One Side Liquidity Mining Proposal

Hello Everyone,

I want to propose that we add one sided liquidity mining. I believe this would give our community far greater exposure to liquidity in general. If someone with very large amounts of FOX does not want to expose their ETH they should not have to, and vise versa. This would open a gate to more liquidity pairings = less risk to the health of the platform in general.

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I like this idea, and generally support the DAO funding more liquidity mining initiatives in various types of pools (such as Bancor and THORChain) - does anyone know of audited liquidity mining contracts built for Bancor that we can fork for this purpose? If so please post links to those contracts here so we can take a look.

How many FOX over what period of time do we think the DAO should use for this initial effort? Maybe we trial it with something small to start to get an idea of its popularity? Like 500k-1 mil fox over 1 month and see how things go? (just an idea up for discussion).

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Asymmetric LP may be a great hook for some defi education, since it’s probably the natural on-ramp to the ecosystem for people that are just getting into cryptocurrency in general.

Personally, I’d love to see, say, a professionally animated explainer video integrated into a one-sided LP flow which introduce skeptical crypto noobs to LPing and impermanent loss and help illustrate that the magical internet money doesn’t have to be a ponzi scheme. Such a thing might exist already, but if it doesn’t I’d definitely support a proposal to make one.

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I am open to this idea and can see the value in single sided liquidity mining with impermanent loss protection. However, THORChain offers asymmetric LPing and impermanent loss protection as well, and if I had to vote for one pool or the other I would vote for THORChain because it enables cross chain FOX swaps and we are already committed to incentivizing the mainnet Uniswap v2 pool for the next 3 months.

That said, the more liquidity and options for liquidity providers, the better. Bancor incentivizes some pools with BNT themselves, and because FOX is such a hot project, they may be interested in partnering with us on a liquidity mining program. I think a farming collab proposal like this would have greater chances of getting community support and passing.

@Jake343 welcome to the FOX den by the way and thank you for suggesting this! Are you familiar with the Bancor community by any chance? Any idea whether they’d be interested in this?

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I agree that I would prefer to see THORChain but I don’t view this as an either/or, I think the more liquidity pools we can incentivize (with reasonable amounts of FOX) the better, so I would support a proposal for Bancor liquidity mining personally.

I think single asset liquidity or staking is helpful to earn a lower APR while avoiding the risk of impermanent loss. This in addition to dual RUNE/FOX liquidity mining might be quite attractive to investors.

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I also really like this idea. It’s all about nailing down the integration partner that already has this functionality. I would definitely vote yes for this if we have the right partner

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I’m really loving this idea! It’s going to attract the more risk-adverse kinda people in the ShapeShift community, allow for more public visibility in Cryptoland, and keep the cobwebs out of the system by keeping FOX moving.

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I want to steer clear of Thorchain for the time being to do the hacks they’ve experience. Bancor imo is still the best example and option.

I dont know them but im sure if a member of the FOX team reached out to them via twitter they would respond.

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It really wouldnt even have to be lower because you earn % of both sides if your staking both

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I hear that for sure but I think Thorchain will rally back in time. There’s some good people I’ve met along the way who really support them and have a vested interest in seeing the protocol succeed. I know Erik is a big supporter from reading his Tweets.

Got a small RUNE/BTC position, but I’m just leaving it alone til things get sorted out. In the end, I really hope they do succeeds as I think RUNE serves an important function for cross-chain liquidity.

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Hey yeah, I threw out lower because that’s what I typically have seen offered on farms. A better APR / APY for LP providers than stakers of single assets.

Not sure I follow the final part of your comment. You wouldn’t be staking both in a single asset pool. I’m also not sure how the tokenomics that provides that yield would work. Something the DAO would have to discuss, I suppose.

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In retrospect, I shouldn’t have brought up the FOX/RUNE LP. It would be better served as a separate proposal when the time is right. For now, it’s distracting from the original proposal in this thread which is to provide FOX single sided liquidity staking. :slightly_smiling_face:

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Correct me if I’m wrong, in single sided liquidity pools there are still two assets balancing the pool. Single sided just gives the user the ability to add either side. So for example; if a FOX/ETH pool at the moment has more ETH than FOX then there is space for a user to add their FOX token and ETH adders will have to wait for FOX to be added and balance the pool. The same, if there is more FOX than ETH then FOX holder will have to wait for more ETH to be added before they can stake FOX. This creates a system of automatic balancing. This is further incentivized by increases/decreasing APY or APR on each side of the pool. This increase/decrease CANNOT be too dramatic though or people will move funds to often for the pooling to function properly.

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Just leaving a “nod” here that I am following along and support this one-sided liquidity mining prop.

If this makes sense and we have the contracts/ability on hand to make it happen technically, we should also consider the marketing optics and which platforms/protocols that we’d want to make this available to first. E.g. which will market this opportunity most effectively and to the audience that is most valuable to the DAO. That may be a combo of THORChain and Bancor or even another platform(?).

Food for thought.

Has anyone identified the contracts that @jonisjon requested last week? I am not an engineer but that seems like an important piece to have on hand before executing :slight_smile:

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I am going to make two other proposals regarding integrations that will give this project fantastic optics in strong communities. Regarding 1SLP I think Bancor gives us the best marketing ability.

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Wonderful @Jake343 - Excited to read those! :beers:

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Ok yeah I see what you mean. Think with UNI V3 there are different options to balance the pool as well. That could be an avenue to explore. Thanks for the feedback. :muscle:

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I support this idea in general, and have a question on the specifics.

If the way this works is as @Jake343 stated above, and it is really a 2-sided pool that allows people to only add to one side as the pool balances - if the market moves and you go to remove your share, can you be guaranteed you can always get back the amount you put in? Seems like if everyone tried to get back their initial investment in the currency they used, there may not be enough - due to the fact that the pool allocation changes as the market moves. So is there impermanent loss protection?

Or maybe the pool does not auto adjust - it only allows people to add in on the side that needs to be balanced. If that is the case, then I can see how this does have impermanent loss protection. In this scenario, what happens if there is no one willing to enter the pool with the token that is needed to balance the pool? Can it allow trading to occur? If so, it could wind up totally draining one side of the pool, could it not?

Thanks for helping me understand this.

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It looks like Bancor uses what they term a Liquidity Protection Contract. Read more here:

https://docs.bancor.network/developer-quick-start/adding-single-side-liquidity

And for developers, Bancor has a guide on how they implement single sided liquidity:

https://docs.bancor.network/developer-quick-start/adding-single-side-liquidity

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