Do we want to extend the FOX Regen Farm?

On October, 2nd the rewards program of the FOX Regen Farm will run out. We should decide whether we want to extend the FOX-HNY Regen Farm, create a new one or stop incentivizing FOX liquidity on Gnosis.

I tried to keep it short and sweet. So let’s dig in…

What are Regen Farms?

In a nutshell, Regen Farms is a liquidity mining solution that Giveth created to get deep liquidity after its airdrop & keep token holders invested on the long run by streaming the rewards over the next 5 years. Soon after, @willy actually noted that this would be a sweet tool for other DAOs like Shapeshift. That’s how Shapeshift became the first DAO to create a Regen Farm :slight_smile:

Key benefits of Regen Farms:

  1. Gain liquidity by rewarding liquidity providers for providing liquidity in FOX and another token of your choice, aligning the incentives of token holders and the DAO.
  2. Streaming rewards. This favors liquidity providers that want to be exposed to FOX in the long term & keep them invested in the DAO in the long run by streaming the rewards over a period of time (you choose the length up to December 2026). This also mitigates sell pressure for FOX.
  3. Ready-made UI/UX & development support. All Shapeshift has to do is decide the parameters, supply the reward tokens & be in the loop in coordination with our team.

Where are we now?

FOX token-holders on Gnosis Chain have been growing steadily since last year. Currently, there is $286,624 USD in FOX liquidity on HoneySwap. FOX has grown steadily in Gnosis chain, reaching a circulating supply of 7,930,246.57 xFOX on 08/24/22 and 1115 token holders. Find here other relevant stats.

Despite market conditions, growth has not trembled and the trend is to continue going up.

So, what are the options?

  1. Don’t extend the program.

This would have no cost for Shapeshift. However, we might see some people pulling off liquidity and in a worst-case scenario, less liquidity could be combined with sell pressure affecting the FOX price, as well as, stability and the growth in Gnosis chain.

  1. Extend the HNY-FOX farm.

This would require to top-off the rewards & a fixed fee of 1K and 2% of the rewards in FOX (half of both fees would go to the matching fund project on Giveth and the rest to the DAO treasury, where it could potentially be paired with GIV to provide liquidity to both DAOs).

  1. Create a new farm.

This would require to top-off the rewards & a fixed fee of 5K and 2% of the rewards in FOX and choosing a new token to pair FOX with. However, this option could give us important value on top of the liquidity. First, we can pair it with XDAI or ETH depending on the risk approach we want to take.

If we feel bearish, we can tie our price with the dollar by pairing liquidity with XDAI. On the other hand, we can pair it with WETH if we are feeling bullish on ETH in the next 6 months. Or with any other token.

Furthermore, creating a new farm would allow us to see how much and how fast liquidity would move once a farm is discontinued and another is opened. Key information for potential future decisions.

Before making any proposals I would like to know what people think about it.

4 Likes

I would support 2) and/or 3) (extend the current, and/or do another one!)

3 Likes

Hey thanks for taking the time to post this :slight_smile: I fully support continuing this farm and would honestly love to see a deeper funding this round.

2 Likes

Thanks for posting and inviting conversation. If option 2 - how much would we want to put in and how long would that extend it to?

To help decide that - how much did we put in for the current rewards program and how long was it for?

2 Likes

Thanks for your opinions and engagement Giantkin, Hunt and Josh

That’s a great question @Josh, here are the key params for the first farm:

Duration: 6 months (3 Apr - 3 Oct)
Rewards: 334,068 FOX
Average APR: 65%-85% (75% ATM)

Currently, those rewards are 17% liquid and 83% streamed till December 2026.

3 Likes

The returns are directly what I am interested in adjusting, I think our rate/deposit amount (is theoretically) scalable. By this I mean our rate of return will remain in the same area as it is now, with that being said 2-3x+ the reward and liquidity will be the mirror target.

2 Likes

@hunt I don’t follow you. Are you saying to give the same return as we are offering now we need to double or triple the amount of FOX we would reward with?

Is that to keep the same USD rate of return???

1 Like

Yeah, so I could have explained that a little bit better but I believe that our rate of return offered by this pool will stay the same as we increase rewards as the amount of liquidity IMO will become deeper. I specifically meant that I think our liquidity is scalable past current levels and we should take advantage of our ability to be a large player in gnosis liquidity for FOX.

Indeed @hunt & @Josh

Increasing the rewards would increase the APR for as long as we have the same liqudity and in theory, in an efficient & informed market, that should bring more liquidity and balance the APR.

I think increasing the rewards should increase the liquidity. But, IMO a communications campaign would help a lot to complement it.

1 Like

Thanks @hunt and @Cotabe. Seems to me at this time we could keep the same FOX amount for rewards. A 65%-85% is very healthy.

If we did that, and the APR dropped below 50%, could we add more and buoy the APR back up? Or is that not possible.

I don’t want to dedicate more FOX from the onset and have a huge APR, that may never attract more attention. I’d prefer to prove that we can attract liquidity and then increase rewards amount.

Does this make sense? Thoughts?

3 Likes

Hey hey, yeah I follow the logic there. I’m prone to thinking that the rewards would be healthy enough especially at current FOX price to incentivize people like myself to keep liquidity in that pool for longer amounts of time. The reality is that if I drop 10k into the bucket the rewards decrease enough that it prevents me from further adding. If it were a single sided pool yeah 65-85% would be attractive no doubt, but realistically with IL in play that rate isn’t necessarily hyper attractive considering the amount of liquidity that the pool can handle without decreasing significantly upon deposit (20kish right now puts a dent in the pool from my experience).

With all of that being said 3x may be too aggressive but a 2x increase in FOX from here would be a good test if we choose a length that isn’t too long (say we try 3 months w/ double the rewards, it wouldn’t be a massive expenditure from my pov even if we hover over 100%).

Interested in thoughts @Cotabe and @willy in terms of lift/complexity in deploying new farms cost/benefit wise - would this all be feasible?

1 Like

I hear you @hunt, considering impermanent loss a low APR may not be that interesting for many token holders & I believe your own experience is at least a minimal proof of concept.

We have not done an APR set up to be tested or changed over the length of the Regen Farm program. But I see HUGE value on it. Let me bring this to the Giveth team, I don’t think it should be too complex.

1 Like

Also, related to this:

It’s likely that Giveth will be hosting the first Regen Farm for single stacking of an asset for a third party (The Standard). The proposal will have to go through the DAO governance first though.

1 Like