[Circle of Tokens] Proposal: Liquidity Mining rewards in the DLLR Era

So rewards will be a lot less but they will be available as soon as you get them, that will be good for LP providers who may not want to hold SOV in the long term.

Liquidity mining rewards currently stand at 60k SOV per week, of which 30k SOV are immediately liquid.

Due to the high origination fees of 5%, zero sees relatively little growth. This is done intentionally in order not to expose the peg and associated redemptions to too much stress.

In my opinion, it does not make sense to offer extremely high incentives if we actively bottleneck the growth by increasing origination fees.

I would therefore again draw attention to the above proposal and advocate reducing the SOV rewards in the AMM pools.

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FREE ZERO

Everyone using Zero knows its risks.

  • Liquidation risk.
  • Redemption risk.
  • RSK powpeg risk.
  • Frontend only accessible via Sovryn dapp.

THEY ALL KNOW.

FREE ZERO TO WORK AS IT SHOULD BE, IN A FREE MARKET.

  • Restore origination fees to previous low levels.
  • Restore redemption menu option on dapp
  • Continue incentivizing DLLR/RBTC pool with SOV rewards

Let market participants take loans, liquidity mine, arbitrage to defend peg.

STOP TREATING ZERO LIKE AN EGG.
Leave it to the free market to find its balance.

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I 100% agree, we are killing revenue, token price and adoption at the cost of maintaining the peg and not having LoCs being redeemed against.

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I would add that if we wait for this too long, then investors are going to see their usd balances decrease a lot, in a rush. we know that the average user, the one who brings money in the “euphoria” period, will never be attracted to the project until he hears good things about it and does hear it from “official” sources. Since it seems to me that everyone is doing GREAT, it would be a shame to let tokenomics ruin everything. We need a good tokenomics in order to turn on the light bulbs in the heads of the mass of investors. Sov rewards needs to go down, otherwise…

I’m sympathetic to this let-things-take-their course approach but ppl need to realize that this only works if it is combined with a softer attitude towards the peg, at least for some time.

There would need to be a clear announcement that we are in an early pre-stability period, preparing people that the DLLR might deviate more from the 1$ peg, and that there is no need to stress out when it does, given the mechanisms in place and what is being built. The community should refrain from: “if DLLR goes to 95 cents or lower, it is a disaster, it looks bad, it undermines trust, it is a failure”, and this kind of talk would need to be pre-empted. If that is done however, then, yes, let the DLLR dip a little in the pools, and trust that at some level people will buy that dip. A DLLR below peg can create its own demand. It has been demonstrated that in case of emergency, fees can put a brake on things. Maintaining a very tight peg creates too much need for control and supervision, and before we know it, all of Sovryn’s energy gets swallowed by peg-paranoia.

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FREE ZERO!

lets make these voices heard everyone. Hope team starts to rethink their stragedy before all hype is gone.

It looks like with the recent changes to LM rewards (and a very good week for Zero), this last week the protocol made a net gain when we compare weekly SOV incentives versus weekly protocol revenue! Let’s hope this trend continues :slight_smile:

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Hi Sacro,

I would like to share my analysis with you, please correct me if I’m wrong.

  1. The majority of the result is due to ZERO fees, perhaps between 90 and 95%? Can we imagine greater contributions from AMM activity and trading in bullish markets? I think so.

  2. These figures have been achieved with a number of LOCs close to 200, with daily openings and closures averaging no more than 5% of the total. I imagine that very small increases in the number of LOCs, with small net entries of new users, would be enough to make significant differences in the results.
    It is true that high fees are determining this peak in results. We all imagine that if these fees are reduced it is because ZERO-DLLR does not need them, due to its sustainability, and that the absolute value (lower fee in more lines) will compensate for the reduction in relative value (high fee in few lines).

  3. I venture to assume that the activity of less than 30 users is determining the majority of Sovryn’s results at the moment. I have no evidence to support this, but if it were true, it is striking that so few generate so much. Let’s imagine just doubling the number of active large users.

  4. The current price of SOV allows for APYs in RBTC for maximum duration stakers of around 18%. As tokenomics and external attacks lose their firepower, market valuation will push the price higher, lowering stakers’ profitability.

Therefore, I consider this moment a point of balance and solvency from which very small increases in users in ZERO and alpha can sustain staker profitability, which would decrease with an inevitable increase in the price of SOV.

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