Proposal to extend the on-going rewards for an additional 3 months and a proposed end date for INST token claims (from initial token launch)
Proposal
The Instadapp Rewards program is approaching its conclusion in the next few weeks. We have seen great success with the launch of the INST token, the liquidity mining rewards in particular have brought lots of volume and interest in the Instadapp platform. The G-UNI pools have good volume and growth and INST is doing around 1-2m USD in daily volume, with a majority of that volume from the G-UNI pool.
The team proposes that we extend the current INST mining rewards program until January 15th, 2022. This is slightly longer than the current three month program, due to it being the end of the year we can give the community some additional time to reconvene towards the end of this proposed liquidity mining program.
This would in total allocate 5m from the Treasury to continue the liquidity mining program. We propose at the end of this liquidity mining period the Instadapp Treasury will re-claim any unclaimed INST tokens from the initial distribution that occurred with the token launch.
Reason
Currently the Instadapp Treasury holds a majority of the INST tokens. The platform is seeing great success with both the Liquidity Mining Rewards and the INST token launch. Instadappās TVL has grown to over 9.5 Billion USD since the launch of the mining program, making one of the largest DApps by TVL. There have also been several discussions around revenue models, market liquidity and growth that also lean towards increasing the distribution of the INST token.
The more tokens available, if done correctly, the more decentralized and more distributed we become. This helps make the protocol more resilient and increases the number of stakeholders to the protocol and helps increase market liquidity.
Result
Allocates 5m INST tokens from the DAO Treasury to extend the Liquidity Mining Program until January 15th, 2021. At the end of this liquidity mining program any unclaimed tokens from the initial token launch will be reclaimed by the DAO Treasury.
UPDATED: Aug 11th, 2021 - Increased allocation from 4m to 5m
Thanks to @Seb_EthMonk and the Instadapp Team for putting this together.
I have a few questions which may or may not have answers:
Do we have any idea how many INST tokens from the initial distribution have not been claimed to date? This would be helpful to understand how many tokens will be coming back into the treasury.
Separate from the initial air drop distribution, do we have a grasp on how many of the roughly 230,000 INST tokens rewarded weekly are claimed?
This was touched on in our first community call yesterday, but has it been decided if there will be 1 or 2 G-UNI pools moving forward?
Great, thanks for the answers @samyak. If the LM was directly on Uniswap v3, would we be able to manage the pool through Instadapp? Reason Iām asking is we donāt yet have Uniswap available for DSA v2 within the dapp.
Yeah! If we decided to with it then weāll speed up the overall development for Uniswap v3 on Instadapp. Anyway, We already have the UI designs ready.
We will submit an on-chain vote to allocate and move those funds for extension most likely in the following week. We do not anticipate any issues with extending the rewards.
Great discussion on the extension and likely a good outcome if we extend it. Weāre suggesting a slight modification
Our current version of the liquidity rewards has gone a long way in propelling the protocol to top of the leaderboard - putting us on top 3 on DeFi Pulse.
As a community, our next goal should be to eliminate āfickle liquidityā and find those that are committed to the development of the protocol and long term health. To this end, weāre keen to suggest a:
Shift from Liquidity Mining to Options Liquidity Mining
This is not a new idea. Andre has outlined the idea in detail here. This idea is simple:
Instead of getting $INST tokens directly as a reward, you get options instead to buy it at a lower-than-market price. This practice is common in our predecessor - web2. This way, we avoid the problem of people getting āsomething for nothingā that results in token dumping and we value the token holders and the governance premium that comes with it. In addition, token options also generates fees for the protocol since the liquidity provider has to pay to buy their $INST tokens.
To quote from the above article:
By switching to Options Liquidity Mining instead of traditional Liquidity Mining it means;
Decreased liquidity locusts
Decrease selling pressure
Natural price floor (twap - discount % over epoch)
Additional fee revenue for DAO/token holders
Look forward to hearing the views of the community. Thank you all!
Hi @akshaybd this has been discussed in the last community call; and more recently in our Growth Call where UMA presented a similar idea to us; I think the team and community would like some form of options. Here is the UMA website which explains the different kinds of options they have: we are looking at a hybrid put/call option see here: UMA Protocol - Call/Put Options
For the time being and to prevent a pause in the mining rewards we will be distributing INST. However we think an optionedā INST would be great to align those long term holders and believers of the platform, we could switch from INST to oINST during the extension of the liquidity mining rewards. In other words, we can develop this idea/proposal now while the first round of INST Rewards ends and the next one begins.
Some of the things we discussed and still need to consider if we create optioned INST is making sure its still viable for all to most users to provide liquidity; finding and shaping the right parameters, figuring out how effective we could be with the increased gas costs; and maybe it would makes sense for us and to help create some automation to help alleviate gas costs. Or create some long term options so users donāt need to submit so many transactions when using Options.
One of the concepts we discussed with UMA was a recursive Option where each set period you can exchange last months options with the current month and receive a slight bonus; so that user is ālongingā the Instadapp Protocol by forgoing their rewards an additional month and possible many multiple months.
I donāt like what I am reading here I am not an options guy and I have very low IQ so can someone explain to me am I not gonna be able to take profit? I am mining inst with 7 figures if my rewards will be trapped with options scheme then why people should continue mining? Letās not make things complicated.Instead of thinking about punishing people who risk their money to provide liquidity for little amount of reward you guys can focus on generating revenue social media marketing and developing an application for mobile phones to reach millions but no letās make things harder for liquidity providers
Sorry for being denseā¦ Weāre low IQ gang here as well ā and weāve tried to understand this conceptually. Hereās the simple version:
Today, farmer put liquidity. Farmer get tokens. Farmer market sell tokens. Community sad. Project bad.
Tomorrow, farmer put liquidity. Farmer get options instead. Example ā farmer get right to buy 100 INST at $1 (very discount) anytime before 2023. Farmer no market sell immediately. Farmer hold. Community happy. Project good.
Basically, farmer is human but brain still ape. Get for free, farmer dump. Get for big discount, farmer hold.
In long term,
farmer with paper hands = bad for project.
farmer with diamond hands = good for project.
That is too radical 2 years is 20 years in crypto and 1 dollar is nothing it doesnāt worth risking the money on the platform big money will find somewhere else to get other coins and TVL will take a big hit Letās just announce we are not gonna extend Liquidity mining rewards that would be the same
@akshaybd thatās the best statement of the problem Iāve heard.
Options work (and donāt) here in the same way that they work (and donāt) as bonuses. The farmed token is very fungible but the farmed option isnāt. Plus a farmed call option with a high strike feels a bit like a fun lottery and who doesnāt like that?
Try buying someoneās lottery ticket on the night of the draw. Theyāll refuse multiples of the purchase price.
Smooth brain here and long-term believer in Instadapp and $INST. Options noob, but have been listening to Andre, UMA, and Opyn talking about using options as a mechanism to distribute rewards and better align interests. Hereās my take:
Liquidity providers provide incredible value for Instadapp, but not everyone is aligned with the long-term success of the protocol. It would be cool to improve this. Options could be one avenue
Nobody in DeFi has experimented with with options in liquidity mining, and we could be the first. If it works, it will strengthen $INST and weāll start a trend. If it doesnāt work, we at least learned from an experiment and donāt harm the protocol at all
UMA and Opyn are secure protocols with great traction (100m+ TVL), so weāre not risking anything from a security standpoint
The basics of options isnāt really that hard to learn
Example:Todayās Date: September 1st
$INST is trading at $8.35
Liquidity provider adds liquidity to the pool, buys a $INST call option for $1 with the strike price of $5, with September 30 expiry (one month from today)
Scenario 1:
On September 30th, $INST is trading at $9.00, and the LP exercises her call option and received $INST for $5. She can sell $INST immediate and realize a profit. This could cause a negative price impact on $INST, but given the buy in from LPs that helps filter out the bottom feeders. Alternatively the LP could or hodl $INST long term
Scenario 2:
On September 30th, $INST is trading at $4.50, and the LP chooses not to exercise her call option because itās not āin-the-money.ā She could buy $INST cheaper in the market ($4.50 vs. $5 from the call option). Despite $INST price trading lower, there is no further downward pressure on the price from LPs selling their rewards.In this event the strike price serves as a natural floor as it relates to LP selling rewards. This helps align LPs with the long-term health of the protocol.
As mentioned above, this could help:
Decrease users who provide liquidity and immediately redeem rewards, sell, and bounce
Decrease selling pressure on $INST
Set a natural price floor
Add additional fee revenue for Instadapp, which makes me more bullish on $INST
I know a dev at Opyn so I can reach out to them if helpful.
Iād like to think of myself AS an options guy and I really appreciate where this discussion and the conversation we had in the #growth community call a few weeks ago. Most start ups reward their stakeholders with equity (in our case INST) on a vesting schedule, so it makes sense to have some sort of vesting schedule to align stakeholders to long term value actions.
I do say that deploying options does seem like a little complicated of a proposal to solve the problem of ensuring long term holders of INST. Given we do not have a revenue model in place yet, I think an options model should have defined KPIs to help drive the incentive structure. Determining these KPIs as a community could be really challenging as it already has been difficult to come to consensus about the path to revenue.
AAVE protocol for example rewards users not in AAVE coin but stAAVE, which is the āstakedā version of their token. This staked version has a 7 day cool down period before somebody could withdraw and presumably sell. Right now stAAVE pays 6.37% APY. So you have a vesting period (albeit short) of 7 days + apy on stAAVE which further incentivizes stakeholders to hold onto their staked aave tokens they have earned while LM.
I know we do not have a staking protocol (nor a need for one), but - what if INST LM rewards were either redeemed like they are today OR redeemed into a pool that had some sort of advantaged APY in return that advantaged APY pool had a cooldown period. This cooldown period in exchange for higher APY could be attractive to those already redeeming their INST and putting it in liquidity pools as it presumably could be done in one transaction instead of 2.
