Starting STAGE 2 since after around 300 views and 7 days on STAGE 1 it seems everyone is in support of option 2. Also, README: 1inch DAO governance process says STAGE 2 is for discussion. (Not sure what’s the point of stage 1 then tbh).
2 options proposed:
End all farming rewards.
Continue farming rewards for 1inch/eth pair and also increase its rewards (Since we get rid of the other pool rewards) - This will support 1inch liquidity, increase APY on the 1inch/eth pool (increase interest) and not create a lot of inflation.
1inch earns most fees through trade volume and not AMM. If the liquidity on 1inch AMM drops after the farming ends, it will just move to other AMMs and 1inch will route trades through there and STILL EARN THE SAME FEES. Hence, the farming inflation does not bring in any value to the protocol and doesn’t earn any extra fees for 1inch holders.
Continuing farming rewards is not sustainable in the long term.
We are primarily an aggregator, not an AMM. People use 1inch as an aggregator. We get fees for that, not for our liquidity pools.
It won’t matter if 1inch AMM has low TVL because that is not what people use 1inch
Currently we have a 25% apy with staking - non inflationary! That is higher than most DEFI protocols and what the focus should be.
Diluting the supply further will not be good even for the above apy because more tokens will be staked.
A little increase in TVL on the 1inch AMM will not increase fees enough to justify the increase in supply.
Vested tokens begin releasing since June 2021 which will add to this inflation and make it unsustainable.
I am for option 2. Having a high TVL is cool and all, but what is the real benefit? I was attracted to 1INCH because it’s an aggregator, plain and simple. I think that should be the focus of the platform, although it is important to support 1INCH liquidity. Currently, ETH-1INCH farming rewards are poor in comparison to IL. I’ve lost 3.5x more 1INCH to IL than I have gained through farming rewards. This doesn’t incentivize users to provide 1INCH liquidity, it does the exact opposite. Farming rewards should offset IL. If people are worried about users dumping their increased farming rewards on the market, we should look into something like time-locked rewards. Rewards could be locked for 3, 6, 12 months, or a certain percentage could be unlocked daily over an agreed-upon period.
I can’t imagine I am the only person who wishes they just held their 1INCH, rather than providing liquidity, but I think it’s important to provide liquidity for the 1INCH token and protocol to grow. If we’re going to have farming rewards, they should at least do a better job to offset IL, and incentivize more users to get involved. Especially with a new token like this, there is a lot of hype and price movement. IL is expected, but yield farming, in my eyes, is a great tool to incentivize users to provide liquidity. It just doesn’t make sense to do so for a new token pair like this otherwise. Maybe I am misunderstanding the benefits, but this is how I see it. I’m honestly curious how many 1INCH I would have received through staking, had I done that instead of providing liquidity.
I would like to say that I don’t necessarily disagree with any of your points however, without developer input or a road map it is just speculation. We really don’t know what the plan or the intentions are.
Farming rewards are big attention grabbers and generate interest/buzz in a project. Hearing about the farming rewards in December is what got me to take a look at 1inch, and to be completely honest I wrote off my initial look partially based on the name and logo. My impression was “here is another “unicorn” DEX, a duplicate in an ever growing space” I came around when I realized the savings that could be had by using a DEX aggregator, I suppose the point I’m trying to make is that LP rewards give people another incentive to step out of their UniSwap comfort zones. Saving money on gas fees is a great incentive IF you can get them to try it in the first place and not just say “how much is it really going to save me, and is it worth the hassle of learning another interface”
While 1inch is primarily an aggregator right now, is that the end of the ambition? With a potential relationship with AAVE it seems like the 1inch devs may want to make this a 1 stop defi shop. With swaps, LPs and lending.
Perhaps the farming rewards were simply marketing and they will end them when they feel like they’ve gotten as much attention from them as possible, maybe these are just incentivized LP trials and they intend on offering a large number of LPs as a step towards a aggregated defi shop where you can borrow/lend, swap, farm and stake…again without guidance or a public plan we’re all just guessing at what they intend and hoping it aligns with what we as users want. Anyway, just a slightly different perspective to add to the discussion.
But, I believe most of the points in your list should be proved by real numbers. Did you calculated how big is AMM governance rewards comparing to Aggregation rewards? But how this would be changed if 1LP AMM would grow 10x in TVL? Please provide something we could rely on before making such critical decisions.
Do you have a data scientist, data analyst, token architect in the team? Who builds models for this kind of problems? I’ve built some gsheet models. But I just don’t have the incentive to do this as a full time job.
Did you saw recent farming update? Opium token have 99% liquidity on 1LP. This made every Opium trader to use 1inch exchange. What do you think about this? Here are some stats about $OPIUM trading pairs (check out full version at duneanalytics.com/1inch):
I am sorry but you & the team just don’t seem to understand the point of having a DAO. However good and great the opium decision is, it should have gone through a vote. What gives you the authority to single handedly distribute 1inch rewards without any communication/consultation/authorization from the community?
Having a DAO is not an excuse for having a token. The purpose of a DAO is to have such decisions voted on by the community. Please understand and execute this. Right now token holders have close to 0 say in the DAO which is not how it is supposed to be.
Farming rewards help keep 1INCH competitive versus other DEX’s.
The 1INCH staking yield is superior to xSUSHI, but without liquidity farming rewards, 1INCH would be less attractive of a hold compared to SUSHI. Stopping rewards at this stage would be quite a mistake.
1inch LP protocol attracted a lot of liquidity. ETH-USDC pair has more liquidity than Sushiswap. But there is a problem: even with less liquidity ETH-USDC sushiswap’s pair is doing 3x more volume than the same pair in 1 inch LP protocol. That means even if farming APY is the same in 1inch vs Sushi, you are still better providing liquidity to sushiswap, because you will get more trading fees there.
I think LM rewards are working ok. The liquidity is there, just need way more trading volume. For the next stage IMO it’s better to leave LM rewards as is or increase LM rewards for ETH-1inch pool a bit, since folks there are struggling with IL. Continue with ETH-stables and ETH-WBTC pool rewards. It will be really sad losing all that liquidity that came to LP protocol. Just need to concentrate on trading volume. Maybe tweak some parameters in LP pools? Introduce trading LM, meaning reward traders with 1inch tokens?
keep the rewards coming! option 2… just make them periodic… so people dont end up taking it and leaving…keep them around for longer!! higher fees the sooner they withdraw, lower fees the later they unstake!!!
I suppose that would be fine, if there was in fact a vote. If the team and the investors pooled their votes and forced a proposal through we could decide to accept that or not. You saying the team “is the final vote” is disingenuous because there was no DAO vote, it was unilaterally decided.
In the end you are asking us to trust you with our funds, trust that you will make good decisions…decisions that will benefit everyone but you are not trusting us with any kind of real decision making ability or input. You won’t trust us with your future plans, roadmap or vision for where the team wants this project to go?