Incentives for Liquidity Provider on FXSwap

Developers Function X Governance
1

Hi all,

As you all know, our development team is working on FXSwap and it will launch officially soon. It has been deployed on the Mainnet and you can test it already (do token swap and add liquidity).

To encourage all LP providers, we want to provide a reward to all liquidity providers (in $FX). Hopefully, this will also increase the number of users on FXSwap. We intend to use the Community Spend Pool for this incentive (CSP).

Currently, we have more than 56 million $FX in CSP pool (you can check it on https://explorer.starscan.io/). I propose to allocate ~10% of the CSP pool (5 million $FX) to incentive all the LP providers. For the farms in FXSwap, these incentives may last for a year.

Three farms are available at this time: FX-USDT, FX-PUNDIX, and FX-PURSE.
In the near future, FXSwap will add more farms and the incentives will be distributed to those farms as well.

With these incentives, hopefully the farms will become more attractive to users & LP providers. At the end, it will a win-win for the ecosystem and community.

Let me know your thoughts regarding the idea/numbers/etc.

Thank you.

10 Likes
2

This is good idea. I support it

3

1st good idea and i would say yes we need such an incentive. please be aware that these incentives should be around or a bit higher than the apy on delegation if you really want to catch attention with it.
i would go with something like 10%apy if added for a month, 30% apy if locked for 6 months, 40% apy if locked for 1 year.

2nd we have really low liquidity on the first community token FXG, but there are 5 million fxg in the hands of functionx now and more than 56 million FX in the CSP pool that are not used right now.
I think it would be a perfect idea and first good usage of the CSP if the 5 million fxg would be put into the liquidity on fx swap and the counterpart FX token (should be around 100-200k FX or something right now) come out of the CSP pool. This isnt even a spending, it will help the token fxg with liquidity and the csp would even gain profits from it by providing liquidity. It couldnt be more of a win-win situation.

2 Likes
4

Hi @indra !

I fully support the idea, but would like to extend it.
What if we were to incentivize liquidity providers, but also use the CSP to provide liquidity to most LPs ?
LP gains could go back to CSP (if managed by the team).

Let’s say we use 10% CSP for LP providers incentivization, and 10% CSP to fill LPs (managed by the team). That would seem fair to me as well, especially since the CSP is growing faster than we can currently use it.

Regards,
FrenchXCore

3 Likes
5

Hi,

Thanks for the input.

Disclaimer: These are my personal views and concerns.

I think it is a good idea to utilize the CSP to fill liquidity on FXSwap (the suggested amount is 10% of the CSP). But, I have a few concerns regarding this idea:

  1. Every pool has its own risk, and it needs to be calculated as well. For a pair with major/stable tokens, the risk will be lower. But what will happen if there is a loss incurred from this liquidity-providing action?

  2. Who will have the rights to manage and pick the LP pairs? Does it require community voting / the decision will be taken by the team who managed this fund?

Once we have answers to these questions, I think we can proceed further. 10% of CSP will provide much initial liquidity for FXSwap users.

I would like to brainstorm with our community in this thread. Together, we can find the best solution for the ecosystem.

Thanks in advance.

3 Likes
6

Hi,

Disclaimer: These are my personal views and concerns.

Regarding the first idea, the development team needs to explore it first. I personally think it works, but FXSwap needs to have a locked farm page to accommodate this idea. There is an impermanent loss in providing liquidity, and users need to understand this term before they decide to lock their LPs.

I think the second idea is workable, but I have a concern. The $FX is considered a “loan” here, not “spending”. Who will be responsible for any impermanent loss incurred from this loan since there is a risk of impermanent loss here? My assumption is, we (as the FX community) do not want any losses from loan taken from CSP pool. This applies to all tokens generally, not only FXG.

Thank you.

4 Likes
7

==> "The $FX is considered a “loan” " : It depends if you’re considering the loan as permanent or not.
Actually, we could mix both :

  1. permanent loan from CSP to LPs
  2. LP rewarding program to compensate (or even exceed) for LP impermanent loss
8

seeing that the CSP has got great wealth the real benefits come from being able to take profit when profit is available, the only thing about being locked up in delegations & LP’s is you get shafted when great value comes & your unable to grab the moment, as a long term supporter way’s need to be available to help the strongest supporters grab those moments, my suggestion is say a dedicated amount of the CSP is sold at an ATH & then held for the supporter to claim a stable coin air drop of a said set amount of sold FX say 3 times in a peek period, maybe it’s a set quantity you can break up the QTY when it’s claimed but only up the the set limit, this way being locked up won’t be a concern; if you have say our market makers Kronos maybe looking after the CSP funds to be sold/held at it highest value & also providing market liquidity keeping the pool a max value, in times like these when you have 90% of your funds locked up is when you wish you sold everything while you where still rich.

9

First of all, I like the idea.

Since there is already a good APY% on FX via delegating with low risk, the APY providing LP must be much higher as @Alchimist mentioned.

10

Agree that the APY should be higher than apy for delegation.

We will probably submit the proposal in the next few days since the dev have deployed the farm contract successfully recently. Time to roll!

5 Likes
11

If APY is (significant) higher then delegation APY, would that come with a risc that delegators will massively undelegate and put their stash in LP? And network security wil be reduced?

Or am i exaggerating and will that be okay?

12

this will balance itself since liquidity provision have other risks and most of the people delegating want to have this lesser risk approach of delegation…

it wont be such a big issue as you might think.

2 Likes
13

Ok thanks.
Think you are right.

14

and secondly if many people undelegate and swith to LP farm then the delegation apy rises… its self regulating

3 Likes
15

https://twitter.com/kuzoIV/status/1580959831552163847 We had voted “Yes” to proposal #21

2 Likes
16

It would be good news to have the possibility to farm our LP tokens.

If you create an AMM with a native token, we can see, in general, that the token price has enormous sell pressure during the bear market, and its price goes down quickly, and it becomes inflationary.

I like the way how Kujira manages the Defi and Grizzly.fi (I’m in this project too).

We have to give an utility to the token, or why not use an existing token as $PURSE ?

18

Can you elaborate more on this? I am interested in what Kujira and Grizzly’s solution.

Right now the plan is to use $FX as the incentive tokens for farm. Yes it will cause sell pressure for $FX but $FX’s usage will also extend beyond native chain tokens. Just imagine the premier AMM in a chain uses the same token as the chain itself, double the value.

2 Likes
19

The Grizzly.fi founders are from Switzerland. A Team of young people, right now in Dubai.
:point_down:some contact from the founders. I think they will answer all your questions.

Here some contacts:
telegram: @grizzlyfi @andres_sol
twitter: @andres_grizzly @LeonHelg

1 Like
20

Hello Zac,

Happy to see your interest about my post. Let me introduce you this two projects.

1°) Kujira

We stack Kujira, and we earn rewards depending of liquidation happening on the platform. This way you don’t only earn Kujira for stacking, but many tokens used for collateral in borrowing on their platform.

LUNA, JUNO, SCRT, EVMOS, Stablecoins, for example…

You can also use the platform for buy tokens with a discount when the price goes down during liquidations.

They have a DEX, and a lending and borrowing platform with their own token over collateralized the USK.

When you stack KUJI you are exposed to receiving some airdrops. It would be awesome to have airdrops on function X too.

2°) Grizzly

Disclaimer: To be honest, I am paid by them to animate the french chat of the project since this month. And I discovered them by myself (cryptodad on youtube) and invested 15k USD on farms before contacting the team.

Grizzly purpose to make the DeFi experience easier as possible. They are running on BNB and soon on Ethereum.

You don’t need to make all the processes for putting your assets in a pool to have your LP Tokens. The app makes all the processes for you. First, you must choose the coin you want to use to invest in a pool.

They are an aggregator of liquidity and use the reward from other apps, for example, CAKE, to buy the GHNY (Grizzly Token), for have a buying pressure, and not see the price dumping.
The token is going down, but their purpose a deflationary system. Investor seems do not understand I think, or don’t believe in the token for the moment ^^

They are in contact with institutions of Switzerland to allow clients to enter in DeFi without using DeFi tools directly from their banks, and rewards in GHNY will be burns!

We can also freeze the GHNY or put the GHNY in farming for win more tokens.

If you choose the Grizzly strategy when you enter in farming, rewards in GHNY are automatically stacked.

The best document for more information is here :

My conclusion:

We have an excellent network with Fx I really like the Fx Wallet, we just need

to be better in marketing.

As CZ said, we have to build the best product during the bear market and make all in in marketing during the next bull market. Fx team build very well, just hope the marketing gonna be awesome for 2024/2025.

For exemple Grizzly had 40M USD in TVL in only 24h ! The GHNY was in 50 cents and went to 340 USD ! Now 42 USD~

They have a tasty affiliate program too, who allow everybody, non-investors included to earn some token only sharing the affiliate link!

I’ve seen the crazy launch of the dogechain! was fast and they still have many users.

Ethereum gonna have troubles with the SEC and I see many critics because they become too much centralized. Fx can be a solution. For example, I don’t hold Ethereum and don’t gonna buy a token who not run better than Solana, BNB, Cosmos, and Fx !

Thank you :slight_smile:

21

Sound nice but we need the farm on fx network not bnb

1 Like