Summary
The proposal is to renew FOX-XDAI Regen Farm to keep incentivizing liquidity on Gnosis Chain and reward token holders who are supporting the FOX economy.
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Abstract
The FOX Regen Farm gives token holders the opportunity to earn rewards for providing liquidity in FOX and XDai and helped ShapeShift bring new members into its community.
The last program successfully incentivized token holders to hodl FOX through the downturn of the market and help Shape
Hence, this proposal is to create a new FOX Regen Farm for the next 6 months for the FOX/xDAI pair.
Phase 1 proposal → [SCP-102] Create a new FOX-XDAI Regen Farm to incentivize liquidity on Gnosis ChainXFOX Analytics: https://dune.com/kevle_cr/foxongnosis.
Motivation
Regen Farm is critical to maintaining FOX liquidity in the Gnosis Chain. To attract new members to our community, we need to have cheaper ways to introduce people to ShapeShift, and Ethereum has proven expensive due to the demand for L1.
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The average gwei, during the week, is 110, an amount that makes it expensive for people to buy and trade FOX
In recent months, Gnosis Chain has proven to be a great way to onboarding on ShapeShift. There has been a 25% increase in the number of wallets holding FOX on Gnosis (250 wallets), while only 5% on Ethereum (2.5K wallets).
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We have an average of 32 active wallets daily on Gnosis Chain, but only 4 wallets on Ethereum.
The data highlights that there is an active community of FOXes on Gnosis and maintaining a rewards program for xFOX + having liquidity to trade it on the network, is critical for us to continue bringing new people to ShapeShift. To keep this up, we need to increase the liquidity of the FOX token on Gnosis Chain and Regen Farm is perfect for this.
At the moment this proposal was written, there is $113.657 USD in FOX liquidity on HoneySwap, incentivized by the FOX Regen Farm on Gnosis Chain.
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
A stable asset will act as a force towards a stable price for FOX, that force would be proportional to the liquidity on the pair. Giveth is requesting 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). We have chosen 750,000 FOX to serve as the liquidity incentive for Regen Farm, aiming to provide an APR of 75%, but should the DAO wish this number to be reduced, it can be discussed as well.
Benefits
- The creation of the pool brings several benefits to ShapeShift, such as:
Gain liquidity by crowdsourcing liquidity from token holders who will pair up FOX & xDAI in a liquidity pool.
- Incentivize holding FOX, mitigating sell pressure on the token
- Align the incentives of token holders and the DAO with an outstanding investment opportunity (30~75% APR).
- Strengthens our relationship with Giveth, one of the most reputable DAOs on the web3
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).
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.
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
- 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.
- Exposes 750,000 FOX to smart contract risk.