Round 2: Proposal for Incentivizing New Farms

Round 2: Proposal for Incentivizing New Farms

Proposal Information

I believe these farms should be incentivized based on the amount of liquidity they will bring to honeyswap. By funding multiple farms at once, it will create a network of farms that users can trade between, thus creating a positive effect on volume and fees which will directly benefit LP providers.

Farms to fund:
xdai/hny - 40HNY
eth/hny - 20HNY
eth/xdai - 20HNY
stake/hny - 10HNY
btc/hny - 10HNY
stake/xdai - 5HNY
usdc/xdai - 5HNY
eth/stake - 5HNY
link/weth - 5HNY
link/xdai - 5HNY
xmoon/hny - 5HNY
renZEC/xdai - 5HNY
usdt/xdai - 5HNY
aave/xdai - 5HNY
uni/hny - 5HNY
omg/xdai - 5HNY
snx/xdai - 5HNY

Farms currently funded that will have to be evaluated later:
link/hny - 40HNY
weth/wbtc - 20HNY
wbtc/xdai - 40HNY

Expected duration or delivery date (if applicable):
As soon as funding for the 1st round elapses. Will last for 30 more days.

Funding Information (For Funding Proposals)

Amount of HNY requested:
160HNY total for this round of funding.

Ethereum address where funds shall be transferred:
0xe1a314e9ec7b72cae3af791259f0aa8b7c259a9f
Funds will be transfered to the Fauna swarm agent address where it can be transfered to all the pools through 1 proposal & 1 transfer from the agent

Proposal: https://1hive.org/#/proposal/72

More data analysis on farming here: Summarizing Farms Situation

Thoughts?

Edit: Updated values

3 Likes

I strongly believe xmoon should have at least 3 HNY to bring redditors over. Even if it’s paired with XDAI and not honey

2 Likes

Hny price is bleeding and I am not sure farms provided much of an ROI. At this point I am abstain until we establish an issuance plan

Those pairs look good, I would add also Link/Btc or Link/Eth …Chainlink has partnered with xDai and will work on bringing oracles to xDai. Honeyswap can get benefit if more projects move to xDai.

1 Like

Frankly my take on this is that even with 1M liquidity and 100K/day of volume this translates to $300 of fees on even a good LP pair. Of this 1/6 might go to 1Hive ($50/day). And this is with funding in the 100-300HNY/month range.

One has to ask a question regarding incentivizing farming here given the results to the bottom line. Does the DAO want to pay for liquidity with direct and immediate inflation at a rate significantly higher than the actual volumes.

I think it makes sense to fund only one HNY pair and I think it should be the HNY-wxDAI. The reasoning behind this is to create a LP incentive that helps provide liquidity not just to trade HNY but also to provide some price support to HNY price via LP incentive. Spreading incentives over multiple HNY pairs based on what we saw is basically a waste when it comes to this goal. Heavily incentivize one single pair with a reasonable return and be done with that.

As to incentivizing other pairs and what to do about Honeyswap generally. I think we simply need to do the hard work to make xDAI easier to use via wallet support for xDAI and a more robust/reliable RPC. I honestly think it is more important at this point to throw 5-10HNY/month at work to establish a reliable RPC than at any of the trading pairs.

Now if one is looking at this farming reward not just to provide liquidity but also a HNY distribution mechanism then we just want to keep an eye on where the HNY we are distributing is going. No matter what we do, we need better analytics and data to measure the reactions to markets to this change. If there was another proposal I would support it would be some HNY to provide HNY analytics to answer some basic questions of where is the HNY and what is it doing to see what people are doing with the HNY they get. While people want HNY to flow - we also want it to stick to some extent. It migh behoove the DAO to actually create some metrics to measure the flow, and the stick to see where to maximize HNY inflation impacts on the ecosystem, interest, participation etc.

At this point after the heavy hit on farming rewards I am almost for letting these drop except for 1.
The HNY-wxDAI pair to incentivize one key liquidity pair at some rate that allows most of our expected HNY outlays to people to be sold with the least amount of slippage to help cover operating expenses. While the farming caused a spike in prices I think we need to pull back and simply incentivize one pair at a moderate level. Off the top of my head numbers here was that 300HNY/month to HNY-wxDAI basically got us 2x liquidity. Slippage isn’t that bad with 1-1.5M of liquidity and is earning what 100%. We take this away and liquidity is going to drop back to old levels. So we have to find the HNY rate that gets us decent liquidity and pays ‘reasonably’.

When I do the math I think 600HNY/yr to get us perhaps $1M of liquidity in the HNY-wxDAI pair is probably reasonable. This is something like 50HNY/month and 1 single pair that I would start with. The idea of throwing even a couple hundred HNY at these pairs - just to do it seems premature until we have a clear issuance plan as well as some clear idea of goals with respect to Honeyswap farming. Literally I think we might get more buzz for our HNY if we use it for more focused PR (buzz) and xDAI development (better redundant RPC and theGraph nodes), and probably some design/documentation while the community pushes through celeste and moves forward on other swarm projects.

When I look at this proposal and ones like it I think we can do better with 100HNY/month than just throw it at LP incentives given the response we saw.

Right now I have one single goal. Get the KEY HNY-wXDAI pair a basic level of LP incentives at say 50HNY/month and leave all the others unfunded and see where we land on liqudity and HNY price, etc. Take the other 100-400HNY we have been floating around and use it for other more focused project to improve xDAI and 1Hive generally. I think we get good Honey Flow and Stick by taking this HNY and paying it out to people who believe in the project and can get some important things done. I want to move past this whole ‘free HNY’ phase and get to the ‘HNY for work’ phase so when we are ready for capacity we can then take the HNY and ramp up buzz and PR, gimmicks, faucet, games, raffles, whatever we want to do to try to entice people into system.

Here is a flip on LP reward. Have every HNY-wxDAI LP token earn a raffle entry for like 3 -10 prizes (so if you have like 20LP you get 20 or say 20,000 tickets) and then every month raffle off say 20HNY in rewards 5,3,2,1,1,1,1,1,1,1,.5,.5,.5,.5,.5,.5,.25,.25,.25HNY on top of the 50HNY/month paid out. Do this after the new year say so we don’t overlap the 300 down to 50 and then later adding the 20HNY/month raffle off in combination with some other offer (i.e. be BrightID verified to level N, or whatever combination of win metrics we want that incentivizes the behaviors we want)

There are a lot of better ways to get people to do things here that don’t have to fit a single model, nor be hugely expensive. We just need proper behavioral repsonse metric measurement tools and frankly I want the measurement tools before we go whole hog here spending 150-500HNY/month on things.

5 Likes

I finally have had a chance to look at some numbers, and decided to comment on the farm proposals with something other than abstain.

For starters I think we need to reduce our supply of hny by 13.5/day. that leaves us with a max of 10.5hny/day (315 hny /mo) we can use for farms or elsewhere and we should see price recover.

Calculations & Assumptions:

Ave honey 24 hr volume ~425 tokens swapped with $15 price reduction $6500

24hr vol at $150k = 400-450HNY , if we are seeing a $15 daily decrease on hny price that is ~ $6750 (~20 hny). Reduce hny supply by ~20 hny / day and we should see price rebound.

We are currently issuing

~24hny/day in farms, +4.5hny /day faucet + 4.7/day cred that’s 33.2hny / day.

Thoughts

Worse case we need to keep supply under 13 hny per day to turn around the bleeding. I say worse case because demand is a function of supply. A reduction will create interest and more demand, how much though? I say for now IF we keep cred and faucet the same that leaves us with a max of 10.5hny/day we can use for farms or elsewhere and we should see price recover. ($6750/($500/hny)=13.5–>24-13.5=10.5hny

Conclusion

I believe when these 3 big farms run out we should be in a good spot given I don’t think the community is going to support >300hny for farms after the price dropping.

3 Likes

Was looking at the fees on Honeyswap we have around 600$ daily swap average fees out of which 500$ got to the LPs and 100$ are transferred back to Honey which is around 0.3 HNY per day at the current price and that is around 9 hny per month . In the same time Honeyswap is paying to LPs around 700 HNY monthly and instantly which can be dumped, this brings instant selling pressure. It would make sense to lower the HNY rewards of max 50-100 hny per month and HNY-XDAI pair is making sense here.

Delaying rewards :
Other thing to consider is delaying the rewards , for example 100 HNY are rewarded monthly for a certain pair lets say HNY-XDAI . Those rewards can be unlocked across next months on a delayed rate , you cant claim them instantly… You may claim only 10% per 30 days out of your farmed HNY pool.

This will bring things in balance and HNY price stabilization as from 100 hny rewarded monthly LPs can claim 10 HNY only for the curent month, which is around the same rate as Honeyswap is buying HNY from earned fees ¬9 HNY per month. The next month they could claim ¬20 and so on… but they will not be interested to dump so much because they are still having locked HNY for the next months.

As for the next farms if we decide to implement this i would start slowly :
-Honeyswap would make 50 HNY reward for HNY-XDAI
-would split the rest of the 50 HNY to the other pairs…

3 Likes

@solarmkd your assuming 100% of farmed honey is getting dumped.

HNYs swap volume is relatively low and the price drop is linear. We should consider we currently are Supplying 720 hny to the market. If you cut that by 60% that is significant.

Until we have a better solution for distributing hny we still want farms to to maximize opportunity for accessibility while not crushing the price. I believe a 60% decrease in farming rewards is all that is needed (based on post above) to stop the price fall AND provide the maximum distribution of hny through farming

Having small experimental values for pairs such as HNY/xMoon would be interesting. Say, 5 HNY. It would also serve as a form of marketing; users from reddit coming over to try it out, and potentially falling in love with 1Hive, and the community. Sort of similar to how some users had the intention of just claiming from the faucet, but ended up staying.

2 Likes

YEP
I back and contributed to this proposal

1 Like

Yay to the updated version. I back and contributed to this proposal.

1 Like

As promised:

My Support for 2nd Round Farm Proposal

I began making my voice increasingly more public about abstaining all farm proposals on 11/04/2020. I would have began earlier if I knew how abstained. Now I am supporting this farm proposal. This is my explanation as to why.

For the numbers people out there, we only have 6 farming pairs for data points. There is no way to make a purely predictive analysis with 6 data points on an equation that has well over a dozen variables from the price of ETH to the reliability of the xdaibridge when the farming proposals were executed. Some liberties were taken intentionally.

Background

Issuance can impact accessibility, price, and engagement/usage of the project/product. Considering we have several HNY supply routes to the community the intent isn’t to drive the price down with all this HNY but to indirectly drive the price up through growing adoption. Can adoption be gained without issuance? Yes probably, but while diluting the holders typically will result in price going down it in theory provides opportunity for accessibility, this can be a good thing. With price going up you are strengthening the current holders but you are beginning to restrict access. Do we need to use issuance as a control for price or for the spreading and accessibility of honey? The answer I believe is both, we need issuance to control price while achieving our goal for adoption. How do we control the price of honey while still continuing to grow the community through issuance? *Put it very simply you just need demand to be larger than supply and in theory it doesn’t matter what your supply is if demand is greater. Earlier today a 2nd round of farming proposal was drafted. I among others support and contributed to this proposal. Below is the outline of my decision

Farming is the current method we are using to incentivize liquidity and token adoption on honeyswap. I am not going to debate that.

The question is:

  • How much liquidity do we need? $100M-$200M /24hr in liquidity
    • This was done by looking at liquidity on Uniswap when they were starting to pick up adoption
    • Given ~$150M liquidty this provides us with with apprx. 35 tokens with >$1M each in liquidty
    • $1M liquidty is ideal for worse case slippage fees any lower liquidity and adoption is unlikely
    • This provides us opportunity to ‘target’ the microtrader
  • What is maximum HNY we can use for farming and begin seeing a rebound in price? Max 300HNY/mo
    • If we keep our maximum supply of farms below 300HNY/mo we should see price rebound. Consider this is a 60% decrease in farming. 300 may seem like a lot but it is still a huge decrease from the current 720HNY a month.
    • My estimation are estimations found here and are not perfect. One major consideration is demand is not static you don’t need a 1 for 1 reduction in supply to offset demand. You only need a portion of the supply to be cut off to incentivize demand growth
  • Which farms should we incentivize?
  • How many farms

Given the above findings we went with the following:

  • 160HNY (+100HNY pending to expire) – this is 140 below target maximum of 300 (remember the big 3 farms of 600HNY expire today)
  • 17 total farms – we went a little heavy on this one in my opinion but this will give us a lot of new data to make better decisions for next month
  • 6HNY pairs vs 11 non-HNY pairs – we are pretty Flipped on this but as pointed out below But I don’t believe this will break the proposal
  • Market Leaders v Network Pairs v Reddit – we kept pretty true to the desired ratios by the polling community

I believe this will grow adoption, rebound HNY price, and provide us with a tremendous amount of information to make an even better proposal next month.

4 Likes

Hey man, I just want to correct you on one thing, the poll you keep referencing shows that the community PREFERS HNY pairs to non-HNY pairs.

I support the proposal that we’ve made here. I do wonder though if we can mine data from other farming projects fro future farming proposals, rather than just focus on data we can produce ourselves, which will take a long time and maybe always be sparse. uniswap itself and sushiswap in particular would be good case studies with fairly rich data.

@befitsandpiper Oh wow, big miss by me. I probably need to sleep more. The poll rearranges by highest to lowest support. When they rearrange it moved the bottom one to the top and I think that threw me off. Good catch. I wonder if I was corrected multiple times during the discussion and just missed it. A big apology from me.

I tried to look at sushi swap for data but I can’t find the historical farms listed anywhere and I am unsure how to get that data. Good idea if it can be done

1 Like

Btw, @Blazar, we’ve been calling the ren Zcash token wZcash in discussions, but it is actually called renZEC.

We are trying to find a happy medium and it would not work. It is very low for hny pairs and wont attract new people. my 2 cents!

Hello lovewins :slight_smile: How would you change the list? I think there are plenty of HNY pairs listed above. Just curious!

@lovewins the proposal is just shy of a 60%/40% split in favoring HNY pairs.

When link-hny, wbtc-xdai, weth-wbtc expire depending on how this proposal plays out it would be nice to renew the two wbtc farms at 50% reward. Any ideas of what to replace them with that might pair up better for a HNY pair?

Would like to see an xMOON/xDAI pool. It (xMOON) has been a staple to this exchange and brings a lot of attention from reddit. Even a smaller amount would be a nice gesture as many of the redditors are early honeyswap adopters. xMOON/HNY isn’t really utilized much by people buying/selling moons.