LQ token emission reductions in response to community feedback to Proposal 001 Amendments

Proposals
#1

Since announcing the LQ tokenomics final version with the the planned Minswap CZI allocation, multiple community members have responded with pushback against the CZI and the initial token emission release. The LQ token emission schedule has been public for over a year and the token allocation to the community have not changed whatsoever.

Since completing the highest value airdrop ever for a Cardano DeFi protocol where every user earned an equal LQ amount irrespective of their ADA balance, the token emissions have essentially remained at 0 with circulating supply remaining flat for an entire year. It was always inevitable for the circulating supply to increase at launch with allocations such as the LQ staking, protocol incentives and DEX liquidity program already announced in our tokenomics details. Nonetheless we have reviewed the community’s sentiment to this and want to find a solution we can gain broad consensus around.

The core dev team met this afternoon following review of the community’s feedback to this amendment and the Minswap CZI. Ultimately we agree that if the community is by majority requesting for lower token emissions at launch this is exactly what we should pivot to until a more community aligned approach to DEX liquidity incentives and bootstrapping protocol owned liquidity emerges. The concerns around LQ token emission rates are detailed in posts such as this thread from SCATDAO: https://twitter.com/scatdao/status/1620903170162696192?s=46&t=a9DmnOIUYjefxejBCmkfww

We propose the following three changes to aptly respond to the community’s feedback immediately take effect:

  1. Cancel the CZI and DEX liquidity incentives allocations for the initial launch near term and return this LQ back to the DAO treasury allocation until (if) a community aligned proposal is passed through the DAO in the future*.
  2. Make the user distribution (LQ protocol incentives) exclusive to lenders and borrowers in the following markets: ADA, Cardano stablecoins.
  3. Partner with SundaeSwap to make use of their rewards distribution solution for LQ staking rewards and protocol incentives for lenders & borrowers (accelerates the timeline for launching LQ reward distributions).

*A proposal the community deems acceptable that rewards LQ/ADA LPs will draw from the 16% DAO treasury allocation. Cancelling the initial Minswap exclusive DEX liquidity program linked to the CZI is in line with the overwhelmingly negative sentiment received since announcement on the token emission rate at launch.

The updated LQ tokenomics would be as follows:

Screen Shot 2023-02-02 at 9.05.49 PM
Screen Shot 2023-02-02 at 9.05.49 PM808Ă—206 116 KB

Do you support these three tokenomics related updates to reduce initial LQ token emissions in line with recent community sentiment?

  • Yes
  • No

0 voters

7 Likes
#2

Why such flip flopping on things…

1 Like
#3

Seems fair to leave the CZI and DEX incentives up to the DAO.
I understand how the CZI can be useful (at launch or in the future) to stabilize the price, but changing the inflation rate so dramatically before launch was definitely a bad surprise.

Two questions regarding the other two points:

  1. What’s the reason for restricting the LQ incentives to ADA and stablecoins?

  2. Is the SundaeSwap partnership the reason the rewards are planned on being paid monthly?
    And if so, can we change the reward schedule to per epoch, daily, or even per block?

4 Likes
#4

Mistake was to distribute the airdrop before the CZI. Imagine a world where the CZI was done and then the community would have received that free airdrop. Would have less whining for sure. I know, doesnt help now… People who already sold vote no, people still holding voting yes. At least it is entertaining to watch.

3 Likes
#5

i was hoping that there be more care before announcement of LBE with MINSWAP. An LBE will discover the market price for LQ for sure. Liquidity is important for DeFi, without which it is not possible. Where is the claim of 5x current liquidity ? how is it worked out please.

You are showing inexperience in managing your rollouts.

#6

Please be smart, don’t think short term, especially in token price terms, think what will benefit Liqwid long term. TL;DR vote NO!

3 Likes
#7

Can someone explain me why to triple the current supply is necessary for the project future?

I don’t think the airdrop was a mistake. They generated demand based on promises and the valuation was pretty good. The initial demand for this project was satisfied with the initial airdrop and LQ holders. Dropping a bunch of tokens without additional massive demand can produce a demand shock and we’ve shown it with the token price drop. We aren’t in the crypto crazyness of 2021.

#8

LQ is overpriced as it is. Either you go forward with the CZI and let speculators adjust the price in anticipation of the new paradigm, or you finangle it in such a way that spreads the pain over a period of time as yield reward supply drives the price down anyway. GETTING AN AIRDROP OF TOKEN WITH A 1 TRILLION DOLLAR FD MARKET CAP IS NOT NORMAL. That price is PURE speculation. Stop being so entitled.

Sell your position, let the price settle, then use that same ada you gained from selling a free airdrop to re-enter the CZI at a fair price. All other traders, who are not a member of the community that did not receive the airdrop yet choose to SPECULATE through trading, are gaslighting this conversation to protect their bags. Sell now, re-enter at a fair price, build your capital from the boosted rewards by zapping them into minswap and deepening liquidity - increasing your pool share compared to if you did otherwise - increasing your rewards provided the CZI in fact discovers a bottom.

8 Likes
#9

Many LQ Holders bought the token in the secundary market. So that, what you say isn’t fair for them because they risk their money in this project.

I don’t think the price is overpriced. The full diluated value is the future valuation. In the other hand the current valuation isn’t too much.

Selling the token for settling the price down is good when all holders do it at the same time. A lot of them were providing liquidity in LP pools and farming. They couldn’t sell them just after the annoncument. Why should they materialized the current price drop?

PD: I’m not salty or entitlled. I believe in the project and I think Liqwid is one of the most important projects in Cardano.

#10

Many LQ Holders bought the token in the secundary market. So that, what you say isn’t fair for them because they risk their money in this project.

what you just said nullifies the definition of risk, let them eat shorts

#11

So your point is that the token is overpiced and we need to move the price down?

Yeah… we can let them eat shorts but that isn’t the way to treat early investors. This isn’t good for the confidence of new investors.

EDIT: Grammar :slight_smile:

#12

fact of the matter is, early investors made a bad speculation, they can eat it in the short term or have their pain spread over a longer term. As for the airdrop recipients, their persuasion should be net neutral, since it was a gift in recognition of participation in future governance. You are basically asking for a bail in for speculators, good luck with that.

2 Likes
#13

I think the right message to send for now is indeed a reduction of the emission. It is the role of community governance to adjust this parameter according to the situation of the market and the phase of the project. Doing this, we act in the direction of a stabilization, and we reduce short term speculation. We can push growth a bit later, when the circumstances are appropriate.

3 Likes
#14

I agree. The emission is basically arbitrary, and the market will adjust accordingly. Just make it clear and stop flip flopping DC.

Nevertheless, the intial proposal for the CZI, as far as i understand it, was that LQ would be supplied at market prices depending on CZI participant demand, so its a mute point.

#15

The emissions were known for a whole year at this point. This is called due diligence, and you’ve obviously done none.

4 Likes
#16

This is the way to blame the people who belive in this project!

#17

This is a fallacy, please try again

#18

The CZI was announced a week ago, so no, they weren’t known for a whole year.

I’m not saying the CZI is a bad idea in itself… But it should be up to the DAO to decide.

2 Likes
#19

The CZI protects against the dilution by offering more liquidity for the current price, it does not have a negative impact on price.

1 Like
#20

Well. It’s tripling the supply.

So if the demand does not increase, I believe the price will suffer.

Besides, with additional LQ supplyw it means the ROI or staking LQ I’d also diluted, which would definitely push the price down.

However, the CZI is not the LBE, and there is no price discovery, so the CZI itself might not push the price down, but the additional supply most likely will.

Overall, I think the CZI would be good for the project’s longevity. But, it’s going to affect to the price of the LQ you hold, so it’s not a clear cut decision to make. :man_shrugging: