhenix, Singularity, BitTensor, Myshell, and more, bringing an extra layer of rewards for our users.

In essence, Pencils Protocol is at the intersection of DeFi, AI, and FHE, unifying these worlds within our Farming and Vaults product lines.

## Q5：What are the upcoming plans and developments for the Pencils Protocol that the community should look forward to?
1.Vaults launched on 26 Sept, featuring AI narrative, cooperating with mind networks.
2.DAPP tokens sold out on Tokensoft, Bounce, and Coresky from September 18 to 22
3.TGE on 27th, on Bybit and Gate
4.First token asset auction in Oct
5.New Vault featuring RWA & Payfi in Q4
6.Nodes sale on our Shop function at the end of the year.

<div class="blog-details-info">
<div>Author:** GateLive**, Gate.io Team
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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