Flux Governance Proposal - Liquidity Incentive Modification

TL;DR

I propose a shift of $FLX liquidity rewards from Uniswap to the Aurora and NEAR ecosystem to equally balance rewards across Uniswap (Ethereum) Ref Finance [https://ref.finance] (NEAR), and Trisolaris [https://trisolaris.io] (Aurora). In addition to shifting a portion of the monthly FLX rewards, we would also deploy FLX and USDC from the Flux DAO Treasury to provide an initial liquidity pool of $1m (FLX/USDC) in Ref Finance and Trisolaris.

Why is this beneficial for Flux?

Flux supports are a variety of significant L1 and L2 chains; however, currently, we are seeing extreme growth in applicable use cases on the Aurora and NEAR networks, with a new dev team popping up each day.

In the coming weeks, we will be kicking off initial data provision with AmberData’s range of high-quality price pairs, providing Aurora and NEAR developers with the same quality data they are accustomed to with chainlink at a lower price.

By supporting the two significant AMMs on NEAR and Aurora, we give their respective communities affordable and easy access to the growing Flux Ecosystem and token.

How will this exactly look?

Once the current month-long internal finalizes on January 9th, 2022, we would shift the rewards equally across the applicable AMMs as follows:

Total Monthly FLX Distribution - 1,250,000

  • Uniswap - 416,666.66 FLX
  • Ref Finance - 416,666.66 FLX
  • Trisolaris - 416,666.66 FLX

During the Copper LBP, 15m FLX was allocated for public distribution; during the three-day auction period, the community purchased a total of ~6.95m FLX, leaving ~8.05m FLX that were returned to the treasury. We would propose deploying an equal pool of funds to the applicable AMMs as follows:

  • Ref Finance - ~592,598 FLX / $500k USDC
  • Trisolaris - ~592,598 FLX / $500k USDC

(exact FLX amount TBD based on the current market price at the time of pool deployment)

Community Sentiment

We want to hear your feedback on this proposal. On January 7th, we will be holding a signaling poll for 24 hrs in this governance post below. The poll is already open to capture the input of our community. In the future, these votes will take place on SnapShot.

  • In Favor of the Proposal
  • Against the proposal

0 voters

Please see the Revised Liquidity Plan here Liquidity and Incentive Distribution: Revised

DISCLAIMER — NO INVESTMENT ADVICE

The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this document constitutes a solicitation, recommendation, endorsement, or offer by Open Oracle Association, the original author, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. FLX is classified as a utility token and is the native utility token of the Flux Protocol and DAO.

Changelog –

Added a poll for voting
Changed the voting destination for this proposal from discord to this governance post
Added a link to the revised Liquidity Distribution Plan

1 Like

I don’t think this is good choice for FLUX. Since Ref Finance and Trisolaris for now have no volume for every pair (Ref have volume 2.1 millions dollars daily), so why we need to set the reward equal with 1.3 billions volume daily dex like uniswap.
By the way, voting by amount of token in each wallet will be better than a random voting on discord. Let your loyal member vote, not some guy who don’t interest in token.
If you really care about transaction fee, why don’t list on any CEX, safe and easier for investor to buy token.

5 Likes

Are you stating that Ref Finanace and Trisolaris will each have a total of 1,009,264.66 FLX (592598 + 416666.66) and Uniswap will be reduced to 416,666.66?

I would prefer to not affect the rewards on Uniswap as that was the original path and many of us spent significant fees to stake our tokens. Reducing the amount of tokens awarded could mean some users will lose money or require their tokens to be staked for a much longer period of time before breaking even due to the fees required to stake and then unstake.

Is there a way to leave Uniswap as is and use a different amount from the treasury for Ref Finance and Trisolaris?

4 Likes

You make some great points around the fee and early adopter cost of purchasing and staking on Uniswap. I think adjusting the model may be a fair way of re-distributing rewards.

We could also make this transitional where we slowly decrease incentives on Uniswap and increase them on Trisolaris and REF.

Another option could be to see which liquidity pools are most active and accordingly adjust rewards to switch to the largest / most active pool after another month of growth.

A couple of points to unpack here. I think that TVLs are growing, especially on Trisolaris at the moment. I think that opening the token up to users on each DEX separately enables more growth of our addressable market. NEAR and Aurora are currently we are seeing the largest growth across the board, so it makes sense to open FLX in easy ways to the community.

I talk about the DAO difficulty here, we are working on something custom –

In the meantime Snapshot voting is difficult because Flux is cross-chain, meaning that all applicable voting power is not only on Ethereum, there are also tokens bridged to Aurora and NEAR, etc.

We are working on a cross-chain DAO at the moment which enables token holders to vote from each L1 and leverages the Flux Oracle to trustlessly combine all state into one DAO vote, but this will take time. For the time being Discord serves as a way for the community to signal what they believe is the right decision and our team will act accordingly based on the sentiment.

Thank you for your feedback and ideas! I touched on this in the following reply already. Flux Governance Proposal - Liquidity Incentive Modification - #5 by Peter

I think that we can continue to mold this proposal till it fits well!

1 Like

Im all for expanding liquidity incentives to other chains - its awesome news we have demand on other L1s. Having that said, Im personally not in favor of reducing rewards on UNI for a couple of reasons:

  • penalizes early adopters who took the high fees and risk. This point was made earlier.
  • the UNI pool is a reasonably high risk pool if you believe in the protocol because its USDC paired. USDC pairs are good in bear markets, but can be punitive in a bull market (you would be better off with a native token pair in that case, like ETH). Im not saying we should change the pair, but I personally think higher APRs are suitable for USDC pairings, particularly in the early days given the IL
  • the token supply is low enough to sustain some extra rewards to the early adopters, particularly after the LBP didnt sell out.

I like the approach of just keeping them constant, incentivizing the other chains with the aforementioned amounts, and adjusting them quarterly based on volumes.

2 Likes

Maybe a compensation to LPrs could be a good idea

1 Like

The idea of expanding the liquidity incentive will def help the protocol to grow. However , taking rewards away from Uniswap doesn’t seems good idea for me as well. Main reasons why ,are already mentioned above.

Good idea would be giving proportional rewards depending on the volume of respective dex. That would bring new users and exposure.

Thanks
Nabin

1 Like

How about my fees that I paid for Uniswap?

I don’t want to share with others. Cex listing will be better than sharing rewards.

Brs.

2 Likes

I don’t think this vote is good for early supporter since they already loss 50% if they bought at 1.71$. but they keep their loyal for project by staking.
Instead of sacrifice your early supporters, team can think about make a new contract that you can borrow token in dev team pool then provide it as reward for other pool.
Sacrifice team token or sacrifice benefit of supporters ? hm…

Hi, to be honest this would be the best way if we are speaking mid-long term. It would allow more reach in community and adopt new investors on the platforms flux is currently most active. But as most stated above this would punish the early adaptors harshly and maybe scare a few away. In my opinion the best way to do this would be:

Change the currently yield farm for FLX-USDC, as USDC is a safe choice but not that interesting as we take the risk/pay the fee for a risky farm. Either change it to flx paired with a relevant coin or change the staking. Something that is super interesting is a epoch mining farm schedule. Renew the pool make the rewards high for early investors but let it be reduced weekly. This way you attract tons of people early on but they will sit on their hands even when the rewards keep reducing weekly.

But reducing the current pool to move to others should scare some away - even tough new people will come to flux this should force negative consequences sort term. You will have to figure out how to keep the current holders happy and attract new people on near & aurora. Even tough I keep mentioning rewards i dont mean to incentivize reward us loyal holders!! It has always been the best way to keep people happy. And in terms of crypto the best way to make someone happy is by rewarding them with something they value and will increase in value in the long term. Airdrops, changing/increasing the pool… you want more people in on FLUX but is making new farms the only way? Something to think about as marketing on flux has been super silent. To become bigger you want the early people to really believe in your project. As there never has been a better way of advertising than mouth-to-mouth. Difficult situation I believe that, but I have faith you guys will figure it out!

Happy new year & best wishes

1 Like

you could give an airdrop for people who participated in the LBP and didn’t sell and an additional airdrop for people who were LPs afterwards.
Airdrop could directly go to Near or Aurora to save gas fees and directly start staking on these platforms as well. Win-Win

I agree with most of the comments written above.
In addition, it does not make sense to take away so many rewards in ETH, when it is the network with the highest fees.
In the end, it will have the opposite effect. Everyone will go to AURORA, as it is a mainnet without gas.
While in ETH, it is better known, and by incentivizing with greater liquidity, it can cause it to attract more users.

Hi, I’m against it. Deciding where the farms will be created and their subsidies should have been done as a first step. And you choose ETH network. Changing the distribution of farms after 2 months is a very bad way to go.

I am not against adding the liquidity to anywhere if needed (assuming its legit) but I’d prefer to get some compensation for early support via Uniswap, i.e. it could in a form of a farming booster for some period of time when migrating.
If we can solve the issue for roughly 900 ppl all is good.

We need to consider what/why we’re incentivising:

  1. Expanding to widely-used exchanges attracts more FLX account holders, we may need to pay for this/provide incentives for them to consider listing us.
  2. Rewarding a long-term outlook on the project, to provide the team some breathing space whilst the token price is below the average paid during the launch event, and to re-build some strength within the community. An important side-note is that smaller accounts may be excluded from this activity since gas costs on Ethereum are prohibitively high.

Currently Uniswap LP’s are incentivised: to provide liquidity for trade amongst existing holders and new holders; to offset impermanent-loss; to cover expensive layer 1 fees from gas costs,; and to reward a long-term outlook.

Branching out to additional dexes makes sense if the goal is to attract a wider audience. It would be particularly attractive if these Dexes offer dual-reward farming (e.g. farm TRI + FLX on Trisolaris) and co-marketing such as AMA within their telegram channel, retweeting content etc. But I think the reward needs to reflect the amount of trade-volume the pair attracts, since I think increasing the number of account holders should be #1 focus. This might mean we need to revisit the amount rewarded on a fortnightly / monthly basis.

Other Dex’s on Aurora should be considered e.g. WannaSwap, DodoExchange, possibly Nearpad.

Currently fees are 0 on Aurora, so accounts only pay once to bridge assets across from Ethereum. As such, this includes smaller accounts and there is only Impermanent Loss considerations when LP’ing. Launching incentives on Aurora will help existing smaller accounts join in on the farming activity, and could offer a further boost in community morale.

There seems to be some noise from existing stakers, who are likely to see a reduction in emissions. Whilst many might have covered their gas costs, they are still likely down in fiat terms from the price they paid in the token launch. So it will be difficult to convince this cohort unless emission reduction is not major…

An alternative to boosting the exposure and number of accounts, and improving morale, would be to please consider a lower-tier centralised exchange listing, such as Kucoin, Gate or Huobi. Of course this can be explored in tandem.

1 Like

I noticed a couple posters asked for an airdrop to LP’s to cover gas costs… It should be possible to calculate how many LP’s have recouped gas fees (plus fees to unwind the position). Perhaps if this was transparent it might help reduce some noise when it comes to proposing a change in emission schedule. Though it is maybe unnecessary work!

Gas costs to bridge to Aurora/NEAR are pretty low (I paid $36 at 80 gwei to bridge USDC). So I think there will definitely be appetite to LP there.

1 Like

ser, your number is quite off the chart,
ref.finance has done an average $20M + daily volume in the past 3 days.

This is a great shout. The liquidity on these platforms is growing fast due to the low gas. Flx will be a bigger deal to those communities so I strongly agree with this proposal.