3 Proposals to improve LQ becoming a better value token

[FlorianVolery]

@TNT1

I think I have not understood it correctly because I have understood that:

Proposal 2 is to dishonestly defraud old stakers with whom an APR was agreed upon if they staked their LQ for more than a year but once that year they break their word.

Of course, if that is what Johnny Sachs is proposing, we would have to ask him if he has taken into account the moral value of dishonesty in his proposal.

I am clear about what to do with my LQ if something like this is done in any company where I have my tokens. I would send a photo to Discord so it could be seen.

Your proposal is totally dishonest Johnny. Something like that can only destroy value.

I understand your surprises, because I did not mention the expected date to have this current staking program being reduced (while I mention “immediately” for the suppliers & borrowers rewards).

To my eyes, the staking APR will be reduced at the end of JUNE 2024 (giving the month of March, April, May and June normally) and then being reduced. It means that early stakers would have 3 months for sure at 50%.

Note: I have edited the proposal and include the 30.06.2024 as date to change the staking program.

[TNT1]

@FlorianVolery

I understand your surprises, because I did not mention the expected date to have this current staking program being reduced (while I mention “immediately” for the suppliers & borrowers rewards).

To my eyes, the staking APR will be reduced at the end of JUNE 2024 (giving the month of March, April, May and June normally) and then being reduced. It means that early stakers would have 3 months for sure at 50%.

Note: I have edited the proposal and include the 30.06.2024 as date to change the staking program.

You should have raised this 12 months ago so that it is not considered a scam in its entirety. I would throw all my LQ into the market when the time comes and wait patiently for a Liqwid Finance competition to emerge while dedicating my LQ investment to others like FACT where the core team does not make dishonest pitches to early investors.

The 3 months that you propose are a lack of respect for intelligence

[TNT1]

For now I interrupt my strategy of buy DCA LQ

I can’t buy LQ if I wouldn’t trust to buy a used car

[Rschwab]

I dont agree, you are saying long term staker are married with the protocol and will not sell ?

[TNT1]

What you just said would make sense if you lower the staking reward percentages to 1.25%/7.5%/12.5% for 0/6/12 month tenure periods + ADA reward increase proposed in the proposal number 3

Assuming you reduce market share rewards x4

[FlorianVolery]

1 year ago, I announced what would happen with mass LQ inflation. You are read the information there. People always tends to focus on the free lunch instead of understanding the big picture.

Transition the monthly fixed LQ user distribution rewards to a dynamic reward system

Summary: This proposal is to transition the LQ user distribution rewards from a fixed schedule to a dynamic emissions schedule based on the protocol’s interest revenue generated each month. Currently the protocol is rewarding protocol users based on a fixed four year schedule with linear emissions of 207,812.5 LQ each month (0.99% of LQ supply). The current system provided a strong incentive among some early claimants, especially because they received the LQ tokens at no cost, to sell as many …

This current proposal is made in the interests of all LQ buyers and long-term holders who care about the success of the Liqwid protocol.

Early holders have already been massively rewarded and will benefit from a 3-month return at 50% APY. Additionally, what you are alluding to in your argument is the fact that reducing LQ issuance will benefit all holders with a price increase, while LQ revenues are also expected to increase. Also, the early LQ stakers have also a big boost on the programmatic rewards (see proposal #3).

Also, I cannot read anything reading your overall strategy of the LQ price, including POL, financing and many other topics.

If you think you can come up with a better plan, you are welcome. We are here all keen to read your throughts?

[TNT1]

Discord - A New Way to Chat with Friends & Communities

In response to “Operation Shitstorm”

[TNT1]

@TNT1

What you just said would make sense if you lower the staking reward percentages to 1.25%/7.5%/12.5% for 0/6/12 month tenure periods + ADA reward increase proposed in the proposal number 3

Assuming you reduce market share rewards x4

Here it is

What you just said would make sense if you lower the staking reward percentages to 1.25%/7.5%/12.5% for 0/6/12 month tenure periods + ADA reward increase proposed in the proposal number 3

Assuming you reduce market share rewards x4

This is a proportional adaptation to new facts. It is not such a hard blow to the first investors while the central team increases its rewards in ADA by 10 without losing anything in return

[AliD]

@FlorianVolery firstly, thanks for your response.

@FlorianVolery

The current supply in these markets is inelastic. Interest rates have been increased (by 50% at a Utilization Rate of 80%). Until more stablecoins are introduced to Cardano or these loans are liquidated, these markets are expected to remain over-utilized.

Are you willing to increase the interest rates again if borrowing does not fall below the kink point 1 month after the NumAction has been changed? Evidently, if borrowers aren’t repaying to reduce borrowing below the kink point then interest rates must be increased again for over-utilised assets, as the 2nd slope isn’t high enough. Does the protocol intend to take this action to reduce borrowing in over utilised markets to protect its suppliers and promote further supply? Or at least further reward them in higher APY by +Y%?

@FlorianVolery

Current markets in Cardano are inefficient, meaning that increasing the supplier rewards by +X% will not necessarily generate an increase in supply by +Y%, as would be expected in rational and efficient markets. In efficient markets, the increase in supply (Y%) would typically exceed the increase in rewards (X%).

If the current markets in Cardano are acknowledged as inefficient, the proposal to offer LQ rewards for suppliers in markets of interest accrued and repaid might seem contradictory at first glance. However, the logic behind offering these rewards likely stems from the need to incentivize participation and liquidity provision despite market inefficiencies. Inefficient markets may require additional incentives to encourage desired behaviors, such as supplying liquidity. By offering LQ rewards, there’s an attempt to stimulate liquidity provision even in an environment where traditional market dynamics might not apply as expected.

@FlorianVolery

I anticipate that the LQ price will rise. While I cannot precisely quantify the extent of the price increase, it is anticipated that the decrease in LQ quantity will be offset by an increase in the LQ price.
Furthermore, these three votes are integral to a larger plan, as elucidated in the initial graph and the final comment on my post.

Suppliers will receive less LQ rewards per month overall in number, but the LQ token price will be higher than before offsetting some of the loss in USD term rewards. Is this your strategy?

3. Will measures be implemented to safeguard against farm/recursive borrowing for farming LQ? For instance, participants supplying ADA might purposefully borrow ADA to exploit accrued and repaid interest LQ rewards. It’s crucial to have a system in place to prevent such wallets from benefiting from such farming actions.

[itzDanny]

UPDATED: 31/03/2024

I have now voted(Yes to Point 1, No to Point 2, Yes to Point 3)

I believe the biggest problem is not that staking is reducing, its that the time spent to reach these APR’s now feels as it was for nothing as the proposal point2 would reward us with programmatic rewards, which would be further diluted from the low amount they currently are due point3.

id like to propose an Amendment to part 2. @FlorianVolery @DC1

Honour all current stakes(and sub-stakes) from the date & time the proposal passes. No LQ should be allowed to be added to the honoured stakes(and sub-stakes). Honoured stakes keep 50% APR for maximum 1 year, to realise the 50% APR as promised.

If, after calculations the LQ required to pay the 50% APR of honoured stakes the LQ staking allocation of tokenomic is depleted, I propose 2.5% of total supply from DAO allocation & 2.5% from User Distributions be reallocated to fund staking for all new stakes going forward.

Any new stakes from the date proposal passes would not follow the 5%/30%/50%. They would have a base rate of 5% and follow the below proposed reward mechanism for LQ staking.

As part of this change, I also propose a change to the mechanics for Aquafarmer(AF) NFT staking boost. The current mechanics for AF NFT’s boost a stake as follow’s “Stake x ( Staking Rate % x AF Tier %)”.

A common AF with base 5% is 5% x 4% = 5.2% APR

This change would be for the AF boost % being added to the Staking Rate rather than multiplied, as follows Stake x ( Staking Rate % + AF Tier %).

Eample of rates for a new staker with each AF tier and 5% base rate are as follows;

Common(6700) - 5% + 4% = 9%
Rare(2200) - 5% + 6% = 11%
Super Rare(1000) - 5% + 8% = 13%
Legendary(100) - 5% + 10% = 15%

Most long term stakers are assumed to be AF holders and this gives a proportional boost for each AF tier, for which many in the community have felt AF’s value sub par to the protocol they are tied to.

Do you agree with the above changes and these replacing part2 of the current proposal?

• Yes, I agree with these changes to Staking and AF Boost.
• No, I disagree with these changes to Staking and AF Boost.

[TNT1]

It is even worse than the one Florian Valery proposes. It is not designed for long-term staking. It’s another bad joke. I’m sorry. Only those who sell the LQ they receive can like it

[JakeMN]

My idea that I shared on discord is for the LQ rewards for staking to be reduced by a proportional value of protocol distributions. So in my example (completely arbitrary at the moment) we agree as a community DAO for an agreed upon APR for staked LQ, in USD terms. Then each week (maybe it is a rolling average or something) we calculate the total protocol distribution eligible for LQ stakers and compute the dollar value of it. Then subtract this from the agreed upon APR value, and award the balance in LQ token. In this way, as protocol distributions rise, the awarded LQ goes down. In this example below, I took the USD value of LQ staked as of a day or so ago and selected a 50% APR. Arguably, this is too high but just used as an example.

This is an offramp from LQ rewards to straight protocol distributions over time.

[Snayke]

They have to sell their stake too then, which means they wont acquire more staking rewards thus less selling pressure…
Ofcos there are those who hold their principal and sell the staking rewards, there are those who stake and add more to their stake.

But yes they are not married to the protocol but why stake for 1+ years is to continuously receive the high staking reward %, and they put their money at risk for this long, pls do factor these variables as well.

[DunkyNed]

NO…

Possibly in the FUTURE, longterm LQ stakeholders might consider selling if programmatic distributions fail to rise to a satisfactory level. As for myself, I intend to retain LQ for as long as there is an acceptable passive income level, whether it be through current LQ staking rewards that I am compounding (not selling) to maximize future programmatic distribution passive income, or through actual ADA programmatic distribution.

The stated primary aim of proposal #2 is to “reduce the overall LQ inflation, which is driving the LQ price down.” However, my argument is that the portion of inflation attributed to staking rewards incentives does not significantly contribute to the decline in LQ price.

As of 25 Feb, the staking rewards accounted for approximately ONLY 20% of total monthly LQ emissions as per @dc’s forum post, and sentiment from long term stakers suggest that MOST of these staking rewards emissions are currently being compounded, re-staked and NOT sold. Therefore it is in fact the remaining 80% of total monthly LQ emissions from Lender and Borrower rewards that are responsible for LQ price dumping.

These three proposals (if they proceed to governance) should also be voted on separately and NOT bundled together.

I propose voting on and implementing proposal #1 initially, independently, to verify or refute the aforementioned points. Let staking rewards remain unchanged for the immediate future.

[DunkyNed]

This is certainly a more palatable and fair approach, which avoids any suggestion of reducing the pledged staking APR, as long as the established APR of 50% remains unchanged.

[TNT1]

@DunkyNed

These three proposals (if they proceed to governance) should also be voted on separately and NOT bundled together.

I propose voting on and implementing proposal #1 initially, independently, to verify or refute the aforementioned points. Let staking rewards remain unchanged for the immediate future

I see a correct approach. I like

[TNT1]

Discord - A New Way to Chat with Friends & Communities

@dc Could you explain to us with some valid argument why Flo’s proposal is simpler and more effective than TNT’s?
In my opinion it is neither simpler nor more effective.
It is not simpler because reducing the rewards proportionally and fairly to what you presented yourself a year ago to the DAO only requires reducing 3 parameters in the reward distribution system already built by Sundaeswap, while reducing everything to a single figure It requires more technical changes, informational effort, angry community, etc. and probably the accumulation of angry community is largely behind the dumping of the LQ reward market.
On the other hand, it is not more effective either because it has never been effective to piss off the community that supports you over and over again and for the following argument:

Whoever stakes for a month or two months does not do so to save the LQ but to sell it at the first good opportunity and, therefore, it does not have a price benefit for the LQ. However, those who stake the LQ with a view to benefiting from rights that are acquired with a timeline have much less incentive to sell when the price begins to rise and, therefore, they are the ones who maintain their price. The conclusion is that long-term holders must be incentivized.

Likewise, think about the fact that those who have been selling all their LQ every week have less strength to acquire LQ compared to those of us who accumulate and repurchase it in addition to our money, with the ADA that we receive. As if that were not enough, think that the largest dump of LQ into the market will have come from the rewards for making deposits and these will be reduced by X4 to which a reduction of 20,000 is added to borrowers. That is, you are going to reduce the offer by more than one X4 in total. Nobody understands why so much radicalism on the part of the team comes from

[TNT1]

Another proposal:

Maintain 50% APR for old stakers (do not admit new ones) by meeting several conditions:

1. 3-year lock on your LQ.
2. Locking your rewards for another 3 years with a different timeline. They could go straight to the vault like Wingriders does with reward WRTs.

This way:

1. The word DAO is fulfilled.

2. Increases the liquidity of the LQ.

3. It does not affect the price of LQ for at least 3 years.

By the time those 3 years have passed, the staking rewards will no longer be available and they will not be able to exert sales pressure via APR. The LQ will be very profitable in ADA, there will be no point in selling by then because you can borrow and pay your loan with the crops

The staking address would have to be linked to the Sundaeswap rewards and the LQs would go to the staking address already automatically blocked in each harvest

The blockade would be voluntary. You can always opt for the 1.25/7.5/12.5% system without unlocking or even the simple 5%.

Everyone happy.

[Elevated_Alligator]

wrt #2, I would like to see some data showing if the sell pressure is coming from stakers’ wallets rather than people selling market participation rewards before I would consider supporting it

[Khelben]

Regarding staking rewards, my proposal would be to copy what Cardano does with Ada rewards (which is was already modeled to be similar to BTC):

• Each week 3% of the remaining LQ allocated for staking rewards is distributed to stakers.

• These 3% are then split as follows:

  • X - for anyone staking less than 6 months;

  • 1.3X - for anyone staking for more than 6 months and less than 12 months;

  • 1.5X - for anyone staking for more than 12 months.

Rewards would gradually decrease over time like it happens with Ada rewards and would last for decades and we would still reward long term stakers. We don’t need to reinvent the wheel.