Initial Honeyswap Farming Report

[Eth_Man]

Basic farming report based exclusively on my own farming within the following pairs.

AGVE-xDAI
HNY-xDAI
xCOMB-xDAI
LINK-xDAI
STAKE-xDAI

Lets start with the basics.

First the launch so far (knock on wood) appears to have gone without any hitches.

A few things worked very well.

1. The airdrop to LP providers based on historical LP provisions
2. The 10% immediate and 6 month vesting schedule
3. The rather high return on the xCOMB-xDAI pair holding price up nicely.
4. xCOMB-xDAI LP and price discovery worked well.

Now looking at opportunities at the time of writing.

USDC-xDAI 45.66 .18% 67.32%
AGVE-xDAI 228.32 1.97% 719.39%
LINK-xDAI 91.33 1.45% 529.99%
STAKE-xDAI 91.33 .54% 195.60%
HNY-xDAI 228.32 1.18% 429.61%
AGVE-HNY 136.99 .76 276.09%
wETH-xDAI 91.33 .89% 323.68%
wETH-HNY 136.99 1.46 532.51%
xCOMB-xDAI 913.27 6.55 2392.03%
wETH-wBTC 91.33 .69 252.18

So what happened to liquidity

Total Honeyswap liquidity basically doubled from 7.5M to almost 16M now.

Price increase from 450 to 600 on HNY increases liquidity about 500K out of 1.3M (800K additional)
Price increase from 300 to 420 on AGVE similar increases to HNY

Pure liquidity addition on xCOMB-xDAI now about 1M
wETH liquidity almost doubled while price dropped so most of our liquidity came on the wETH side with it dominated byt the wETH-xDAI pair. up about 800K
AGVE liquidity dominated by AGVE-xDAI pair almost 800K there.
some wBTC-wETH came over as well bumping liquidity perhaps 600K in that pair here.
STAKE-xDAI liquidity up about 800K as well.

In the loosest sense liquidity is up probably 4-5M due to new money (3-4M xDAI pairs .8M wBTC-wETH). The rest of the liquidity increase 2-3M is due to price appreciation of HNY and AGVE.

We now have 1000K xCOMB-xDAI liquidity which is great.
7129xCOMB/536039wxDAI should provide decent price support particularly if we reduce drip (see recommendations below)

Returns are such that liquidity is driving into the key pairs in this order.

xCOMB-xDAI then
AGVE-xDAI
LINK-xDAI (not so attractive for some reason)
HNY-xDAI

wETH-xDAI seemed pretty attractive to people.

Based on above I would encourage the following changes to rewards.

USDC-xDAI 45.66 .18% 67.32%
AGVE-xDAI 228.32 1.97% 719.39%
LINK-xDAI 91.33 1.45% 529.99%
STAKE-xDAI 91.33 .54% 195.60%
HNY-xDAI 228.32 1.18% 429.61%
AGVE-HNY 136.99 .76 276.09%
wETH-xDAI 91.33 .89% 323.68%
wETH-HNY 136.99 1.46 532.51%
xCOMB-xDAI 913.27 6.55 2392.03%
wETH-wBTC 91.33 .69 252.18
Total 2054.87

USDC-xDAI 90 .35 132.70
AGVE-xDAI 140 1.208 440.90
LINK-xDAI 90 same ~520
STAKE-xDAI 90 same ~190
HNY-xDAI 180 .93 339.54
AGVE-HNY 90 same ~270
wETH-xDAI 90 same ~323
wETH-HNY 90 ~1 ~350
xCOMB-xDAI 300 2.1516 ~785
wETH-wBTC 90 same ~252
Total 1250 -804.87 down 39%

Key points here. Rewards look pretty decent. Overall returns in the 1%/day range are generally quite good and highly competitive. Since xCOMB price determines this we want to be quite careful with how we manage incentives on the xCOMB pair and to do everything possible to reduce the total drip while maintaining sufficient rewards incentive to manage xCOMB price.

Put simply we want the good times on xCOMB to be able to last as long as possible. To this end I believe we can reduce total xCOMB outlays by 40% while still providing appropriate rewards for the next 2-4 weeks at least. Should we find xCOMB price dropping this gives us the ability to more than double those xCOMB rewards to try to provide some LP and price support.

Reducing the xCOMB drip here should help give us some idea of whether the market price of xCOMB is purely dominated by farming drip, or whether there is a price perception here. My expectation of dropping the xCOMB drip by 40% would mean a xCOMB price more in the 100 range, but with less rewards one might expect less to be put into the xCOMB-xDAI LP. Frankly I am farming more than 1/2 of these and I am taking my xCOMB to 1/2 cash and pairing it with xCOMB to compound the returns for a while as the returns are just too compelling.

At 5%/day returns there I see no reason for anyone to take LP anywhere else. This is why I think we can reduce this to 300 to give a 2%/day return (still very good) and still better than any other pairs. This should still drive liquidity into that LP while maintaining decent price support and lowering drip by 800 xCOMB/day.

The above is my recommendations for LP xCOMB farming returns.

As a last note I upped USDC-LP farming rewards by 2x because I think that is generally an important pair. The pairs I am not as interested in are the AGVE-HNY, wETH-HNY and over time would like to see those depreciated mostly to allow liquidity to pool back together in xDAI than to stay fragmented. If we have strong Token-xDAI LPs these will provide great liquidity and price support and then if people want to go to wETH they can pass through a well supported wETH-xDAI pair.

I think we should start thinking more about how people get to USDC and this is where the xDAI-USDC pair comes in (I keep thinking curve fork btw on stablecoin trading). Some thought of putting LP farming incentives doing the wETH-USDC pair may be another good way to pass through wETH to get to USDC/xDAI but I am mixed on the stablecoin focus here. I just know we should be as friendly to USDC as xDAI here if possible.

[SirWithAComputer]

This xcomb/xdai returns are very nice, inspired me to actually move more fiat on chain!

Now you mention the importance of USDC/xDAI liquidity, so I wanted to ask: I happen to be providing some USDC/DAI liquidity on honeyswap on the matic side of things. Would it more useful if I moved it back over to xDAI?

[Elartistazo]

Thanks for your insight!

[lkngtn]

@Eth_Man

Put simply we want the good times on xCOMB to be able to last as long as possible. To this end I believe we can reduce total xCOMB outlays by 40% while still providing appropriate rewards for the next 2-4 weeks at least

The way the farming contracts work this is not a lever we can pull, we can redistribute the drip among pairs by changing allocation points, but we can’t change the emission rate. One the one hand this prevents us from modulating the rate which if you are correct in your assessment would limit our ability to make a correction in the rate… on the other hand by removing the lever individuals can make more informed decisions about the valuation of comb since the supply schedule is predictable.

[Blazingthirdeye]

@Eth_Man

To this end I believe we can reduce total xCOMB outlays by 40% while still providing appropriate rewards for the next 2-4 weeks at least. Should we find xCOMB price dropping this gives us the ability to more than double those xCOMB rewards to try to provide some LP and price support.

Thank you for your detailed insight! I am not an economist and I hope to learn from my farming here at 1hive however your suggestion alarms me.

I aped into the xdai-xcomb pair and locked my deposit for 120 days based on the displayed APYs. Maybe many bees did. My initial reaction to your suggestion is very negative but I am open to argument and perhaps I will better understand your ideas.

If you drastically chop this xComb pair many bees might take a potential loss. If you do decide to lower this pair perhaps an emergency unlocking of the xcomb stakes is appropriate to permit investment management.

I liked the honey-agave pair, which is where the rest of my investment is. I want what is best for the hive but I also must try to avoid personally losses. At the most basic level how would it be fair to lock people into deposits then chop the very return rate they locked in for? Seems unjust. But sometimes a little injustice is better than the alternative.

Perhaps if not unlocking deposits you could wait until the end of the 120 period to adjust returns but that is likely too far away to achieve your goals. We all knew returns would decrease with time but your suggestion seem drastic.

Incidentally I am surprised the hny-agve pair isn’t more popular…that sure makes me wonder…

What would be the downside of not adjusting the xComb pair? A potential decrease in xComb value ?

Thanks again for your work here (to all who were involved) and sharing your thoughts!

My thoughts are we must all sell a little xComb regularly to keep the system functioning well. Seems like if bees tried to horde xComb it could result in devaluation but this is more of a hunch than calculated analysis. Ultimately the hive must thrive or we all perish. You have heard about the disappearance of the bumble-bees right😉

[stillnoob]

Ah thanks for writing this reports

[Monstrosity]

Yeah I agree. You can’t really change the rewards this significantly. I think Luke has posted or is about to post a conversation starter around this which talks about ensuring these “keystone” pair allocations stay relatively fixed but I will say we do know pairs will be added and we know the distribution drops over time so a decrease is expected assuming all other things constant

[lkngtn]

@Monstrosity

I think Luke has posted or is about to post a conversation starter

Its here, lets get the conversation started

xComb Farming and Allocation Points Policies

Really excited to have xComb and the farms launched and in the wild. The initial pairs were chosen by the Tulip swarm in order to get things rolling, however, the intention is for the allocation of farming rewards to be adjusted over time in order to curate the liquidity that’s available on the platform and attract volume to the exchange. Currently the ability to adjust pairs and allocation points is held by a multisig of Tulip members. This is a privilege that can be revoked or adjusted via 1H…