PIP-1: Liquidity Provision Reward (Amended_V1)

Author:
Core contributor of PathDAO

Summary:
The current Liquidity Pool (LP) on Uniswap is mainly provided by the PathDAO treasury. As such, the LP pool is not deep enough to provide price stability. We propose moving 70% of the committed staking reward to Uniswap V2 LP reward, as a way to improve the depth of Uniswap LP and subsequently better price stability.

Abstract:
PathDAO treasury has committed a total of 1,600,000 USDC (10% of funds raised in Copperlaunch) to Uniswap since 8th December 2021. The two current LP positions are

  1. Position 1: Ranges from 0.26 to 5.0 USDC per $PATH
  2. Position 2: Ranges from <0.001 to 0.4 USDC per $PATH

As of 19th December (at a price of 0.2 USDC per $PATH), position 1 is out of range, leading to a thin liquidity for $PATH.

23,000,000 $PATH tokens have been committed to staking rewards, for a duration of 30 days, from 8th December 2021 to 7th January 2022. To strengthen the depth of Liquidity Pool, we propose the following

[START OF AMENDMENT 2]

  • From 8th December 2021 12pm EST to the date of LP farm implementation, daily staking reward at 766,666 $PATH tokens ( emitted rewards are untouched )
  • From the date of LP farm implementation to 7th January 2022 1159am EST, daily staking reward reduced to 230,000 $PATH tokens
  • From the date of LP farm implementation to 7th January 2022 1159am EST, daily LP rewards (on Uniswap V2) at 536,666 $PATH tokens

[END OF AMENDMENT 2]

[START OF AMENDMENT 1]

  • From 8th December 2021 12pm EST to 23rd December 2021 1159am EST, total staking reward at 11,500,000 $PATH tokens ( emitted rewards are untouched )
  • From 23rd December 2021 12pm EST to 7th January 2022 1159am EST, total staking reward reduced to 3,450,000 $PATH tokens
  • From 23rd December 2021 12pm EST to 7th January 2022 1159am EST, total LP rewards (on Uniswap V2) at 8,050,000 $PATH tokens

This means that the total reward emission for staking and LP is maintained at 23,000,000 $PATH in the first month. Second month emission as below:

  • From 8th January 2022 12pm EST to 7th February 2022 1159am EST, total staking reward reduced to 3,000,000 $PATH tokens
  • From 8th January 2022 12pm EST to 7th February 2022 1159am EST, total LP rewards (on Uniswap V2) at 7,000,000 $PATH tokens

TLDR: Post first-month, total emission of rewards for staking and LP will be at 10,000,000 $PATH per month, to ensure a minimum of 12-month sustainability. Bonding and locked rewards will be explored in the subsequent proposals.

[END OF AMENDMENT 1]

  • From 8th December 2021 12pm EST to 23rd December 2021 1159am EST, total staking reward at 11,500,000 $PATH tokens
  • From 23rd December 2021 12pm EST to 22nd January 2022 1159am EST, total staking reward reduced to 3,000,000 $PATH tokens
  • From 23rd December 2021 12pm EST to 22nd January 2022 1159am EST, total LP rewards (on Uniswap V2) at 7,000,000 $PATH tokens

Assuming price of $PATH at 0.2USDC, a 1,000% APR will bring 1,680,000 USDC to our LP pool on Uniswap. Calculation as below:

  • Monthly reward for LP pool = 7,000,000 $PATH * 0.2USD = 1,400,000 USDC
  • Annualised reward = 16,800,000 USDC
  • Expected LP at 1,000% APR = 16,800,000 USDC / 1,000% APR = 1,680,000 USDC

Note:
(A) A separate proposal will follow to discuss the necessity of locking rewards
(B) An emission rate of 10,000,000 $PATH tokens per month will ensure continuous emission of $PATH tokens for staking or LP for the next 14 months, given that the allocation of $PATH tokens for this pool is 150,000,000 $PATH

[START OF AMENDMENT 3]

Voting options

  • In favor (Yes): Move 70% of the staking reward to Uniswap V2 LP reward (from LP farm implementation to 7th Dec 11.59am EST),
    or
  • Against (No): Keep the staking reward (23 Mn $PATH) in the first month, and wait for future proposals on locked rewards and Protocol-owned liquidity via bonding

[END OF AMENDMENT 3]

Rationale:
LP incentives will improve the price stability and subsequently stronger investors confidence in $PATH

Budget:
No USDC spending involved. This proposal is about the shift of rewards from staking to LP

Process:
PIP-1 will proceed in the following manner;

  1. This proposal will be open for discussion until 21st December 10AM EST
  2. After the discussion concluded and any possible adjustments have been made, the proposal will be up for voting on Snapshot. This link will be provided in due course
  3. The snapshot voting will last for 24 hours after it goes live
  4. After the voting concludes and if the proposal is accepted by the token holders, the proposal will be executed
14 Likes

Single Stacking with high rewards is by far the most attractive proposal you have for you token right know.
The high staking rewards allow the disgruntled copper buyers to lower their average, and the ido buyers to stay in the projects even if they are in profit because they can take advantage of the good APR.
Liquidity providing, even though with a high 1000% APR, won’t do the same as there are huge risks correlated on a new token and in a volatile market (impermanent loss) as well as being on eth with high gas fee (and people who bought few hundreds on copper won’t definitely provide liquidity with all the expenses that entails. Moving money to eth, approving contracts, creating pools tokens, staking them could be hundred of dollars).
Also to be fair this crisis was triggered by a wrong allocation of liquidity in the presumption the price wouldn’t go lower than 0.25. It did and this proposal seems to be a further sacrifice to the small bag holders which could recoup some losses with staking but won’t be able to participate in liquidity farming. I’m against the proposal.
Thanks

21 Likes

Sounds good! I think that’s a good idea

Thanks

1 Like

Replying to Teremors answer

I’m with this comment 110%. Explains it perfectly. Im also against the proposal.

5 Likes

I think various locked-in periods with various APR will be attractive and ensure supply is staked for a specific amount of time.

3 Likes

As I’ve said on discord, I think we should use Olympus style bonds to incentivize liquidity.

Simply paying LPs is renting liquidity and if we can’t do it forever it won’t help us long term.

Buy buying LPs position means that the DAO gets something permanent for it’s money and owns the liquidity forever.

This not only helps increase the liquidity, but it also brings a long term revenue source for the DAO, since the treasury will basically own all the liquidity available (kind of like now), getting all the trading fees.

Now, as far as I know, Olympus does not have support for uniswap v3 (basically no one does I guess).

But I still think we should use their idea as a guide. We use our $PATH in the treasury to buy LP tokens instead of paying them for just being there.

Also we can easily move our LP position, I mean we decided to do it at 0.2-0.5 kind of arbitrarily.

6 Likes

I like that Idea, I think we can build upon it to ensure there is long term growth and sustainability

Let’s all agree on one thing - without a deeper liquidity pool, we would struggle to attract and retain investors. Liquidity is an important consideration for any investor. And

So I disagree with Teremor’s comment that moving rewards to LP will actually be worse for us. That’s quite a one sided view - you say by shifting rewards to LPs we actually marginalised small holders who can’t afford to provide liquidity. I think the opposite is true - if we continue to offer high APR on single staking, we will be in a scenario where we have constantly increasing PATH supply with no corresponding increase in liquidity - which means lower and lower prices constantly. Liquidity will help us attract new investors and stabilise the price.

Given we do not currently have ways to get to protocol-owned liquidity on Uniswap v3, I think renting liquidity is probably the best short term option until we are able to have protocol-owned liquidity.

However, I do think before we shift rapidly to incentivizing LPs (and thus forever leaving us at this base price), we will need to improve transparency of what Path is doing and improve price discovery.

15 Likes

I think the only possible solution for going out of this “crisis” is to make your best to get listed on a CEX. That way you can attract new investors without having to pay in ETH. If get listed, the LP has no sense while maintaining staking rewards incentivises exiting holders to not sell their stake.

My proposal is to maintain current staking while you use your contacts to get listed ASAP on a good CEX, and provide liquidity to CEX and LP from one of these two pools:

Treasury (185m) → you just launch the project, no need for more funds. Other way to look at it, is not the same to use 185m to raise funds if this tokens are trading at 0.2 or at 2, so if you want more funds, focus on the token to trade higher, so you’ll need less tokens to raise the same amount of funds.

Community incentives → by maintaining staking (which comes from other pool), you’re compensating your community, so don’t touch it and take the liquidity you need from this pool, as is the same as the point stated before, give 1 to token at 2$, is better than 10 tokens at 0.2$ (for current holders)

As stated before there are around 60 million circulating supply, at 0.16 is 9.6 MC, which is less than what they raise in Cooper + private sales + liquidity…guilds like YGG or GGG usually trade at 10x funds raised (you can see avocado guild raised 18 million in a private sale at 11x valuation for reference 1 month ago), and path is trading at less than 1x…if I sell my stake in path (which is something I’m not going to do for sure) I will dump price to 0.1, because there is no liquidity (more than 80% of circulating supply is stake).

If you guys put that 16 million raised in Cooper into projects like POLIS or ILV, you can make x10 by mid year 2022, and give back funds to investors and Cooper investors will be making x20 what we invested.

I’m not saying this to do it, as it is not the roadmap, but simply to state that value should be given to investors. If you increase liquidity by decreasing staking, the value will be given to new investors that enter at 0.2. We entered at 0.7, and our value is for newcomers. I think increase liquidity is necessary, but It can’t be done at the expense of the people who invested in the project at first.

This is token distribution based on your roadmap, take liquidity from elsewhere, not from first investors (Cooper)

Public distribution - tokens set aside for the public rounds - 2.5% (25,000,000 PATH tokens)
Genesis NFT minters - the contributors that participated in NFT-as-seed round - 7.5% (75,000,000 PATH tokens)
Long-term holding compensation - compensation for PATH token long-term holders - 15% (150,000,000 PATH tokens)
Treasury - for future fundraising for PathDAO - 18.5% (185,000,000 PATH tokens)
Community Incentives - through various means we want to reward our community for their efforts in contributing to our DAO’s success - 20% (200,000,000 PATH tokens)
Private investors - the contributors that participated in private sale round - 14% (140,000,000 PATH tokens)
Launchpads - Ignition and Enjinstarter - 2.5% (25,000,000 PATH tokens)
Advisors - rewarding the advisors for their effort to our DAO’s success 5% (50,000,000 PATH tokens)
Team - rewarding the core team members for their full-time effort to our DAO’s success 15% (150,000,000 PATH tokens)

9 Likes

We should also provide higher incentives to longer term stakers so they’re not just dumping liquidity on us.

9 Likes

I sincerely agree. This is like a cooperative, it should bring value not takeaway value. If you need funds for LP then by all means invest some of the money the project made to buy LP.

We need the high staking APR to remain positive.

3 Likes

What would we be losing if this was funded, or partially funded by the treasury?

sounds like a plan. thanks for the quick turn around and opening up for discussion.

3 Likes

I am also against it.

Killing the single staking APR is the single thing that will screw the most the Copper launch investors. This proposal not only would harden the price at the 18c region but also make people that believed in the IDO impossible to DCA through the staking rewards. This would only benefit private sales and even incentize them to continue dumping on tokens.

Messing with the treasury also doesnt seem like a good option. Probably one of the less harmful solutions would be to borrow liquidity. The thing is, damage is already done, the project is not doing well and even the team didnt believe it was going to be this bad, hence they didnt provide liquidity below 0.25c. For now Cryptoraculo8 has the best arguments in my opinion.

7 Likes

funded by PATH or USDC? not sure which are you referring to

I know price stability alllows investors to feel more comfortable with their investment; however, I think you also need to emphasize users and investors to stake, for long term organic growth not, to have it pump and dump so investors can dump their positions

Hey man, so if you reckon the rewards should not be diverted from the staking pool for LP, what is your alternative suggestion?

incentivize users to add to the LP

1 Like

agree with offering incentives for providing LP

100% against this suggestion.

High single asset staking reward for 30 days was partial compensation for the price trading down after copper, in addition to 30% bonus from the community pool. I view that this suggestion is unfair to token holders who have invested / committed based on the assumption of higher staking APR for the first month, and even bought more after copper from uniswap. A lot of us bought even more on uniswap because of the higher staking reward, and are also ~50% down from that, let alone copper price.

I have a view to hodl and stake for the long term (not in it for the quick flip / trading gains), and give the team time to build out the business and investments. Thin liquidity at the lower bound of the price band is of lesser importance to me because I believe in the long term value proposition of the DAO’s business model. We should not be attempting to support price artificially, especially for those looking to exit. Once the value from the treasury’s investments can be demonstrated, the price and interest from buyers will come (buying demand > selling supply), and we will revert to the price range where there is sufficient liquidity.

We should not be diverting staking rewards from the parties who have been most affected by the price decline since copper, to indirectly aid parties that want to exit when price is down.

PathDAO team: Please focusing on building and investing. If this is done well, demand for the token will be highly visible and demonstrable, and demand will naturally come. This is what we need from you.

11 Likes