The problem Michi Protocol solves

Many protocols that have not issued a token are promoting incentive programs where users can engage in specific actions to earn points. This has created a craze of points farming, especially in regards to EigenLayer points (ex. https://dune.com/hahahash/eigenlayer / https://dune.com/maybeYonas/renzo-protocol).

As users are earning points, a problem has arisen as points are stored off-chain and linked to wallets (EOAs). This forces users to wait until their points convert into tokens to be rewarded for their efforts unless they give access to their private keys. Existing protocols that offer points trading, such as Whales Market, are capital inefficient and provide zero guarantee for the buyer that the sale will close.

Michi Protocol provides significant design improvements to the process of trading points by utilizing Tokenbound Accounts (TBA). TBAs are wallets owned by NFTs and selling the NFT transfers custody of the wallet + any points earned by that wallet.

Any user can mint a Michi Chest (NFT) and deposit points-earning tokens into Chest's TBA. Once the TBA has accrued points, the user can choose to withdraw the points-earning tokens and sell the Chest, consequently selling any points that have been earned.

This model provides several advantages:

1. No collateral needed to complete a points sale, which is required on Whales Market - the sale is the same as trading a normal NFT.
2. The trading is trustless
3. The trade is guaranteed once accepted by both parties - the seller cannot renege on the sale

For our MVP, the first DeFi protocol we integrated with is Pendle Finance (which means we support Pendle Yield Tokens for Liquid Restaking Tokens) on Arbitrum One. These tokens allow for accelerated accrual of EigenLayer points while having no exposure to the underlying asset. We will shortly be adding support for Pendle LP tokens and YT USDe tokens that are earning Ethena Shards.

Challenges we ran into

We were working with a new SDK (Tokenbound Accounts) for the first time and there were some issues with getting our calls to execute. This required us working closely with the Tokenbound developer and learning about upcoming features that we could implement.

Additionally, we had some issues gathering data from DeFi protocols that we are integrating. This has been a challenge for us as some of this project information is not publicly available, but we are continuing to develop relationships with those protocols to provide us access to that data.

Lastly, we did not have time to complete all the functionality that we originally planned for. Some of these features include cross chain messaging as well as native trading built into the application. Instead, users have to use a third party such as Open Sea to trade our Michi NFTs. We are hoping to have this within our app in the next few weeks.