[SCP-102] Create a new FOX Regen Farm

Summary:

The proposal is to create a new FOX Regen Farm to keep incentivizing liquidity on Gnosis Chain and reward token holders who are supporting the FOX economy.

Abstract:

The FOX-HNY Regen Farm liquidity mining program will finish on October, 2nd. The FOX Regen Farm gives token holders the opportunity to earn rewards for providing liquidity in FOX and Honey and supporting the FOX economy on the Gnosis Chain.

The first iteration of the program successfully attracted $286,624 USD in FOX liquidity on HoneySwap and incentivized token holders to hodl FOX through the downturn of the market. In the incubation phase of this proposal, the signal is to continue with the Regen Farm program.

Hence, this proposal is to create a new FOX Regen Farm for the next 6 months (3rd of October-2nd of April) for the FOX/xDAI pair.

Motivation:

  1. Increase the liquidity of the FOX token on Gnosis Chain to keep up with the overall growth of the FOX economy on this chain.
  2. Continue rewarding both liquidity providing and holding of the FOX token.

Currently, there is $286,624 USD in FOX liquidity on HoneySwap, incentivized by the FOX Regen Farm on Gnosis Chain. FOX liquidity and number of holders has grown steadily, reaching a circulating supply of 7,930,246.57 xFOX on 08/24/22 and 1115 token holders. Find here other relevant stats.

This is an effective and tested solution to increase liquidity on the Gnosis Chain, incentivize holding FOX, minimize sell pressure, keep farmers invested in the long term, and require minimal bandwidth from the FOX team.

Specification:

In the incubation phase, 3 options were suggested to the extension of the Regen Farm program. (1) to terminate the FOX Regen Farm, (2) to maintain the HNY/FOX farm and top off the rewards or (3) to create a new WETH/FOX or XDAI/FOX farm to pair the value of FOX with ETH or a stablecoin. The result was a strong signal to extend the Regen Farm program and soft signals with respect to which token would be the best to pair it with. I’ve seen interest in pairing it with xDAI and am submitting the proposal for xDAI, however would love to hear the community’s opinion on this during the ideation phase.

Regarding the rewards to be allocated, there is interest in growing the liquidity 2X or 3X. Therefore, I will add a poll to get a signal from the community on the number of tokens to be allocated to the Regen Farm program.

Giveth is requesting 5,000 USD and 2% of the FOX rewards to cover the costs of configuring and deploying the farm contracts. 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)

What is a Regen Farm:

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 and this is how Shapeshift became the first DAO to create a Regen Farm :slight_smile:

Process overview:
  1. ShapeShift governance process to pass the proposal to Create a New Regen Farm.
  2. Giveth governance process to Create a New Regen Farm for Shapeshift.
  3. Final parametrization of the Regen Farm.
  4. ShapeShift transfers FOX rewards and 5,000 USD to liquidity.giv.eth.
  5. Giveth team takes care of the setup.
  6. Comms.
  7. Launch.
  8. Giveth transfers ownership of the distribution to Shapeshift.

Benefits:

  1. Gain liquidity by crowdsourcing liquidity from token holders who will pair up FOX & xDAI in a liquidity pool.
  2. Incentivize holding FOX. Align the incentives of token holders and the DAO with an outstanding investment opportunity (~75% APR).
  3. Streaming rewards. This favors liquidity providers that want to be exposed to FOX in the long term & keeps 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.
  4. 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.
  5. Tested solution. We already have been using Giveth Regen Farms for the past 6 months and it has worked like a charm.

Bonus: half of the service fees go to donations to fund public goods!

Drawbacks:

  1. Cost. Some of the rewards may be farmed by people not aligned with the FOX economy and dumped. It’s worth mentioning that reward streaming mitigates this drawback.

Vote:

Should we create a FOX/XDAI Regen Farm?

  • For
  • Against

0 voters

How much should we allocate in rewards for the next 6 months?

  • 375k (similar to last time)
  • 750k
  • 1.5M

0 voters

3 Likes

Thanks for taking the time to put this proposal through the governance process @Cotabe :beers:

My thinking is Top up the current one, and start up another pair. fox/xdai being a strong choice i think.

1 Like

@Cotabe thanks for the proposal.

I have not done a lot on gnosis chain so please bear with me!

What is the main benefit of the DAO having liquidity on this chain? Is it mainly to enable DAO contributors to be able to swap into another asset without bridging?

Is there significant trade volume for FOX on Gnosis chain?

2 Likes

I did a bit of digging to try and learn more about how much FOX is being used and traded on gnosis.

While there is 7MM FOX bridged over, only about 1MM of that is being held in EOA’s currently.

FOX-xDAI - has traded $732 in volume in the last 24 hrs, chart below for a bit more historical volume.

and here is total FOX volume across all pools

Looking at the last 30 days of trades, it’s pretty clear that the majority of these transactions are bot activity simply arbing the pools or selling rewards.

Unless our contributors want liquidity on gnosis, I don’t see much benefit to the expense to the DAO. If we want to incentivize the long term holding of FOX I believe there are many other better ways to allocate these resources to do so.

Hey @0xean thanks for your questions and doing some digging to enrich the discussion.

Based on your questions & comments I will reply in 3 main directions: (1) the Importance of Gnosis Chain, (2) the importance of liquidity in Gnosis Chain, and (3) Benefits for contributors and the DAO. I will also suggest a pathway to learn more about FOX holders on Gnosis.

  1. Importance of Gnosis:

Gnosis is a great alternative to keeping and move FOX freely with low fees; the use of FOX has grown significantly in the last year despite the bear market. Here is a comparison of the total token holders (left axes) in Gnosis vs Main Net.

Fox1&2
Main Net :point_up:

On Gnosis Chain, token holders are growing steadily even after the last peak price of FOX early in December (first graph). Whereas the token holders have decreased on Main Net since in 2K in the same period (bottom graph).

Additionally, Gnosis is securing its position as the DAO chain and FOX is one of the top tokens on Gnosis. I consider there is a lot of value in preserving the position of one of the top tokens on the DAO chain. On top of this, xFOX is one of the top lockers of FOX nowadays.

1 Like
  1. Importance of having liquidity on Gnosis Chain.

In the bottom graph :point_down: , you can see that by swapping on the FOX/HNY pair, a swap of around 2K can already create a 2% movement in the price. Whereas on the FOX/WXDAI the same is true for only 1.4 K. Consolidating that liquidity on WXDAI would increase the 2% depth. Which on one hand is better for contributors and on the other sends a positive signal to the market, further legitimizing (in the view of third parties) FOX by having high liquidity against a stablecoin on Gnosis as in Main Net.

Liquidity paired with a stablecoin not only is good for optics but also ties the price of FOX closer to stability. Which is a net positive in the current market conditions. Furthermore, the FOX/WXDAI pool is the only decentralized stable pair for FOX and as such, incentivized liquidity is key to strengthening the pool.

  1. Benefits for contributors & the DAO:

Low fees allow global foxes to use their FOX freely, especially considering that some contributors are compensated in FOX. It’s nice that they can contribute also by providing liquidity and are rewarded for it.

On the flip side, there is no other way to earn a yield on Gnosis with xFOX. If we don’t launch a new program existing FOX holders on Gnosis chain may be motivated to remove their liquidity, bridge or sell their FOX. Exposing FOX to less liquidity and increased the sell pressure.

A key benefit of Regen Farms is that rewards are streamed for about 5 years which is an elegant and robust solution to incentivize liquidity providing on bear markets while mitigating sell pressure.

Finally, I acknowledge that in this discussion there is a lot of unknowns and maybe some unknown unknowns… I consider that there are a lot of hypotheses to be tested regarding token holder behavior with different farms and rewards. I think a lot of valuable data could be extracted by using a curious approach and playing with params to understand how behavior changes with different params. I talked with the Giveth Dev team and at least is technically possible to change params biweekly.

2 Likes

one of the platforms we are intergrated on, wants us to raise our Liquidity on gnosis, before tehy continue support. So i guess we really need to think about it, and decide if we want x liquidity or not. and then worry about growing it, or not.

1 Like

I do ser.

20charlimit

which platform are you referring to?

1 Like

Very much appreciate the detailed response.

I am not sure I am convinced of benefits of adding liquidity or trying to build the FOX ecosystem further on Gnosis chain given other options.

Many of your points may be generally true, but don’t specifically convince me that Gnosis chain is the right place to implement them. For example a stable paired with FOX vs FOX<>ETH does de-correlate us from the price of ETH, but if this was our primary goal, doing so on main net would be much more effective.

i forget , i believe it was agave.

I checked. it was agave. due to the low rate of lp we have on gnosis, that we were working on building, tehy lowered the fox …impact on their site. (deposit %) causing less reason to have lp there.

1 Like

would be nice if we (dao wise) could discuss and determine overall direction/goal on LP

1 Like

correct, we have lost strategic partnerships due to low liquidity on gnosis unfortunately.

also, I’d be curious to see a chart w/ our liquidity indicating the time frame that we had that pool open, when it closed, and liquidity and activity after that pool closed. I assume our lack of proactive addition to liquidity health provided the effect & further the ‘clip/snippet’ of ‘data’ you provided in your hypothesis/self-determination. cc @0xean

1 Like

also , something maybe to put on the table… ETHmain lp regen farm?

2 Likes

Great to see all the work you put into this proposal! I think this is a great idea!

1 Like

GM!!!

I know lots of perspectives have been shoot on this topic proposal. Following the governance process now I’m passing the proposal to snapshot (still as ideation) based on the leading votes on the polls. But there is still time for feedback on the proposal.

https://snapshot.org/#/shapeshiftdao.eth/proposal/0xcfb4d4155fca4e522d5bbb25cf2c41ad45174cb0ddd061ce30e54b18fc606c68

The proposal params are the following:

  • Length of the program: 6 months
  • Rewards: 750K FOX tokens
  • Setup fees: 5000 USD worth of FOX + 2% of the rewards (deducted from the 750K FOX)
    *Half of the setup fee will be donated to projects on Giveth, half will be kept on the Giveth DAO treasury with no intentions to swap or dump.

Note that the current reward program ends October, 2nd. So it’s important to get a good signal with anticipation.

2 Likes

Just to be clear (at least it’s not clear to me) - 750k in FOX tokens means 750k FOX right? Not 750k USD worth of FOX?

2 Likes

Thanks for noticing that. Totally my bad.

Yes I meant 750K FOX tokens!

2 Likes

GM everyone!!

Hope you are full of beautiful vibes from the post-merged world, post-burning man, GR15, pre-Devcon and all other things happening in your life.

I wanted to update that the Voting Proposal is life on Snapshot here:
https://snapshot.org/#/shapeshiftdao.eth/proposal/0x1d9f6321b1a0b5a7aa80546a2d0bfcfc3f2e56c3854a92983c181953a42089ba

Cheers

1 Like