Frequently Asked Questions (FAQ) About the LongTerm Finance DeFi Protocol

Before using any DeFi protocol, it’s crucial to have the full understanding of all of the key features and benefits, as well as the potential risks that can arise from using such a protocol. In today’s article, we answer some of the most common and the most important questions that we get asked about our DeFi platform. Let’s dive in!

1.) What is LongTerm Finance?

LongTerm Finance is a DeFi protocol that enables you to simplify your crypto investing with ALTS, a token that tracks the entire crypto market excluding BTC and ETH. This helps easily you diversify your portfolio and at the same time get the altcoin market’s superior performance in one click.

2.) What are the benefits of investing in ALTS?

The simplicity and extremely low costs of investing into ALTS offer many benefits to both retail and institutional investors: it de-risks (hedges) your crypto portfolio by enabling you to have exposure to both altcoin market and BTC & ETH at the same time and helps you effortlessly diversify and use the proven passive investment strategy that will outperform most investors and funds, while at the same time being much safer compared to picking your own altcoins. Finally, it saves you countless hours that will otherwise be spent on research.

3.) What are the risks of investing in ALTS?

Even though ALTS has many benefits for long term investors, there are still some risks that need to be mentioned here. The most important risk is the smart contract risk, specifically because our contracts are not officially audited yet. Many contracts in our protocol are forked from reputable DeFi protocols like Synthetix, Compound and Cryptex, which are all audited themselves. We plan to complete an official smart contract audit some time in 2022. Also, there is the risk of de-pegging, i.e. ALTS token not following the intended price levels. Luckily, this is easily solved by providing an arbitrage opportunity: if ALTS ever gets under-pegged or over-pegged, it presents an arbitrage opporunity for traders, and this mechanism will quickly get ALTS price back to where it should be, thanks to it always being provably overcollateralized by high-quality crypto assets. Finally, there is the risk of insufficient liquidity for ALTS and LONG trading pairs, which is expected to be gradually solved over time without any interventions from the core team, primarily because of the LONG liquidity incentives, as well as the increased adoption and utility for both tokens.

4.) What is ALTS backed by?

Each ALTS token is overcollateralized by more than 150% corresponding amount of MATIC, WETH, renBTC, DAI, MIM or UST. We also have plans to include multiple other collateral types over time, including: staked ETH (stETH), staked MATIC (stMATIC), Chainlink (LINK), Aave (AAVE), SushiSwap (SUSHI & xSUSHI), QuickSwap (QUICK & dQUICK), Curve (CRV), Uniswap (UNI) and even exotic and innovative new tokens like Base Carbon Tonne (BCT) and KLIMA DAO (wsKLIMA).

5.) Who is ALTS for?

ALTS is mainly intended to be purchased as a buy & hold investment for the long term oriented investors who are generally bullish on the altcoin market and for those who simply don’t want to pick individual altcoins themselves, but still want broad exposure to this sector. The other target group of investors includes those who are overweight BTC and/or ETH and want to diversify and hedge their risks with the broad altcoin market index. It’s also for DeFi users that want to earn fees and liquidity mining rewards by minting ALTS tokens and providing liquidity on decentralized exchanges (DEXs) like SushiSwap and QuickSwap. Combining ETH or BTC with ALTS makes for a highly correlated liquidity pair, thus allowing liquidity providers to earn above average yields with the minimal exposure to the impermanent loss. Also, ALTS represents a measuring tool and a valuable market indicator.

6.) How is ALTS able to track the altcoin market?

ALTS uses oracle solutions which enable LongTerm Finance to aggregate multiple data points from the top crypto market data providers in the world, and brings that data on chain using Chainlink’s oracle smart contracts. Also, if the price of ALTS ever deviates from the current ALTS price supplied by the Chainlink oracle, this will present a free market arbitrage opportunity which will very quickly bring the ALTS price back to its intended levels.

7.) What is LONG token?

As a native governance and utility token, LONG represents a lifeblood of the entire LongTerm Finance ecosystem. It features a robust and carefully designed tokenomics with the max supply of 10 million. In addition to having favorable tokenomics, it has many use cases that will ensure the constant rise in demand for LONG tokens over time.

8.) What are the use cases for LONG token?

Two primary use cases for the LONG token include liquidity incentives (for the first 3 years following the launch of the protocol) and voting in the protocol’s decentralized governance (where you can vote, propose, decide and debate changes to the protocol). Also, you can buy & hold LONG tokens to enjoy the discounted burn fee rates. Finally, one of the key demand drivers for the LONG token is also the monthly buyback & burn event, in which we’ll take 75% of the protocol’s earnings for that month, swap them for the LONG tokens, and finally burn them for good, thus decreasing the token’s circulating supply.

9.) What are your long term plans?

ALTS is only the beginning for the LongTerm Finance. Our long-term vision is to become the Vanguard of the crypto industry by offering various simple, low-cost & passive investment strategies in the form of token indices.

10.) Where can I learn more about ALTS and LongTerm Finance?

We highly recommend you start by going through the About section of the LongTerm Finance dashboard. There is more than enough information there to get you started, and it will take less than 5 minutes to go through it. For more detailed information, you can always refer to our official documentation. To keep up with the news and announcements from LongTerm Finance, you can follow us on Twitter and join our official Telegram group. Finally, if you have some specific questions (like partnership or collaboration requests), please contact us directly via email at contact@long-term.finance​