We Must Reform the Honeycomb, Part 2

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:

  1. make COMB a more attractive token to acquire and retain by providing additional use cases for holding and investing in COMB
  2. directing a portion of the initial mint towards supporting maintenance and future development work
  • Element A:
    • 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:
Recipient Allocation Intent
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
  • Element B:
    • 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.)
  • Element C:
    • 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:

  1. 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
  2. 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.


Pair Beneficiary
uCOMB-wxDAI Tulip
mCOMB-wxDAI Tulip
HNY-wxDAI 1Hive
AGVE-wxDAI Agave
GTC-wxDAI Gitcoin
RAI-wxDAI Reflexer
PAN-wxDAI Panvala
GNO-wxDAI Gnosis
FOX-wxDAI Shapeshift
BZZ-wxDAI Etherswarm
RAID-wxDAI Raid Guild
SYMM-wxDAI Symmetric


Pair Beneficiary
WAVE-SURF Surf Finance
wMATIC-RAI Polygon


Pair Beneficiary
GTC-RAI Gitcoin
DAI-RAI Reflexer

I think this is a brilliant piece of writing @ceresbzns. Thank you for that.

I believe that a single token would be ideal to strengthen its power, but I was wondering a few things; A fixed supply (let’s say of 3MM) would hardly keep in consideration future networks where we may land. I mean, we were only on xdai until 3 months ago, and within one month we’ll be on Arbitrum - after landing on Polygon -. I can imagine a future where we are in other networks, and I wonder if keeping a fixed supply wouldn’t be counter productive, for that matter.

I strongly agree that partnerships with other projects/DAOs may bring interesting benefits, and make us more attractive to other projects as well to create even more partnerships.

APYs are also an issue in my opinion; We can’t really be competitive with an 1.50% apy on stablecoins. Or with a 15% on a pair like Agve-xDai (Single staking is 14.40% atm), or HNY-xDAI is 5.70% against a single staking on celeste with an APY or, roughly, 25%.

That’s something to keep in consideration, in my opinion.

Again, thanks for the artiicle!

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As divisible as the coins may be, the initial supply doesn’t have to be huge.
YFI, for example, has a fixed supply of 36,666.

I agree about APY.
People lock crypto in, in spite of the potential instability etc, for degen APYs.

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I think this is excellent.
We do need to up our game and keep it tight with the quality partnerships we’re attracting through the hard work of our marketing team.
I’m wondering if the COMBs couldn’t all swap around 1 for 1 to start?
Then work something out to lower the total number?

I didn’t understand what this means:

If we don’t use protocol fees to buy back Honey what will we do with them?
(Airdropping them to active swarm contributors comes to mind. Heheh.)

So, I had an idea before I read this, as something additional we could do to add a use for COMB and also to be the place for public good. It potentially can incorporate a bit of Beezu.
I was thinking we could create crypto learning games and give prizes in COMB.
You could access it through Honeyswap. It would have to be sybil resistant somehow.
We could do videos like Coinbase, but I think better would be games set up as consecutive quests, where you answer questions or maybe even enter the right code to make a contract work (Highly advanced level I would hope). And these quests could be paid in COMB.
There could be a quest venture about how liquidity pools work, and farming v staking, and suchlike, rewards of COMB for questions answered correctly, then have a staking opportunity with more COMB reward for correctly staking, then go on to other things, like maybe opinion questions to collect some data strictly voluntarily or survey questions like “How many wallets do think is normal to have?”.

I will say finally that I believe a lot of our issues really are that Honeyswap has been buggy.
I don’t have data to back that up yet, and I don’t have an idea of how much of it has been just xDai and how much as been our actual platform.
It’s hard to get people focused on us as a dex when we don’t have the reliability to trade or pool consistently. Often people have issues buying Honey or adding to a Honey pool, and that’s a problem.
We may want to consider a wrapped Honey for pools, if that might solve the problem.
Idk that yet.

Anyway, all and all thorough and interesting.

They are, and I am hoping to address APYs through enacting these reforms. My hypothesis (based on looking around at other farm programs) is that a more attractive token with single-sided staking will better support a good price, which will greatly increase APYs on our farms.

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Protocol fees will be used to buy back uCOMB and redistribute it to uCOMB stakers. By giving 1Hive DAO treasury 10% of the initial uCOMB mint, then a significant portion of all the value that accrues to uCOMB will also benefit 1Hive. How the DAO decides to make use of the wealth created by the COMB holdings will be subject to governance. The important thing, in my mind, is that the revenue stream from the Honeyswap protocol fee collection isn’t being split, especially early on when revenues are relatively small.

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I like the idea of the gamification but sometimes rewarding a token is a sell pressure. You could add something else as a reward: if you win an NFT that gives you a bonus for staking or providing LP (maybe for a limited time?), in addition to the tokens, people will be more likely to stay and get involved. Plus it could be an incentive to stay in for people already involved but who can feel disappointed with xcomb. And there could be a secondary market for those NFTs (which is always good publicity).


Single-sided staking comb

I agree, single comb staking always was needed and even a high removal fee I think can help offset the sell pressure seen shortly after staking is removed.


the other thing missing is the tokens being minted. we discussed minting rates based on liquidity such as:
below $10M 25% rate
10-100M 50%
100-250M 75%
greater than 250M 100%

ranges can vary.

stable coin for deep liquidity

I am not sure incentivizing the highest IL pair is needed for every farm. Put another way, your trying drive everyone into pairing half their portfolio into stable coins. I feel you will run into the same issue rogue suggests of running out of liquidity. xdai is not 10x the liquidity of weth and hny it’s less than 2x. so we could have a bent towards more xdai pool but to have them all be xdai is a deterrent imo.


Are you familiar with Coinbase’s reward system?
They have a limited amount of tokens in each reward pool.
I don’t think the small rewards will create much sell pressure, though that is a consideration.
It can be minimized by offering a limited amount of reward per game, and only replenishing COMB supply when it’s beneficial to the project.
NFTs could be used to consistently reward other milestones in the game, which would be good to have if the supply of COMB needs to be limited.

I know Coinbase Earn. Coinmarketcap and Binance do the same. To be honest, I don’t find it effective. You earn a few tokens doing a copypasta of a Google search and a few days later you just have dust in your wallet and you can’t remember what you’re supposed to have learned.
In addition, we will have to produce the content (the game, the videos, the quiz, etc.).
Personally, I prefer the Rabbithole method, where you earn rewards for interacting with the protocol or the dapp. Learning by doing. You are less likely to quit later if you are involved and if the “rewards” (for providing LP for example) continue. They use BrightID for Sibyl resistance.

I deeply support this approach, I think that one of the things that is unique and special about 1hive is the community… as they say come for the honey stay for the bees. I think using liquidity incentives to support other like-minded dao projects would be a great way to extend that sense of community more broadly and put honeyswap into a position where even if its not the biggest dex by volume or liquidity, it becomes the go to dex for community members (which would no be larger and inclusive of many more DAO communities) as these community members would have a sense of co-ownership.

Great write up. I’m not sure I fully agree with all of the conclusions, but do agree that it’s imperative that we establish confidence in the utility and future value of COMB tokens in order for them to be effective.

I think the main advantage of network specific comb tokens is that it creates a resource which can be used to fund liquidity rewards (backed by future fees on that specific network) so each of those networks could treated equally with regard to the amount of resources allocated to bootstrapping on that network.

However, I think there are also clear advantages to focusing on a single asset that represents honeyswap… but that does make me wonder if we shouldn’t also focus our efforts (at least initially) on just one network?

I think Im okay with this approach, it creates a relationship between 1hive and honeyswap that is much more similar to that of 1hive and agave. At the end of the day it is shifting ownership from 1hive/honey to honeyswap/comb, and shifting the split between the assets from 50:50 to 100 percent comb (but 10% of the comb supply would go to 1Hive). While this is definitely 1hive giving up stake in the project, its not unlike what we did when we introduce comb tokens in the first place as we felt we needed to be able to distribute a greater proportion of the protocols “equity” for lack of a better word in order to effectively bootstrap, and perhaps the initial approach was simply too conservative.


That’s an excellent point. Given finite capacity and resources, it probably does make the most sense to concentrate on bootstrapping one network at a time. That does put us in a slightly awkward position at this precise moment.
Arbitrum is where we’re going, but we haven’t gotten there yet.
xDai has been our home for a while, but the future growth of the chain is somewhat uncertain.
Polygon has a much, much bigger total addressable market (TAM), in terms of trading volume and TVL, but very few DAOs are native Polygon. I’m not sure that the long-term return on investment (ROI) is there for us right now, if we want to be focused on public goods projects.

Given these tradeoffs, I would suggest the following for a path forward: let’s focus on supporting xDai and xDai native DAOs in the short-to-medium term, and focus on Arbitrum launch and development medium-to-long term.

FWIW, I think the proposed 10% uCOMB allocation to 1Hive will be worth more in the long run. While using the existing Honeymaker, the value that accrues to 1Hive from Honeyswap is only proportionate to the actual price support of HNY from fees. By accepting the uCOMB allocation instead (which can be staked for mCOMB if the DAO decides), then 1Hive benefits from Honeyswap fees (indirectly to the uCOMB), but also benefits from all other sources of value that accrues to the uCOMB token, such as future expectation of returns, expected value of governance rights, brand equity, etc. etc.