Not sure if this is the right process to open stage 2, happy to remove/edit if any admin/team member says so
Stage 1 Link - [ STAGE 1 - End all farming rewards ]
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.