@chainlife I assume the larger part of people will be staking so the share of graviton allocated to investments of LP (per dollar) will be larger anyways. Given the difference in liquidity of both groups I wouldn’t lower this pool at all.
@alexp I propose a scheme to boost the reward for liquidity providers (staking/pairs) that lock their assets for a given amount of time. This is interesting to deincentivise from day trading and improves the stability of the token. A more stable coin would also reduce the cost incurred by arbitrage done by Pathway, as less dips and heights will occur.
I can think of two implementations:
The reward goes up as the asset has been present in the pool for a longer time. This would involve more work to find a proper formula that doesn’t explode too much for larger times. Practically, everybody will be ‘by default’ included to the boosted reward as it doesn’t require any extra involvement from the liquidity holders.
The user decides on the locking time beforehand, after which a boost is given from the start which is constant. Unlike the previous implementation, liquidity providers wouldn’t be able to retract their assets at all. Additionally, as this choice requires an action from liquidity providers (and some premeditation on the optimal locking period), not as many users will be included to this. As locking away assets has a higher effect on the liquidity providers, I would imagine the second implementation to have a higher reward.
Overall, I think this idea falls in line with the goal of the graviton dev team to push graviton forward as a stable investment.
Based on Forum’s discussions and escpecially Jim 's proposals/comments. There is an idea:
what if we’ll use amount of locked GTONs as a weight for farmign disctribution for both staking & LP farming
imagine today according to “exponetial decay” formula for Staking & Farming allocation we have undestributed 10k GTONs
atm we have: 100к GTON in staking, 50к GTON in NT-LP, 30k GTON in WT-LP, 200к GTON in USD-LP
which means we’re distributing those 10к GTONs across 4 pools:
total GTONs locked atm = 100 + 50 + 30 + 200 = 380k in the system
so we’ll distribute:
into staking: (100/380)*10 = 2.6k (26% weight)
into NT LP: (50/380)*10 = 1.3k (13% weight)
and so on.
this system is fair and autobalanced
imagine we have a LP-pool with weak asset
so if the price of this asset will decline
amount of GTON will be decreased in the pool => less GTON farming rewards for it
stronger assets will bring more GTON for it’s holders as a compensation for possible impermanent loss if an asset is outperforming GTON for some reason, this will motivate more people to move liquidity into asset/gton and this will organically push gton price as well
so, it seem like this is self regulated approach to farming rewards distribution
Interesting approach Alex. One thing that might have some unintended consequences however:
If we use the amount of GTON in each pool, the APR will always be double for staking - as there is no additional token with the same value included. This might lead to many staking and not LPing - which would then result in lower LP liquidity - which is not the target.
So if we go this path, I would suggest that we add weights to the pools, which would essentially change the APR relative to each other to an intended ratio.
So lets say the intended ratio for a LP GTON-Wrapped Token pool is three and for staking it is 1. This should result in an APR for the LP GTON-Wrapped Token pool to always have a 50% higher APR than GTON staking.
Assuming GTON price is 10 USD and the Wrapped token price is 2 USD or 0.2 GTON. We have only this pool and the staking pool. In the staking are 100k GTON, in the Wrapped Token pool are 50k GTON. The TVL of both pools is thus 100k GTON or 500k USD.
With the assumed factor of 3 the Wrapped Token pool will be caluclated as 150k GTON, while the staking pool with factor 1 as 100k GTON.
Staying in Alex’s example, to 10k GTON would be alloacted 150k/250k to the Wrapped Token pool, which equals 6k GTON. The other 4k would go to the staking Pool.
From my understanding on the whole matter of APR (a more detailed post here), reweighing pool rewards will mostly affect liquidity in that pool.
That said, reweighing the pools based on the asset strength might be a bad idea, and will incentivise liquidity migration based on the current market.
I’ve invested in GTON-ETH (500$, APR 50%), ETH price dropping will cause two things
reduced APR: my share in the pool is equal, the APR is therefore not influenced by the weak asset. However, by reweighing the GTON allocation the APR lowers
impermanent loss: impermanent loss occurs if either asset grows/weakens with respect to the other
The effect results not only in my liquidity being worth less (ETH price dropping), but also results in lower reward (GTON allocation dropping). Moreover, other pools suddenly enjoy better APR rewards. More people will migrate liquidity to other pools as compared to a system where the APR stays the same.
For the project, I would project this system to make liquidity present in each pool less stable and more correlated to the shifts of the market.
this system is fair and autobalanced
What constitutes fair? The balancing causes the feel of double lose to liquidity providers (see example).
stronger assets will bring more GTON for it’s holders as a compensation for possible impermanent loss
Impermanent loss applies to both assets growing stronger and weaker
this will motivate more people to move liquidity into asset/gton and this will organically push gton price as well
I’d like to see a more expanded step-by-step explanation on this happening.
This makes a bit of sense to me. I’m worried that it will end up in the negative ways of Swop,fi, ie, finding adoption and keeping APYs high will be difficult in the long run. If you look at Waves Ducks, it is the same thing. They purposely bring on new proposals or ideas for how to make the ducks worth more, they can be perched, they can farm, they can be bred… the least disirable most common ducks suddenly stop being born… they will run out of things eventually, or transform the game somehow. Graviton needs to keep a close eye on keeping APYs high for adoption as there are some other cross chain solutions coming out there. The pool weight voting or some kind of other incentive will help as long as it doesn’t get too diluted.
I really like it, and there comes nothing to mind right now to improve upon it.
It allows for a dynamic setting of the rewards, which seems important. With this proposal, the rewards can be tweaked based on community feedback thru the community. Nice work