Proposal/discussion on next set of liquidity mining rewards

Workstream Discussion FOX Tokenomics
21

Yea that is totally fair, as I said at the top of this post this was meant to serve as a discussion starting point and I am not even entirely sure if I am convinced doing both pools is the best thing to do yet 1f914

I am convinced we need to keep incentivizing the uniswap pool (and I like 9 months) and i currently prefer more than not to also incentivize a sushi swap pool for the various reasons to discuss.

Would love to hear from others in the community their thoughts on what has been posted so far and/or some alternative LM allocations we could consider.

22
  1. In my opinion we should definitely continue the Uniswap liquidity rewards – our existing backend & UI works with the uniswap reward contracts so I think it makes sense to start there before worrying about any of the other liquidity mining mechanisms.

    Even if sushiswap uses the same contract as it is still more of an “unknown” and likely involves more work than uniswap (Im thinking of liquidity providing functionality+design needed to get the sushi LP tokens to stake in the first place).

    Launching the same smart contract with a different time period and total amount wont be hard and doesnt worry me at all. The part that worries me is figuring how we want the new liquidity mining program to fit into our existing UI.

    Specifically I am thinking of the mobile app it interface – it could be confusing to have multiple simultaneous liquidity providing programs at once. Trying to fit sushiswap LPing into this mix could be even more complicated – hence my vote against worrying about sushi yet, at least in the mobile app.

    It would be quite easy to swap out the existing functionality to talk with the new contract and use our existing UI but I dont think that alone is what we want. The user would still need some way to interact with the tokens staked in the original contract as well as the new contract

    Another issue on my mind is the code behind the mobile UI wasn’t perfectly designed to support simulatneous LP/staking programs (even though it may initially appear that way from the UI). It would probably involve some ugly refactoring to make a robust way of supporting simultaneous LP/staking rewards programs.

    For these reasons I think the easiest way to start supporting a new mining contract in the mobile app would be something like this:

    Hookup existing code to the UNISWAP new contract – all of the staking / unstaking functionality and balances etc would be referring to the new contract

  2. Add a small new area to the UI allowing the user to view their info from the old staking contract (balance, rewards, APR, etc) and a single button only allowing them to “unstake”. Dont show this UI to the user if they have nothing staking in the old contract

This seems like the simplest migration process to get it done. A more robust solution would be to have full support for staking / unstaking on multiple contracts but that adds a LOT of extra work. Thats not to say we dont eventually want/need full support running multiple LP & staking programs at once in the mobile app (we will need for sushiswap) but I dont think its warranted given our current goal of making sure there is no gap in mining rewards.

Also I wanted to mention that I really like josh’s idea of copying the existing FOX Token Benefits | ShapeShift pages onto other URL’s. This would make it way easier to support multiple simulatenous rewards programs than trying to write a bunch of complicated new code / interface in the mobile app.

23

Appreciate you sharing your thoughts - you definitely make good points about the LOE and your insight is invaluable here, but there is also no reason we need to start the sushi program at the same time, it could wait until we are ready. Also we could launch it on just web and turn on mobile when ready. Eventually we definitely need the ability to have multiple LP opportunities on mobile - such as when the osmosis stuff goes live and yearn eventually, but also other farming opportunities they will exist for FOX down the line like sushi and bancor.

After seeing your feedback here, my thought is it may still be worth allocating a budget for sushi farming, and a bounty to make it go live, but the timing may be less important and we can launch it around whenever the work can actually get done, where on the other hand we want to prioritize uniswap farming continuing and it’s more time sensitive around October specifically when current program ends.

24

Thanks for the thoughts . I agree that it’s not necessary to run programs on both SushiSwap and Uniswap as this will fragment liquidity. There are real benefits of having at least 2 deep pools on a single chain though as this creates arbitrage opportunities that drive volume and additional returns to LPs. Any thoughts on Bancor one-sided LPing, especially if they handle the LM contract?

I think the next mix of programs I’m most in favor of is continuing UniV2 and adding Bancor.

Check out this screenshot of EPNS’s current strategies, which are split between 50/50 EPNS/ETH and 100% EPNS Staking:

https://global.discourse-cdn.com/standard10/uploads/foxcookieco/optimized/1X/49d5bfc260350b613fb41b88e0f4719f628a86ef_2_654x500.png

As you can see, even though the APR on the PUSH/ETH pool is more than 3x the single staking pool, the single staking pool accounts for over 70% of the total amount farming.

This also will give the ability for anyone with more FOX than ETH the ability to earn yield on all of their FOX without having to sell FOX for ETH, and we’ve already seen strong interest in this from both the ShapeShift and Bancor communities.

I also think it’s worth considering HoneySwap where contributors will get paid, but we don’t necessarily need to provide any UI or contracts for this as 1hive.io has both.

Native UI would certainly be ideal though and something I think would be worth an open source bounty on the external farming page or ideally the new web app

25

I’m learning more about Bancor. If all we need to do to get that going is deploy some FOX airdrop to a list of addresses from Bancor - and they build the UI and provide the single-sided liquidity contract, I think that sounds great. From their UI, it looks like they are set to pretty easily do this.

At this point, I agree with Willy. I would like to see a proposal to continue uniswap v2 rewards with the parameters defined above, and then also taking the action to start a Bancor one-sided FOX pool. This is all very easy to implement on the tech side.

Any other rewards (Sushi, Honey, Pancake, etc…) I think should be kept separate so they can be voted on individually.

26

Lots of good discussion here, I wasn’t sure which to reply to. I have been an active contributor within the 1hive community (honeyswap) since oct 2020. Thanks to for sharing the forum post.

Honeyswap is on both polygon and xdai and I think the community would be very welcoming of fox. We are pretty open to suggestions for doing double rewards or any activities such as AMA’s, retweets, to help grow exposure to Fox since we hear you maybe coming to xdai for payments.

Even if we can’t come together on strategic collective LM approach we may likely add a fox-xdai or fox-weth pair to our xdai farm on both polygon and xdai anyway to support your community coming to xdai. If we coordinate I think we can make a bigger impact than releasing farms rewards for Fox independently of each.

Let me know if you have any questions

27

Interesting discussion here!

1f984 I am far from being an expert, but it seems crucial to continue the incentives on Uniswap to maintain a healthy depth in this pool.

1f363 Regarding Sushiswap, I would say an important consideration would be to know if they are willing to incentivize a pool with their token regardless of incentives from the Shapeshift DAO or not. If it is a requirement on their side, it could be worth it to allocate some FOX to accrue overall liquidity. If it is not mandatory, the conclusion is less obvious.

I am not knowledgeable enough about the others to have a strong opinion. An option to have a one-sided FOX pool seems interesting.

28

I agree with here. If shapeshift is going to be a window to defi then it only makes sense nailing down Uni first then thinking about these other calls. Imo it would be cool to have Bancor or Sushi further down the road, but doing anything but Uni right now doesn’t make sense

29

I think the idea is that sushiswap has offered to incentivize a pool with sushi rewards, but I am unsure if they would do that if there wasn’t FOX rewards too, may have more info on that subject.

Based on the convo in this thread, seems like there would be strong support for someone to move forward a uniswap proposal to continue rewards in the v2 pool at the stated amount above for an additional 9 months past October.

Seems there is also some interest/more lukewarm support in order for bancor (no rewards needed but maybe airdrop), sushiswap, and possibly honeyswap on xdai or polygon but those could be considered as separate proposals and don’t have the same time sensitivity around them as just continuing uniswap rewards when the current program ends.

Still up to hear more discussion and ideas in this thread and if someone wants to move forward the uniswap proposal sometime soon into ideation and eventually to a vote please go ahead!

30

Honeyswap is going to be adding a few more tokens to their polygon farms shortly and we could add fox token to that list. Fox would be the only token that we would be adding with no joint deployment at same time.

Would shapeshift community like to see honeyswap hold off until you make an asserted effort to market polygon LM or go ahead independently of what shapeshift does?

If we deploy fox incentives independently from shapeshift it may not get a tremendous amount of excitement but because we have several others we are adding, for us adding fox at this time we think would be more attractive timing to maximize traffic and exposure.

We are willing to do what’s best as a whole if it means we need to work with the others and delay a short bit as well. We are open to any ideas, thanks.

31

I personally think it would be great for honeyswap to go ahead and deploy FOX on polygon if you all are interested regardless of if we are ready to fund LM incentives or not.

If you all are willing to push some rewards towards that pool then I think that may excite the ShapeShift DAO community regardless and maybe even help push forward allocating some additional FOX rewards from the community after the fact.

I would be for some amount of FOx being allocated to honeyswap on polygon for LM rewards, but it seems like the community first needs to align around the next set of uniswap rewards so I am unsure how fast things will move timing wise on LM rewards for honeyswap, but I do think you all pushing forward independently of the ShapeShift DAO’s timing is prob the right way to go.

I am curious what other community members think about this of course though.

32

discourse-post-upload20231125-65354-1ixa31.png elmutt:

In my opinion we should definitely continue the Uniswap liquidity rewards – our existing backend & UI works with the uniswap reward contracts so I think it makes sense to start there before worrying about any of the other liquidity mining mechanisms.

@Shapeshift

I put forward above that I feel the utility of the project superseded seeding multiple chains and pools with the token. I was actually quite impressed with the level headedness of response above, not just the quoted section. However, if Shapeshift could seed a pool and provide a nice Ui/Ux on the Shapeshift site for LP token deposits on multiple chains at the time a Polygon project is seeded…

discourse-post-upload20231125-65354-1ixa31.png elmutt:

The user would still need some way to interact with the tokens staked in the original contract as well as the new contract

The chain is selected in the MetaMask browser plugin at the moment and the Ui is practically identical in design. This might not be true for mobile, but I don’t use Shapeshift’s current mobile app.

…there is value in the token being distributed in another ecosystem.

33

I would love to see FOX added to HoneySwap. What is your timeline looking like? Perhaps we can push a proposal into official voting sooner if the DAO and HoneySwap can agree on a joint initiative. Unfortunately I am not qualified to suggest ideas or say X will work better than Y, so I’m more interested in what you guys have in mind! I’ve been pushing for HoneySwap for a while now, and whether or not something passes soon, I will continue to push and support!

34

I agree with that honeyswap moving forward with adding fox to their polygon farm would be a good move, even with no joint deployment at this time. Appreciate you putting that out and checking for feels.

35

It’s great to see all the discussion on this important topic! Looking forward to continuing the discussion on the optimal mix of programs for the DAO to incentivize FOX liquidity.

In the meantime, what do you guys think of making a standalone proposal to the DAO to deploy a second liquidity mining program for the FOX/ETH pool on Uniswap v2?

I haven’t seen any pushback or modifications to ’s original idea of allocating 15,760,000 FOX over 9 months, and would be happy to take this proposal through the governance process. I’m thinking we could plan to start this 2nd liquidity mining program on October 13th, 48 hours before the initial program ends.

Based on the current amount of funds in the DAO’s treasury (6.58M FOX), the current amount claimable (3.45M FOX) the amount of FOX that will be claimable from the Sablier stream by then (an additional 12.5M FOX), there should be more than enough of FOX to available to fund this program on October 13th. Furthermore, the DAO will be able to claim any unclaimed FOX from the airdrop contracts and replenish the treasury on October 23rd, and I expect this amount to be ~10x the 15.76M FOX required to fund this program.

36

As promised, I just posted a draft proposal to extend the Uniswap v2 liquidity mining program for 9 months to ideation: Boardroom Management Portal

Should be live tomorrow (August 30). Please take a look and lmk if you have any feedback :fox_face:

37
  • Firstly, thank you Jon for starting this discussion. Liquidity incentives are extremely important when projects are first getting off the ground, and even more important when the project doesn’t yet have broad centralized exchange presence.

    At time of writing, FOX is currently listed on:

    Uniswap

  • Hoo
  • MEXC Global

Uniswap is decentralized, while MEXC and HOO are both centralized. To help folks understand the importance of LP incentives, I want to detail the current FOX liquidity situation. First, I’ll define a few terms:

Spread: The difference in price between the “buy” and the “sell” side of the market.

Depth: The amount of liquidity up or down to a certain price.

2% depth: The amount of order volume which which will move the price by 2%. Calculated as x = (-2% depth + 2% depth) / 2

Uniswap - 0.6% spread | 2% depth = $217,336

Hoo - 2.34% spread | 2% depth = $1,127

MEXC - 0.93% spread | 2% depth = $308

  • As you can see from these numbers, the only realistic place to trade FOX is currently on Uniswap. Even a small order of $300-$1100 can move the market by 2% in one direction or another on the centralized exchanges. Whereas on Uniswap it would take a $200k order to make the same movement. Additionally, the spread is far more attractive on Uniswap. Over time, FOX will get listed on better exchanges with smaller spreads and more liquidity but we’re not there quite yet.

    Another important metric is total LP. Currently on Uniswap there is $21.6 million in total LP. Historically, when LP rewards are dropped it results in a proportional reduction in available LP. So, with the currently proposed 1/3 reduction I would anticipate total LP to reduce to roughly $7.2 million. That is a VERY small liquidity pool for such a major company converting over to a DAO, and will discourage many investors from participating. A lot of community members love to vilify whales, but they’re incredibly important to a healthy coin distribution and tokenomics for a fledgling project. It’s true that too many whales can cause other problems, but I don’t believe FOX suffers from such poor distribution where we need to concern ourselves with that.

    With all of this said, I think we should be more careful with reducing the rewards. Here’s my suggestion:

    Reduce the current UniV2 rewards by 25%

  • Provide these rewards for 6 months
  • Don’t setup a Sushiswap pool (too early to split liquidity)
  • Do integrate with Bancor (this will be excellent automatic marketing, will further distribute the coin, give more users more ways to stake)

Burn Rate Math:

Current

Current rewards: 15,768,000

Duration: 3 Months (July - October 2021)

Current daily burn: 175,200 FOX

Proposed

Rewards: 11,826,000 (UniV2) + an unknown amount for BNT holders based on snapshot. Let’s use a (high?) estimate of 3,000,000 FOX (15,000 BNT holders each getting 200 FOX)

Duration: 6 Months (October 2021 - April 2022)

Proposed daily burn: 82,367 FOX

Jon’s proposed burn rate with Sushi/BNT/77% reduction in rewards: 127,911 FOX

As you can see, my suggestions will reduce the overall burn rate by eliminating the Sushiswap pool and bolstering the UniswapV2 pool a bit more. I anticipate this will result in a retention of $16.2 million in LP, which is a reasonable amount for this sized project at this stage of its lifecycle.

38

awesome comments , thanks for taking the time to put them in writing 1f64f

  • Reduce the current UniV2 rewards by 25%

  • Provide these rewards for 6 months
  • Don’t setup a Sushiswap pool (too early to split liquidity)
  • Do integrate with Bancor (this will be excellent automatic marketing, will further distribute the coin, give more users more ways to stake)

To clarify, do you mean reducing the current FOX staking rewards rate by 25% rather than by 66% like

  1. initially proposed? I would support something in the middle, I’ve seen other projects successfully apply a ‘halvening’ rate to their rewards emissions (ie. Pickle Finance) and they did not experience a corresponding 50% drop in liquidity. 75% APR on FOX is still very attractive, especially for a reputable project like ShapeShift.
  2. I am open to reducing the period from 9 months to 6 months. 9 months felt a bit long to me too to commit to a program on UniswapV2, especially with liquidity slowly but surely moving from V2 to V3, not to mention all of the other liquidity mining innovations/alternatives that have launched recently (tokemak & olympusDAO) and will be launching in the coming months.
  3. Fully agree with you here. I don’t see any need to fund a liquidity mining program on SushiSwap mainnet at the moment as this will just fragment liquidity between the Uniswap and SushiSwap pools. I would be open to a smaller liquidity mining for SushiSwap on Polygon though, especially if SushiSwap were to partner with us on Sushi rewards.
  4. Fully Agree
39

Something else to keep in mind is the intrinsic relationship between liquidity and APR.

For example, let’s imagine that if we reduced the rewards by 50%, 50% of the liquidity would indeed get removed. If this were to happen, the APR would actually not change because half the amount of FOX would be rewarded to half the amount of liquidity, which would in turn incentivize more liquidity. Perhaps more realistic is that we’d see a 25% reduction in liquidity which would result in a 25% reduction in APR, but I estimate the reduction in liquidity will be even lower than this. Ideally, the decrease in liquidity mining rewards will be offset by strong DAO traction/performance and a corresponding increase in interest in the project, and liquidity & volume will grow despite a reduction in rewards.

40

Thanks for the reply, I’m already loving this process 1f642

To clarify, do you mean reducing the current FOX staking rewards rate by 25% rather than by 66% like

  1. initially proposed? I would support something in the middle, I’ve seen other projects successfully apply a ‘halvening’ rate to their rewards emissions (ie. Pickle Finance) and they did not experience a corresponding 50% drop in liquidity. 75% APR on FOX is still very attractive, especially for a reputable project like ShapeShift.
  2. My suggestion is to reduce by 25%, yes, but I could certainly accept a slightly faster tapering off. Splitting the difference is 45% so maybe that’s where we could start, but I think I’d feel better with 33% to start with. Another compromise would be to lower the duration even further (maybe 3-4 months) so we can re-evaluate sooner if we determine the taper was too slow/fast.

    I am open to reducing the period from 9 months to 6 months. 9 months felt a bit long to me too to commit to a program on UniswapV2, especially with liquidity slowly but surely moving from V2 to V3, not to mention all of the other liquidity mining innovations/alternatives that have launched recently (tokemak & olympusDAO) and will be launching in the coming months.

  3. Yea I like the idea of a 6 month timeframe for two reasons, it allows the rewards to stay a little higher without using a larger chunk of the treasury and it provides for a sooner opportunity to re-evaluate if conditions change (v3, price changes, liquidity changes, new tech, etc).

    However, at the same time it gives LPs some security for 6 months, and that’s an entirety in crypto so LPs will love it.

    Fully agree with you here. I don’t see any need to fund a liquidity mining program on SushiSwap mainnet at the moment as this will just fragment liquidity between the Uniswap and SushiSwap pools. I would be open to a smaller liquidity mining for SushiSwap on Polygon though, especially if SushiSwap were to partner with us on Sushi rewards.

  4. Appreciate the support! I like the idea of a separate, cheaper, chain supporting another pool. I think we could skip that for this round just to make passing this less complicated, but it’s definitely something we should engage with other Dex’s over to have something ready for the next round.

    Fully Agree

Thanks!