Outcome of DFC Vote #14: Revising the Fox Farm Rewards (V9) and Liquidity Strategy

Hello everyone,

Following the recent DFC vote (#14), which passed with a majority of 4-1, I am here to detail the newly adopted changes to the Fox Farm Rewards (V9) and our broader liquidity strategy. These updates reflect a commitment to refining our approach to maximize efficiency and sustainability within our ecosystem.

Current Liquidity Overview:

  • Staked FOX in Fox Farm Rewards v8: Approximately 2 million FOX tokens are currently staked to 315 depositors

  • Total Liquidity in Uniswap V2 on Mainnet: $9.89 million.

  • Additional Liquidity Sources:

  • Thorchain (Ethereum): $2.9 million

  • SushiSwap (Polygon): $240,073

  • Velodrome V2 (Optimism): $32,820

Strategic Decisions:

  1. Adjustment in FOX Tokens Farm Rewards: The FOX reward program will be scaled down to 1 million FOX tokens over the next 4.5 months. This change reflects the increasing USD equivalent value of FOX tokens and a broader shift in the DFC and DAO away from renting liquidity from an increasingly diminishing base of liquidity providers.

  2. Evaluation of the FOX Farm Rewards Program: It has been observed that the FOX Farm Rewards program has not provided sufficient liquidity relative to the total FOX spent, when evaluated at the end of the period amounts, RMA, or current valuations. Detailed research on this will be shared on the week of May 13 by myself and the DFC.

  3. Future Strategy on Liquidity Incentives: The DFC will assess potential strategies to incentivize liquidity on both the mainnet and other chains in the upcoming months. This could include programs such as single-staked rFOX or evergreen iterations of the existing LP staking mechanisms. At this time, the DFC does not plan to continue Fox Farm Rewards in the current form/contract.

Funding Strategies for ETH Acquisition:

To acquire more PoL, the DAO needs to acquire more ETH to pair with its significant fox balance

  • Option Token (OP): With an expected 50k OP tokens grant (worth about $135k USD), selling 10% would contribute approximately $13.5k USD in ETH.

  • ThorChain (RUNE): With 109k RUNE in our holdings (valued at around $577k USD), a 5% sale would add about $28k USD in ETH.

  • Alternative Revenue Sources: We are considering selling some of our staked ATOM revenues.

  • ETH Products in Treasury: $39k USD worth, including $15k rETH and $24k stETH.

Evolution of Liquidity Providers:

The number of liquidity providers has continued to concentrate across different versions, reflecting less broad participation:

  • V1: 4955 depositors

  • V2: 1449 depositors

  • V3: 854 depositors

  • V4: 611 depositors

  • V5: 513 depositors

  • V6: 371 depositors

  • V7: 295 depositors

  • V8: 315 depositors

We believe these adjustments will better position our ecosystem for long-term stability and growth. Ultimately, renewing the Fox Farm Rewards at 5M for the next 4.5 months (meaning, V9 identical to V8) would be too expensive for the DAO, and the DAO is taking steps to acquire more PoL. We appreciate your feedback, continued engagement, and support, and we look forward to discussing these developments further. Your feedback is invaluable as we strive to optimize our strategies.

Warm regards,

ProfMcCarthy / Tokenomics WS Leader