RFC: Initial Discussion Around Topping Up the KTON Liquidity Farm for 6 More Months

[2xJDubs]

With the success we have seen with the current liquidity farming for the KTON/RING pool on Snowswap, I wanted to start the discussion on making a new request for the treasury to top up the farm funds for another 6 months. To reminder everyone, here is the original discussion for developing the farm, https://github.com/orgs/darwinia-network/discussions/1414.

With the incentive the KTON/RING pool on Snowswap has attracted close to the 2000 KTON that was the original goal, currently there are 1639 KTON in the swap pool.

The farming pool will run out of rewards in 2 Months and 18 days which is why I am starting this discussion now as the voting for the treasury will take 30ish days on its own.

The original amount requested for the farm was 1.4M RING and I think that would be a good amount to top up with for the next 6 month.

So in the end I would like to get feedback on requesting 1,400,000 RING from the Darwinia Treasury to fund another 6 months of the KTON/RING farm.

Happy to discuss making this amount lower as well if the majority thinks it doesn't need to be the same as before.

Thank you.

[SasoLithops]

Not to burden treasury as much I would propose halving of the rewards to 700k as bullrun is approaching and hopefully Ring and Kton can start making profit for farmers on their own. APR will still be huge.

Also liquidity is set close to goal so no need to attract more users.

Maybe we could do a retroactive airdrop of the remaining Pink tokens in DCDAO treasury to first half year LP providers. Those tokens still have some small value, best to airdrop them soon.
For next half year TNKR and VARCH could be airdropped.

[Laki389]

So in the end I would like to get feedback on requesting 1,400,000 RING from the Darwinia Treasury to fund another 6 months of the KTON/RING farm.

In the past period, looking at the pool, it was constantly between 1650 - 1850 KTON, which was close to the set target of 2000 KTON.

The reason why there is not constantly over 2000 KTON is IMHO, because in the meantime a new staking website for KTON was made.
Even in Darwinia 2.0 there is unmigrated KTON so the staking rewards are bigger than we could have predicted.

But as the remaining non-migrated KTON slowly migrates, it is expected that the staking rewards will decrease, which would be enough for that 1.4M RING to attract over 2000 KTON to Snowswap.

To conclude, I support 1.4 M RING for another 180 days. 👍

[cryptohustler101]

With the goal of reaching 2k KTON and market conditions stabilizing, the 1.4M RING will attract more users to Darwinia. This influx of KTON will draw long-term holders to deposit their KTON. I believe this initiative is crucial for sustained activity and will encourage others to build on Darwinia, capturing these new participants. Therefore, I vote yes on @2xJDubs' proposal for 1.4M RING, as it could bring in another 2k KTON, creating a solid LP for Snowswap and fostering organic ecosystem growth!

[hackfisher]

After the establishment and operation of Kton DAO, I lean towards having Kton DAO governance and allocating a small proportion of Kton DAO's own income for farm incentives (or buyback from DEX KTON/RING pair and add liquidity KTON/RING), rather than applying for additional expenditures from the Treasury. However, before this, due to the lack of reasonable means, I did not oppose appropriate Treasury proposals to continue farm incentives.

[2xJDubs]

I absolutely agree that once KTONDAO is fully active it should take over supporting this initiative. One of the reasons i wanted to keep this request to 6 months so we can again evaluate how things are going. Thank you for your input.

[SasoLithops]

Can someone explain to me why at current Ring/Crab price daily incentives for farming in pools are:

For Ring/Kton is 21$

but

for Crab/Ckton is just below 0.6$.

Anyone new(except for us hardcore belivers) checking $ price and not ammount of Ring tokens they get for risking and providing LP probably doesn't care much about huge APR and incentives at all. As $ value is too low. And with bigger investment the APR would of course go down.
Point I am trying to make, doubt we will get more Kton in pool with more burden from treasury as all we do is put more Ring on market. Imho those two pools above are pools mostly for hardcore belivers.

[hackfisher]

I would suggest to use and propose to https://www.tally.xyz/gov/ktondao to allocate part of the incomes for further liquidity support.

[SasoLithops]

Explain why this is not a burden for Treasury/RingDAO?

At first I want to mention I was for halving the rewards to 700k but we did a poll in Darwinia Official TG. It was vote either for 1.4M or 700k. 1.4M won by 10:9 votes.
Since majority of community voted for 1.4 M, I will use 1.4M RING as example.

Looking at current data on Coingecko( I will attach image below the post ) there was 40 000 USD daily trading (I took only data for MEXC and Uniswap, Coin W has 300 000 USD but don't know the exchange maybe just bots). But let's say some bots and some days higher some days lower, let's take 20 000USD daily trading volume on all exchanges.
Asking for 1.4M Ring which will be spread over 6 months is at current price cca 2800 USD. So we are asking for small ammount. So if I divide that number by 180 days (half a year) it gives 16 USD per day. If we take into account that due to past RING price movement most will sell. They probably sell daily and weekly. Let's say weekly. 7 days times 16 USD gives 112 USD weekly sell pressure if everyone sells. I think market with 20 000 USD daily trading can handle that.

[SasoLithops]

Preferred to leave it to RING token holders and RingDAO to decide as the they are the owner of it and decide to donate or not, I have no idea on this for now.

Absolutely agree. Not my decision to make, just expressing my view.

[Laki389]

I support idea of KTON being donated to KTON DAO as it was forgotten.

But still I think we shouldn't burden KTON stakers and KTON DAO to provide liquidity from funds they get but should incentivise users to provide liquidity. We have seen that is working now. I think it would be great if Darwinia treasury will have to fund some more last time for incentives ( like Laki proposed it doesn't have to be 6 months if you find it too long) until KTON DAO has some time to set a mechanism to be self sustainable. If we would just drop the rewards and start building own liquidity, I expect KTON sell pressure to be huge.As the one utility it has atm will be lowered for liquidity that already exists.

I want to emphasize just in case, in case I have been misunderstood or misinterpreted,

I suggested a one-time, shorter period of, for example, 3 months,

because I think that the period of 43 days will not be enough for the so-called decentralized debate and governance, after which, logically, the liquidity of Snowswap will disappear.

With a one-time donation that will provide a 90-day incentive for KTON - RING LP farmers, enough time will be bought for the young and new KTON DAO, which with an empty treasury is trying to figure out what to do next.

[Laki389]

I support idea of KTON being donated to KTON DAO as it was forgotten.

Preferred to leave it to RING token holders and RingDAO to decide as the they are the owner of it and decide to donate or not, I have no idea on this for now.

There is another option, instead of Ring DAO donating its KTON, it can enable its KTON as liquidity.

Really worth thinking about, why would the new KTON DAO, with an empty treasury, be solely responsible for liquidity, when it is KTON-RING liquidity, both tokens equally have the only opportunity to trade on the Darwinia chain.

I plan to do a poll on this.

[SasoLithops]

You make great point. I agree both DAOs should equaly provide liquidity. Voted on that option.

But I would rather that they provide farming incentives not actual liquidity.

[johneggleston]

I am definitely in favour of halving the rewards to 700k Ring for the next cycle. Though there are a couple features that could be added to the Snowswap interface that I think would be cool ways to fuel activity, and incentivise liquidity provision and trading.

Firstly, displaying the LP reward APR alongside the farm APR would be cool (showing people how much they can earn from the organic LP fees on top of the farm rewards if they provide liquidity).

Secondly, displaying the price discrepancies between the Snowswap pool and pools on ETH/ARB pools to encourage trading activities from the constant arbitrage opportunities.

Hoped you liked my input!