In my previous post, We Must Reform the Honeycomb, I provided evidence that the COMB liquidity rewards program has not succeeded in attracting and retaining capital in Honeyswap liquidity pools. The hypothesis that I put forth, with supporting evidence, is that COMB is not a sufficiently attractive token to effectively power the Honeycomb farms flywheel.
In this post, I outline a 3 phase plan to reform the COMB token and revitalize the Honeycomb liquidity rewards program with the intent of bringing Honeyswap closer to the goal of being the go-to decentralized exchange (dex) for DAOs and public goods projects.
I believe we must address the largest outstanding issues with Honeycomb before propagating the existing COMB regime to Arbitrum, especially as we begin partnering with high impact DAOs like Gitcoin.
Phase I: Reform the COMB token
The reformation of the COMB token primarily aims to accomplish two goals:
- make COMB a more attractive token to acquire and retain by providing additional use cases for holding and investing in COMB
- directing a portion of the initial mint towards supporting maintenance and future development work
- Mint a unified COMB token for use across all current and future chains, i.e., xDai, Polygon, Arbitrum, Ethereum. Let’s call it uCOMB. The initial maximum supply can be more or less arbitrary, let’s pick 3MM as a starting point.
- Reserve initial allocations of the new uCOMB as follows:
|1Hive DAO Treasury||10%||enable 1Hive DAO to accrue value from Honeyswap success without having to use protocol fees for HNY buybacks|
|Tulip Swarm Treasury||20%||reward/incentivize swarm contributors and align incentives for future work|
|Redemption Pool||10%||migrate existing COMB holders from x- and p- COMB to uCOMB|
|Distribution Pool||60%||reward/incentivize Honeyswap stakeholders, e.g., liquidity providers and traders|
- Create a single-sided staking offering for uCOMB. Let’s call it Meadows. The existing Honeymaker contract currently splits Honeyswap protocol revenue between HNY and *COMB for a buyback and burn model. I propose replacing this with a more typical Masterchef contract, similar to the ones deployed by Sushi, Curve, and Quickswap. New Honeymaker would use protocol revenue to buy uCOMB from the market and redistribute it to participants who have staked their uCOMB in Meadows for staked uCOMB (let’s call it mCOMB). Importantly, mCOMB would retain full voting powers in the Tulip DAO (see next element.)
- Instantiate a Tulip DAO using the Gardens framework and support uCOMB and mCOMB as the governance tokens for the DAO. Tulip will need to partner closely with the Gardens team to set parameters for the Tulip DAO that is resistant to plutocratic capture while maintaining our core values of openness, transparency, and equity.
- Tulip DAO will explicitly have governance powers over current and future uCOMB allocations from the Swarm Treasury and Distribution Pools, as well as governing the swap fees and use of protocol revenues on each Honeyswap instance. Both fee and token governance are particularly important for partnerships, such as the one being discussed with Gitcoin.
Phase II: Migrate COMB holders
Existing pCOMB and xCOMB holders will be provided an opportunity to transition their holdings to the new COMB regime. Once uCOMB is launched, COMB holders will be allowed to redeem their p- and xCOMB for uCOMB at a 1:1 rate for a period of 6 months. To enable this, we should unlock all liquidity from Honeycomb farms on xDai and Polygon to enable LPs to redeem and redeploy their capital. Any unredeemed uCOMB from the Redemption Pool will be burned.
Phase III: New Token Pairs
I’d like to address two major opportunities with revised token pair lists:
- Honeycomb existing farm reward pairs do little to promote mutualism with fellow DAOs and public goods creators. By shifting towards token pairs that explicitly promote liquidity for fellow DAOs, we have an opportunity to differentiate Honeyswap and Honeycomb from other dexes and fulfill the promise of our identity as the dex for public goods
- By employing @eth_man’s thesis of DeepLiquidity, we can incentivize stable-volatile pairs for improved liquidity and value creation.
These lists are incomplete and are simply a proposed starting point for incentive allocations. Incentive allocations and specific amounts would be governed by the Tulip DAO and uCOMB + mCOMB holders.