Honeycomb liquidity incentives

🌿 Proposals
#1

Proposal Information

Proposal description: After a delay of two weeks as it was explained on the last blog post. The time has come to kickstart the liquidity incentives that will run on the Honeycomb website under hny.farm :honey_pot:

This proposal will fund the first three pools:

  • “Dai Daisies” :blossom: pool that holds the HNY-WXDAI pair with 300 HNY
  • “STAKE Sunflower” :sunflower: pool that holds the HNY-STAKE pair with 200 HNY
  • “Ether Eucalyptus” :herb: pool that holds the WETH-HNY pair with 100 HNY

Proposal links:

Proposal Rationale

Liquidity incentives have proved to be an excellent tool to attract more participants to a network and grow the liquidity of assets involved. For the 1hive community and the Honey token the incentives play a key role to keep experimenting with circular economies. Honeyswap success is coupled to the Honey economy as a portion of every swap fee flows back to the common pool to fund further community proposals.

Expected duration:

The proposal will fund each pool for the first month. The continuity of the farming program will depend on further proposals to pass in conviction voting


Team Information

This proposal is a collaboration between the seed :seedling: members.

Funding Information

Amount of HNY requested: 600 HNY

Ethereum addresses where funds shall be transferred:

0x2dF0Af12DB95f16c33f496461bB2E38B1C860227 - 300 HNY

0x745963503A6489b91F7a8ff784d286877a775D72 - 200 HNY

0x23512464529127Ec01A3422453a4416e6b569984 - 100 HNY

More detailed description of how funds will be handled and used: The funds will be sent to the UnipoolBalanceProxy contract for the specific pool. Afterwards HNY will start being distributed to staked LPs on every block. LPs can claim their farmed HNY through hny.farm.

28 Likes
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#2

Let’s get this vote rolling, great work guys!

6 Likes
#3

This is amazing news! Thanks to all the devs for all the hard work. Now it’s our job as a community to start getting this thing into motion.

2 Likes
#4

Wow, this look promising! Good job guys.

2 Likes
#5

Great news. Thanks for making this happen. Congrats all devs for the hard work.

2 Likes
#6

Everyone is really excited for this, thanks to those who made it happen! :slight_smile:

2 Likes
#7

Great news, can’t wait to test them!

#8

I think in the future we should try to discuss these proposals more broadly before submitting them. I understand anyone can create a proposal, and open discussion is not enforceable, but I personally would have like to be a part of this discussion and have this be a community norm.

It’s unclear to me why we are funding HNY-STAKE more than HNY-WETH for example. The WETH pair seems to my intuition more important than the STAKE pair.

In this situation, it probably doesn’t matter too much, and in general I support these proposals. But just some food for thought for the future, particularly with proposals championed by seeds.

12 Likes
#9

can we already farm ?

#10

Well done! As others said above, thanks to the seed team for all the hard work they have been doing recently. Exciting times are coming! However, I also agree with @befitsandpiper that the pair HNY-WETH could happen to be undervalued. :slightly_smiling_face: :honeybee:

2 Likes
#11

Great work! great news team! lets do it.

1 Like
#12

Great job ! Now lets bring that liquidity up boys !

I also agree with sandpiper i think Weth/HNY should get same amount as Stake/HNY , there are more holders of ETH that potentially would want to join Hny.farm . We should discuss this more before giving the proposal, but lets do it now just for the sake of all the people waiting eagerly to Harvest Honey.

2 Likes
#13

I agree, having some discussion before submitting is a great way to propose something with a wider acceptance.

3 Likes
#14

I’m happy to see things moving forward, I think everyone did an excellent job getting things done. All you people work tirelessly and it is amazing to watch this unfold. Congratulations, i feel, are in order to everyone who worked to make 1hive what it is today.

2 Likes
#15

Greatness SweetHoney!!! Voted!!!

#16

Finally have a great news.

150 hny for HNY-WETH pair and 150 hny for HNY-STAKE pair is better deal in my opinion.

#17

At the end of the day I think that is a proposal
Written by a group of community members like any of you guys can do, we did it that way to kickoff the game , any of you can support it or not if you don’t like and propose new pools or change pools allocations for next month.

1 Like
#18

Fellow colony partners I was assuming these LP rewards were going to be for the year not the month.

Running these numbers against current liquidity gives the following 1 month return (not compounded but annualized).

HNY-wxDAI 606HNY-507000xDAI 1/2 x 300/606 = 24.5%/month = 297%yr/yr
HNY-STAKE 296HNY-19495STAK 1/2 * 200/296 = 33.8%/month = 405%yr/yr
HNY-WETH 9.8HNY-21.4WETH 1/2 * 100/9.8 = 510%/month = 6122%yr/yr

Personally I have seen staking rewards at these return levels completely skew markets and if governance decides it wants to proceed with these kinds of returns I would expect capital to drive into this market. Pretty massively. Given the actual amount of HNY liquidity in these contracts I would expect a significant price spike which would likely contract if the rewards are pulled back or changed.

Put simply there just isn’t enough HNY liquidity to satisfy what will be a huge demand generated by the above staking returns.

I really think a revist to the timeframe of distribution here be considered. Instead of a month I would go with taking 1/6th of the funding for the first month and observe what happens to the liquidity in these markets. Adjust the HNY LP reward payout so that it doesn’t annualize to above 100% based on what are reasonable liquidity targets.

Given that governance requires some measure of HNY available for voting some thought as to how much HNY we want in liquidity contracts seems prudent as HNY for LP given the above returns is going to compete with HNY for governance.

I have been studying implications of Liquidity incentives of governance tokens for governance generally and there is a wide margin to having rewards in the 20-40%yr/yr range that seems healthy. But much north of 100% yr/yr (or 10%/month) returns and the competition between using tokens for governing vs. taking the 10%/month return becomes too high with potential impairment to ability for governance to actually carry out its functions. I don’t know the guts of conviction voting yet to know the implications of this but generally it isn’t positive.

8 Likes
#19

Hi @Eth_Man,

I see where you are coming from, but this is

  • Normal in every starting period of farms. APY based on the first minutes/starting value of a farm makes no sense at all. Show me one farm that has had a >1000% APY for more than a few days. It’s as much use as determining the amount of snowfall in a year extrapolating the quantity during an hour in a full-on snowstorm.
  • This is already solving itself. Since your post liquidity has doubled and will likely again before the day is over, halving/quarting the ‘APY’, before the farm is even funded.

The Weth farm gets about 3hny/day, or about USD $100/hour. That might seem much for the first 1 hour, but after the first few minutes earnings/lp-token will drop off quickly.

It will show that our way of funding these pools (announcement -> proposal -> vote) is much fairer as it will normalize the pools before farming even starts, instead of whales being able to milk the farm, so to speak.

1 Like
#20

hello,is it on.can we start? since i have seen the alarm not there anymore