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.