I would suggest we end ALL farming rewards after the current announced ones end.
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 do not see any clear gains for 1inch aggregator by continuing farming and attracting fake liquidity to justify the inflation.
This is the address where all the fees from the aggregation protocol features are collected (this includes positive slippage). All of these are then used to market buy 1inch which is used for governance rewards.
As far as I know these are the only rewards that benefit token holders. Would be happy to be corrected if thats not the case.
Also, I think only the team can give us exact numbers on fees from various sources. I am stating what I can conclude from the information I have.
Doesn’t Farmers being rewarded 1inch make them holders though?
Doesn’t their LP help this whole operation?
People tend to like one stop shopping, being able to have all your DEFI needs under one roof draws in and keeps users. I get that it’s not sustainable with high APY’s, but sure looks form the outside that the system auto adjusts the APY based on if the LP is diluted or not. Which might make just stopping it more detrimental than not
I’m just saying that all the other guys are doing it, and if 1inch just stops doing it all the cool kids are going to go to another party
Maybe what you actual desire is a burn feature. Something to help with runaway inflation worries. Am I wrong in thinking runaway inflation is the root issue?
I could be wrong, but isn’t the Staking mechanism of the Farming what creates the 1inch tokens, and they are rewarded to the Farmers and Liquidity Pools? Isn’t that the entire point of this level of DEFi. Be the ones Bankrolling the Bank. Don’t all banks make ridiculous returns? That end up going out as bonuses. Here We get to be the ones getting the bonuses. As long as the bonuses don’t exceed net isn’t that what draws us to this particular bank
Cannot find an option to edit the OP, so adding this here till maybe the admins can fix it.
I am thinking we consider 2 options:
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.
#2 is 100% accurate* , as one can watch the APY% change in inverse correlation to the amount staked in the liquidity pool. this fact is why i made a lil fuss on twitter when they announced the opening of V1.1 was open 20 minutes early. Had i gotten in before then when the returns where over 1000% i would have made more and very quickly than I did when i was able to get in at ~430%
I watch the pools APY change all day as the Liquidity value changes. You can verify this by watching the plots yourself it jumps around a lot, but that’s due to stakers constantly adding and removing liquidity. Would be nice to have some graph/chart action their
Simply put as more of the pair is staked the APY decreases. As liquidity is removed the APY rises. The farming pairs are the pairs that the DEX finds most used, and are in need of insuring the largest amounts are staked. By giving the farmers high APY returns the DEX insures the fasted, cheapest tx for the user, due to these being the most stable and largest pools.
it’s the large APYs that make these new DEXs so much smoother and faster than the deathly clunky DEXs of the past. people are actually providing liquidity, because it’s profitable. There’s a ton of risk that comes with staking your coins in this manner. That has to be offset or people don’t provide liquidity.
removing the farming is a backwards move to the antiquated give all the profits to only a small group traditional finance style. Where as what makes DEfi work is that all the profits go to all the individual investors in direct correlation to their skin in the game. Perhaps you’re missing the gamification factor of crypto and Defi. It’s successful because it incentivizes individuals to invest, buy allowing them to use the same methods banks use to compound their investment.
The LP is what allows the DEX to function, rewarding the Farmers/Stakers is what insures that the DEX functions Smoothly and Quickly
I think the DEVs might need to post up a business model so that how this whole process works is more clear
*#2 being the 2nd of the quotes in your reply above
I actually came here to bring a proposal forth that would increase farming rewards on the ETH/1INCH pair, but I also like this idea. Sadly it doesn’t play into my hand, or any other ETH/1INCH providers, but ultimately it sounds like a productive move forward.
My beef is with the incentives behind farming to begin with. LPs should be rewarded for providing liquidity to the ETH-1INCH pair, but it doesn’t seem to be working out that way. I’ve been farming in 1.1 since it launched, and have lost 40% more 1INCH to IL than I have farmed in the same time period. Sure, I am up in net worth, I have more ETH than I started with, but I am holding 1INCH and providing liquidity because I believe in the project.
If farming continues, I believe that any 1INCH pairs should have increased rewards in comparison to other farms to account for IL, otherwise what is the point of providing liquidity to that pool? In essence we are providing the liquidity to allow others to get into 1INCH, while taking fees off the top of their transactions, but if farming doesn’t offset IL, why bother?
After further inspection, I’ve actually lost more than 100% of 1INCH to IL than I have gained through farming. Rough. I’ve accumulated 115 1INCH through farming rewards according to Zapper, and this is what I’ve lost, according to APY.vision.
Totally agree with option 2:
“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.”
@ vitalsine you aren’t even providing you liquidity on 1inch you have you tokens on sushi swap, so if your aggregator is paying you rewards it’s in $Uni and not 1inch. You haven’t lost 100% of your 1inch you are only -28.34464827387% [ 1.32 - 1.86|/((1.32 + 1.86)/2) = 0.54/1.59 = 0.33962264150943 = 33.962264150943% ]
, while you have a 40.909090909091% increase in Eth [ 1384.60 - 992.14|/((1384.60 + 992.14)/2) = 392.46/1188.37 = 0.33025067950218 = 33.025067950218% ]
Defi is literally making you money and you don’t realize it as eth is up o~120% in the last 30 days and 1inch is up ~62% and thats why you are suffering impermanent loss on staking the pair, but you are actually up as your have 33% more Eth and it’s value is up 120%. you are actually making out quite well and are focusing on the wrong metric.
another reason you are losing 1inch is that your LP is on a DEX where people are mainly swapping eth for 1inch. so your 1inch is decreasing in amount directly proportional to your percentage of the pool those swaps are being pulled from.
this plan will not decrease impermanent loss. especially since the pair that is suggested to be the only one is such a high probability of suffering from it. Impermanent loss occurs because one coins value is so much higher than the other, and or greatly out paces the other in the pair. As ETh is doing to 1inch The only way to fight impermanent loss is too pick coins that are close in value and likely to move in similar fashion. ETH/1inch pair is literally a prime candidate for suffering the most impermanent loss, as Eth has the potential still to 10x way before 1inch does. getting rid of the other farming pairs isn’t going to decrease your chances of impermanent loss. this proposal has an extremely high probability of causing even more impermanent loss.
idk feels like due diligence wasn’t done before jumping into this investment vehicle, as impermanent loss and rug pulls are the two most likely to happen of negative consequences. This proposal is trying to reinvent the wheel with a square wheel. it’s literally going to bring about the exact thing the proposal claims to be trying to prevent (debasement of the 1inch tokens value ) because once LP moves away from 1inch the value of the token will drastically fall.
this proposal goes 180 degrees against the !inch business model. it’s trying to turn 1inch into Uniswap.
Aggregators are a 2nd layer to the Uniswap protocol that offer liquidity providers incentives to fund the project. Incentives this proposal is trying to kill.
I don’t know why it shows on APY.Vision that my tokens are in UNI, but I provided LP through 1INCH. Minor oversight hah. I know I’ve only lost only 28% of my 1INCH in the pool, which is ~392 1INCH, but I’ve only farmed 115 1INCH. I know how impermanent loss works, it was expected. What I was proposing was that ETH-1INCH farm would receive more (x2, x3) the rewards of other pairs, to offest the IL. As you said, if no one provides 1INCH liquidity, the value falls… where is the incentive to continue to provide liquidity? Sure it is safer to farm a pair like wBTC-ETH, but that isn’t helping 1INCH.
For example; If I had held my 1INCH rather than providing liquidity, I would have been up 37% on what I initially put into the pool, not including Ethereum gains. Instead I am down 4% (my farmed 1INCH barely covers this). I understand that stuff like this can happen, I did my research on IL.
I still believe that people providing liquidity to ETH-1INCH should receive more farming rewards than other pairs, or like mentioned above, remove the other pairs from farming.
other pairs do help 1inch as they are:
A. LP used to facilitate swaps in-house helping to reduce gas fees
B. Farming stake the LP to help insure the most needed in-house pools are the ones with the most value staked
both of these actually help 1inch increase in value as they help insure the speed and lower fees that give 1inch the advantage of the other projects.
BlockquoteFor example; If I had held my 1INCH rather than providing liquidity, I would have been up 37% on what I initially put into the pool, not including Ethereum gains. Instead I am down 4% (my farmed 1INCH barely covers this). I understand that stuff like this can happen, I did my research on IL.
the lower return on LP of 1inch is to incentivize farming to be a longer play than just providing liquidity, also why the APYs are/can be so high ( some times ridiculously high when the amount in the farming pool is lower. this incentivize user to start farming, and also to move or add to farming pairs with less value staked) incentives to entice users to do everything in-house as apposed to on other projects
the due dilegence part was meant to be directed at this proposal, as it calls to end the incentives designed and proven to get users to do the things most needed to ensure the success of the project. So that’s my bad as i can see how you would feel it was directed at you
Maybe we should give the invention of the price impact fee at least a shot?
Immediately killing all mining rewards will prohibit 1INCH from actually trying to gather the data and demonstrate the 1INCH liquidity pools are a better option for liquidity providers compared to SUSHI or UNISWAP.
Have you read any research about the profitability of pools?
I asume that 80% of liquidity pools actually have a negative return. Happy to be proven wrong.