[Pre-Proposal Polls] Incentivized Liquidity Mining Program for HoneySwap on xDAI

  1. Summary - As workstreams begin to launch, more and more DAO members and contributors will begin receiving compensation on xDAI through Colony. This is an urgent proposal discussion thats been asked to be pushed forward by various members of the community because of the unpredictable and rising gas fees on the Ethereum network.
  2. Abstract - The DAO has been in discussions with 1Hive/HoneySwap for a couple weeks already, but talks stalled a bit with discussions about a Polygon-based program. While Polygon is great, many members see an urgent need for xDAI liquidity (see below).
  3. Motivation - The logic is quite simple — as a DAO who’s treasury is relying on xDAI, there should be sufficient liquidity for DAO members to do as they wish with their compensation. At the moment the only existing route to mainnet is through the Omni bridge, and it costs considerable gas to 1) move assets onto mainnet; 2) swap tokens for offramp or to stake and provide liquidity on the existing UniSwap program. A double whammy in fees.
  4. Specification - The 1Hive team has been kind enough to give us time, insights, and a soft promise to prioritize our proposal.

(Following is an excerpt from a 1Hive/HoneySwap member @monstrosity):

We used a similar model as quickswap (where you add $250k in quick liquidity and in return you get rewards). We put it in place so we had something we could use as reference and so we are flexible.

We could do a double reward if your staking contract is able to or if it’s able to mint a stkLP token that could be farmed on HoneySwap for additional rewards.

We could share rewards meaning FOX-HNY or FOX-COMB we both could reward.

Even if we can’t come together on strategic collective approach we may likely add a fox-xdai or fox-weth pair to our xdai farm anyway. If we work something out I think we can make a bigger impact than doing them independently

The main thing to consider with our farms is you can choose to lock your LP for 0-120 days. Users get 2x the rewards for 120 days locked. Linear reward multiplier, 1x for 0 days.


Xdai farms are a bit of a task for us but we will make it a priority for you. We have a meeting on Tuesday, I can see what kind of timeline we could provide to you after the meeting.

In regards to farms: See above for our normal “application for rewards process”. We are open to ideas tho and are flexible.

As a pre-proposal discussion, we need to figure out as a DAO the following as requested by 1hive to accelerate the launch of the program:

A) What is the desired/anticipated liquidity and volume?

B) What is the amount of tokens we are willing to allocate for incentivization?

C) What token pairs would we like to see?

D) Is the DAO interested in potentially incentivizing a FOX-HNY or FOX-COMB pair?

I am neither a professional in DeFI nor LP/LM, but I will offer my 2 cents of limited knowledge: Yes, I am very aware that a Polygon program is much more attractive and is still something we should pursue, even if purely for Matic’s massive volume, liquidity, and adoption. However, because of the expected growth of Colony users in the coming weeks and months, prioritizing xDAI would be doing the hard working members of the DAO a huge favor.

The amount of liquidity needed would not be much, as we expect that a considerable amount of the volume would be coming from DAO members — although volume coming from speculators and traders would also be greatly welcomed.

The DAO’s treasury currently holds ~10.25million FOX. According to @willy 3.45M FOX, an additional 12.5M FOX, and a third tranche of unclaimed FOX from the airdrop will soon be claimable by the DAO [link]. Assuming that FOX ranges around $0.50-$0.70, around $8-$14M USD should be added to the treasury in the coming months. Please correct me if I am wrong.

Shared rewards could be a good way to diversify the DAO’s treasury, even if by little. What does the community think about a FOX - HNY or COMB farm? Or should we keep it simple and focus on the goal which is to provide liquidity for xDAI which would then open up a whole new range of offramping routes other than a straight mainnet bridge.

References:

What should be our liquidity target?

  • Just the minimum, $250K.
  • $500K - $1M
  • $1M - $2M
  • $2M+

0 voters

How much should the DAO allocate towards this program?

  • 250K - 500K FOX
  • 500K - 1M FOX
  • 1M - 2M FOX
  • 2M+ FOX

0 voters

Which token pair(s) should be prioritized / incentivized?

  • xDAI only
  • xDAI
  • HNY
  • COMB
  • wETH

0 voters

2 Likes

Thanks for moving this conversation forward @LPX - I think a lot of the details could be debatable but I would definitely support some sort of LM rewards for fox on honeyswap/xdai as I think it’s important to the DAO’s ecosystem right now.

I also like the idea of doing some sort of double rewards if we can get the alignment from the honeyswap community (and maybe the simplest is to just allow the staked fox LP to be staked elsewhere for the hny/comb rewards).

4 Likes

I agree, and I am not qualified to be in that debate so I’m hoping that someone will take the torch and get this moving :sweat_smile: Hopefully now that it’s its own thread it doesn’t stagnate or get forgotten with other ideas.

One thing is for sure though – workstreams are beginning to be organized and the benefits of having liquidity on the xDAI network itself would be huge for the DAOs ecosystem, like you said. @hunt brought up a very good concern yesterday when he mentioned that those getting paid small amounts (~$1.5K) may end up having to spend a significant portion of their compensation (up to 10%) just on fees depending on ETH’s congestion, which imo is a very unattractive tax that could potentially create problems for new DAO contributors as early as next month.

4 Likes

Thank you for pushing this forward from the minimal input/information that you were given LPX :raised_hands:

I’m chiming in to provide a little bit more in the ‘motivation’ category of this proposal as I have surely been the most vocal recently about the issue that you are proposing the community solve:

As the DAO moves forward with workstream leaders being responsible for paying contributors through colony the ability to do that with lesser fees (than experienced now) is necessary for sustainability IMO. @giantkin and I have been the first two users of the system in place (colony) to compensate contributors - however in that experience I have found there to be excessive fees (when you are moving less than 4-5kUSD in FOX).

This is the case, in my opinion as gas fees have been increasingly volatile with ceiling levels being high enough to be considered ‘unusable’ for the average user simply transferring value on the network. When bridging currently on OmniBridge the rate can swing wildly, with the current rate to move 400 FOX being: 0.019 ETH (60.83 USD) at the time of this writing.

This is not an alarming cost in itself, however in the last week, this is the second lowest rate (the lowest was 56) that I’ve received during my process of monitoring. The highest (and also most consistent) price range was between 115USD-6x and 370USD4x at the random times that I recorded data. This reality provides that moving smaller amounts of FOX for bounties/payouts is not a reasonable solution for either the DAO or the user (as someone has to pay those fees).

Beyond the bridging concern is that of users that need to move to fiat for whatever reason, whether it be to buy food, grab the family some holiday gifts, or simply put fiat into a saving account for children’s college funds. When a user is in a situation where they do not want to wait for lower bridging fees and they were only paid 1-2kUSD, they will also likely be willing to take the loss and pay whatever fees are in front of them to get to fiat. My end concern, of course is that the fees are approaching 8-10%+ (on a good day) for any payment under 4k (when a user w/d’s twice a month). On a bad day, that number is closer to 20% in total fees to get to fiat for a person making under 4kUSD a month from DAO compensation w/d’ing twice a month.

  • If I broke that down incorrectly/too-generally lmk and I can provide more specific information.
2 Likes

“around $8-$14M USD should be added to the treasury in the coming months. Please correct me if I am wrong.”

This is quite off :wink: The unclaimed airdrop tokens will likely be in the ~250m FOX range, so $100-150m in value, going to the DAO in a couple months.

We should not let this encourage us to spend the FOX liberally.

For this proposed xDAI pool, I’ll commit to contributing at least $250k of liquidity to it regardless of rewards, just to help the market for our contributors. Thanks for beginning to form this into a proposal @LPX !

10 Likes

I’m going to pretend I didn’t see this post :joy: I’m all about conservatism, but dang, that was not the number I expected to see. Thank you for the correction.

5 Likes

ShapeShift x HoneySwap/1hive Community Call is scheduled for TOMORROW 10:30AM Mountain time.

Easy add to calendar: Honeyswap X Shapeshift Community Call

5 Likes

After dicussions today, I am in favor of this, I selected the xDAI and HNY as the pairs, but I know for sure xDAI has my support, HNY is still on the fence for me.

The thought of super low fee way to get offramp for those who need it is a big incentivize for me in this.

4 Likes

Proposal will move forward to ideation room… when boardroom lets me :sweat_smile:

[Proposal] Incentivized Liquidity Mining Program for HoneySwap on xDai

  1. Summary - As workstreams begin to launch, more and more DAO members and contributors will begin receiving compensation on xDai through Colony. This proposal will allow DAO contributors and leaders to offramp their earnings through L2 networks without the burden high gas fees on Ethereum.

  2. Abstract - The DAO has been in discussions with 1hive, the operators of HoneySwap, for several weeks now. They have graciously donated their insights, support, and even time for a community call with our DAO [video]. The proposal has received overwhelming support by active DAO leaders, and members already on Colony have voiced the need for FOX liquidity on xDai. What would have cost $100-$500 to offramp FOX and into a fiat/stablecoin/your-crypto-of-choice, will be significantly reduced to as low as a couple cents to $0.10 depending on your route. xDai liquidity opens up many routes that were previously inaccessible, as well as a gateway to other L2 networks.

  3. Motivation - The logic is quite simple — as a DAO who’s treasury is relying on xDAI, there should be sufficient liquidity for DAO members to do as they wish with their compensation. At the moment the only existing route to mainnet is through the Omni bridge, and it costs considerable gas to 1) move assets onto mainnet; 2) swap to another asset (or provide liquidity in existing programs). A double whammy in fees. At the time of this writing, it would cost around $375 to get FOX onto mainnet and another $100 or so for a swap on Uni.

  4. Specification - The following specs are being proposed after a week of open polls in our forum. Of course, now that it is in ideation, now is the time to voice any last minute concerns or suggestions.

    • The ShapeShift DAO will allocate one million FOX to fund an incentivized LM pool on HoneySwap for a target liquidity of $1-$2mil. The FOX/XDAI pair will be prioritized initially with a minimum of 70% of the allocated funds going to that pool.

    • The community has also voiced significant interest in a FOX/HNY incentivized pool. Depending on how well the FOX/XDAI program is doing, the DAO can decide to allocate up to 30% of the allocated FOX towards a HNY pool. If the numbers are not favorable, tokenomics do not make sense, or is strongly advised against by 1hive, then this 30% reserve will continue to fund the FOX/XDAI program until the funds are dry or until more funds are allocated in a future proposal (if needed).

  5. Benefits - DAO contributors don’t lose 10% of their compensation to fees. Micro-payments are now possible for part-time workers / bounties. We build a strong and mutually beneficial relationship with 1hive.

  6. Drawbacks - Polygon-based incentivized pool will have to take a temporary seat for now, but rest assured, another proposal is already in the works.

3 Likes

Anyone please feel free to post this in ideation. I’m having difficulties with Boardroom authentication with 3ID.

1 Like

To clarify: the 1m FOX is used to subsidize liquidity mining (like we do with Uniswap), correct? Other interpretation is that the 1m FOX is actually deposited into the pool.

2 Likes

I was hoping by now someone from tokenomics workstream would take over, but yes, I would like to model it like Uniswaps? Like a mini-uniswap program for HoneySwap liquidity.

Edit: On second thought, since there is not much FOX holders on DAI yet, it would make sense for the DAO to allocate a small starting amount to initiate the pool’s liquidity with maybe 100K or so tokens. Thoughts?

1 Like

I think just a LM proposal just like uniswap (but smaller obviously) is the right way to go on this rather than allocating DAO funds directly for liquidity. We can always allocate DAO FOX for liquidity directly in many ways with subsequent proposals if we decided that was right thing to do but wouldn’t conflate them.

1 Like

Right on, let’s KISS it then. Now if Boardroom would work for me…

2 Likes

I’m wondering if adding an ENS to my address has anything to do with my boardroom woes… Even though I did reset my 3ID account

1 Like

Update on the situation: it appears our ideation board is caught in a bug in which every new topic posted is perpetually adding more to the blocksize. The ceramic team is confident the bug is coming from the Boardroom side, and is claiming that they are not responsive in trying to fix the bug. So… what happens now?

This proposal is now in ideation for 5 days: [Official Ideation Thread] Incentivized Liquidity Mining Program for HoneySwap on xDAI