Sovryn is a Bitocracy, Not an Ethocracy - a critique on the Uniswap plan

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We are all here because we believe in the long-term viability of Sovryn as a project because it allows us to be custodians of our Bitcoin. We trust the security of the Bitcoin network and RSK, which is why the project was launched here, rather than anywhere else.

The reason SOV shouldn’t be on Ethereum is the same reason Sovryn never launched on Ethereum. Sovryn is a Bitocracy - a distributed autonomous organization secured by Bitcoin Proof of Work - not an Ethocracy.

I am a big fan of Uniswap and the decentralised exchange space, however, I am cautious about the pending launch of eSOV on the Ethereum blockchain. Whilst exposing the project to more eyes, my concerns lie around the fact that many Uniswap traders are mere speculators and are not interested in the fundamentals of a project - the opposite of all the people here who have taken the time to understand the RSK blockchain and transact upon it.

The SOV utility and velocity has not been developed enough, even for RSK

What can you do with SOV? You can:

  • Stake to earn fees from the system
  • Vote on proposals
  • Delegate voting power to other users, while still, of course, owning your staked SOV and accruing fees

What CAN’T you do with SOV? (Yet)

  • Get rebates from trades
  • Get early allocations from projects on the Origins launchpad
  • Stake to earn rewards on top of fees
  • Much more

The point being - SOV’s utilities are not developed enough to consider spreading it as a naked asset to other chains - where all you can do with the token is buy or sell. You cannot vote with eSOV. You cannot stake eSOV. It becomes a dummy token.

To me - Sovryn is a Bitcoin Layer 2 project, and spreading SOV to other chains prematurely will dilute our most important message - that Sovryn is DeFi secured by the Bitcoin network.

We also need to make sure we do all in our power to bring users to the Sovryn App - rather than allow trading to be done off-platform, as this does not benefit the Sovryn ecosystem at all.

“So what do we do, then?”

As we move to a cross-chain world, SOV on other chains is an inevitability, but other assets that exist on other chains can also exist on SOV, and this is what we should build our mental models around. The bridge from ETH is a necessity, however, users should be incentivised for providing liquidity on rETH/SOV on the Sovryn protocol, rather than eSOV/ETH on Uniswap.

We are here at the start of a new Ecosystem around SOV, and we should be thinking about other services around the DeFi on Bitcoin narrative - things like incubating new projects, trading rebates, or airdrops based on locking/staking duration - all of this will happen, as long as value is accruing to the SOV token, on the SOV platform.

SOV has already achieved over 40m in volume, from dedicated users like you and me who care about the long term viability of this project - as the application is developed and the ecosystem matures, there is no reason we can’t attract more liquidity to this platform, without incentivising activity on other chains.

Signed, Satoshi Nakameowdough
Twitter - @Nakameowdough

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As I’ve said on degen dojo telegram

"Yeah listing for Uniswap is not the main thing, but to migrate liquidity over to rsk network and Sov on rETH

That in itself is a huge selling point"

What i mean is that yes, buying sovryn tokens on Uniswap is all good but migrating then to rsk network to build up liquidity should be the incentive. People follow money, and less on security unfortunately… So to build access to get more liquidity into sovryn platform, rETH liquidity mining should be the priority.

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The Sovryn spaceship should be for the purpose of migrating assets from Ethereum to Sovryn - not the other way around. So I think we should rethink our Ethereum bridge strategy to allow for focus of other top market cap crypto assets to trade on Sovryn.

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Killer post @Nakameowdough. Once we launch eSOV there is no turning back - so timing is everything.

The reason to do this now, would be because we want to boost awareness. However, Sovryn is growing on basically every metric. We don’t need to juice anything right now, it seems.

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Yup, I fully agree with this view. While bridging to Ethereum will be essential at some point, we should prioritize growth around the Sovryn platform for now. The sole purpose of other chains should then be to gain more access points from which users flow into the dapp instead out.
There is one point to keep in mind which is that RSK will continue to outpiss Ethereum tx costs, so naturally users will want to migrate to the dapp once we get there.

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As fellow Sovryn investors, we are invested in the vision. However, we also need to be objective about the current situation to not be biased and think that everyone will think the same as us.

From a short term investor perspective, launching SOV on ETH and BSC is great for buying the rumors and sell the hype. But from the project angle, it just does not make sense based on the following points:

  1. The escrow for ETH bridge has a hardcap of 75k SOV which is 35% of the liquidity we have on SOVRYN. Wouldn’t it make more sense to use this liquidity to bootstrap our platform like the recent liquidity mining event? This will increase TVL of platform as well as increasing the fees generated for protocol which benefit SOV stakers.

  2. What are people gonna do with eSOV? I thought it will be better to have something similar to FastBTC for ETH which is ETH > rETH > SOV. The priority should be bringing awareness to the PLATFORM not the TOKEN.

I think there are a lot of things that need to be worked on before we even consider cross chain options:

  1. TVL.

We have stuck below 40 mil for a long time. We call ourself Defi on BTC. But how many of us have actually done any leveraging using the platform? Those who did have raised issues about the difference in start price and actual price of the order. I think this is something we need to look into to see if its a technical issue or an illiquidity issue. Regardless, the point is we need to bootstrap the use of this feature to really call ourself Defi on BTC.

  1. Rewards.

The fee distribution summary needs some updating as I understand that LP is currently earning 0.3% off swap which is different from what is displayed on our Sovryn WIKI. May I also suggest that we also need to separate the terms Liquidity Providers (LP) and Bitocracy stakers? These two groups earn different fees and have also staked their SOV for completely different reasons. It is confusing to lump both of them as stakers.

If the rewards are poor, people will eventually leave. The whole idea of bootstrapping the platform is to incentivise early users for their risk to stake their SOV instead of speculating with them. Eventually, the platform should grow enough to sustain its incentive via its increased volume. However, it does not seem like we are prioritising this at the moment.

Conclusion
At this point in time, SOV current price is a representative of its potential, not its current value. To increase awareness now may increase short term price discovery, but once people realised its overvalued, they wont be coming back. Hence I beg the team to re-consider and focus on beefing up the platform before we reach out to the masses.

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I agree. If majority of the activities happen outside of the Sovryn platform, then what’s the point? We should focus on making the platform to be on a”ready” state that truly allows anyone to trade,lend,borrow,stake,liquidity mining etc. At its current state, I think we have more work to do before we are ready for the world!

Do we track and have statistics on the usage of the current platform? A good indicator would be when we see the community starting to use the platform and the queries in the various socials dropped to an acceptable level.

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I can make a long post or reply, but I simply can’t agree more! Let’s believe in our self’s (Sovryn) and stay true to the idea and believes which have lead to the birth of Sovryn at the first place! Stay Sovryn my friends!!

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Yes I was actually envisioning the ETH and BSC bridges were to bring more liquidity on to the platform to incentivize those users and LPs to come over to Sovryn

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Don’t fall into the trap of overestimating sovryn, dear sir.

There are alot of things to build on sovryn to increase awareness. It was a while ago but that mccormack guy complained about UI.

Octopus made really great points so please take a read on his post. In addition to those points, I’d like to underline that, yes i know exactly that SOV team is doing what they can to increase interest in using sovryn, but there are always things to improve on things like

  1. User experience: Could there be like an ad-like banner placed above the swap or margin trade page where you get ads like “learn more about our vision here”, “Read about how to liquidity mine to earn more SOV”, “Lend and borrow your btc by following these steps” etc. A banner that swaps every 5 seconds or something. With sovryn’s excellent concept art, setting more of those would bring more… colour to the black and white pages hehe.
    I see that the default swap pairs are rBTC and DOC. I’m being very picky here but should it not be SOV first as default?
  2. Payment options: Someone in degen dojo said his friends found buying SOV more complicated in the sense of not having credit card buying function. To buy sovryn directly with fiat. If that is ready, that would be amazing.
  3. Exclusive deals to enter presale on other assets you plan to list on rsk-based projects. Trustswap has that where swap holders are eligible to enter presale on projects. Or these so called launchpads.
  4. Staking rewards: showing what one can earn upon staking for 3 years should be shown. I know it’s probably hard but that would seriously attract locked SOV into the protocol

There’s TONS of things at work still. The goal is to attract people into using sovryn and to an extent RSK, and away from gas killing chains like eth. I believe you guys are doing it right but there are alot of things to improve, even while the eth bridge is in process of being live.

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Brilliant post.

To check the current state of things, I tried opening a short with 3x leverage and it opened 1000$ below oracle price, so my trade is $1000 underwater from the beginning. The usdt liquidity was also too low to settle (close) my position in usdt.

Having higher functionality of this core product (btc perp) before we really open the gates might be good.

For the sake of good decisions and healthy discussions I will try to gather a counterargument for this as well.

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I agree/disagree. I think there is no better exposure for SOV than to be listed on other exchanges. That being said, I think listings on Uniswap and Pancake swap are a good idea, but it doesn’t have to be forever. Exposure to Sovryn could be through other AMM’s but with incentives to bring the SOV back to the Sovryn dapp. Only list SOV on uniswap for 6 months for example (then delist) and have a 100$ incentive to connect your wallet to the sovryn dapp move your (or use your funds) eSOV to SOV and stake at least 100 SOV for a minimun of 6 months. Only new wallets would count, not existing, this would help bring more people and money.

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I do agree with this. Let’s continue the pull to bring users to the Sovryn dapp, otherwise risk what makes us unique. Would love to see a rETH/SOV instead of eSOV/ETH

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Here is the counterargument, composed by input from trading dojo and some private convos:

Cross-chain sales and the associated inflow of liquidity and an increase in the community will definitely benefit the project. Isolationism has not yet resulted in anything other than extinction.
In anecdote, there was a good ad case and a perfect product. In essence, one team made a bad product and good advertising and entered the market early. They received a lot of attention, users and money. With the money they received, they finished the product. Another team decided to make the perfect product. And they made the perfect product. But by the time the perfect product hit the market, the market had already been taken over by the first team’s product.

Add to this that there are swarms of Uniswap degens eager to ape into just about anything.
And add that DOGE made it to become a top10 marketcap whilst trading ONLY on cexes, whilst being the shittiest coin ever. I believe it would be healthy for our treasuries to tap into this liquidity and reap something from it that we may invest into development.

Yes we know its not a perfect product, but almost every investment in the industry is based on potential, and the potential is huge. We should list, to bring in more liquidity, more users with new ideas, and more awareness.

If we don’t list, we should do something else to increase marketing. Sovryn needs to move very fast, like a startup. And make noise that it exists. It is very important in crypto or startup life.

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As a side note → this happened to me yesterday. Went 2x in BTC long and was down 3.5% off the mark. Unable to get out now. Thankfully I’m a long termer but your point is well understood.

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the question posed in the announcements channel is “Should Sovryn postpone launching SOV on uniswap, and instead use the recently completed ethbridge to draw ETH liquidity to our platform instead?”

my answer is : YES

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Just speaking for my own experience in spreading the word,ost people I know who really do get behind sovryns core philosophies are , like myself, absolute luddites when it comes to defi tech. Having to set a defi wallet up, configure it, send from 1 act to another, converting tokens all to be stuck trading on a pc and not their cell phones.

Far more critical than uni and other exchange exposure in my opinion is developing a VERY simple mobile APP for sovryn. I can tell you personally I’d probably have 20x people onboarded already, nevermind referral bonuses.
I know it’s in the works, but mobile simplicity is key.
That aside also fully agree about directing liquidity TO rsk and btc not eth👍

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This is a great response.

Of course no one here wants SOV to exist in isolation, but the concern is that users will come and take liquidity away from this platform.

I think the ETH bridge is great, a lot of people here will have assets they want to move to SOV easily, but we want to keep the liquidity here, so it’s important we somehow incentivise this rather than activity on another chain.

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First we should list eSOV at UNI, at the same time provide a bridge from eSOV to SOV and from ETH to rETH, and then proportional to the amount of eSOV we should incentives SOV/rETH pool, and reach out to ETH community and yield farmers, meanwhile we should be increasing the core value of SOV so when we pull back on the yield, we have extra demand for SOV from ETH community.

The end goal is to bring maximum liquidity to Sovryn Platform.

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I’m in alignment with what you’re saying :slight_smile:

What I’m thinking is: the exposure we would’ve gotten from UniSwap listing, if we forego that then how do we get it in another way? I think we need to increase marketing and exposure as the natural step to keep up momentum. Uniswap listing was doing that, so if we bail that idea then what do we do instead?

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