Yes. But now you can add other tokens to the pDEX. It’s not limited by BTC or ETH anymore.
[Finished] Liquidity rewards program v2
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I invested based on returns from these major coins. It gave me reason to add those pairs. So, incentive to add liquidity is now what % for PRV alone?
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You get around 32% APR when staking only PRV, versus 62% (has this changed?) when paired with an equal amount of another cryptocurrency.
Is there a chart that compares what kind of return you would get converting the other crypto into PRV and just sticking it all in the staking section?
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So, why would I do $100 PRV/$100BTC.
Instead of just the $200/ PRV staking?
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@Jerry_Watson,
the answer is simple. If everyone puts PRV on staking, the liquidity pool will be = zero and no one will be able to execute any trade.
This why I keep repeating, that pDEX is the heart of Incognito ecosystem and liquidity pools - circulation system.
Every PRV holder should switch focus from maximizing profit to maximizing the project’s health.
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I guess if you think putting all your money in PRV is more risky, at least when you remove your liquidity, you have a chance to get some of your crypto back. But 62% on half your investment is less then 32% APR on your full investment, so I feel like this incentives people to stop providing liquidity. Pair that with “impermanent loses”, you don’t seem like your going to be winning for providing liquidity to the network. Sure, it’s better for the network if you do, but it’s a mistake to assume people would do that for the health of the network. Some people would, but equally some people wont. At the end of the day people are greedy. If you want people to provide there has to be more of an incentive.
The incentives don’t necessary have to be short term profits, for example, before I suggested voting rights
You could also provide liquidity pool providers better PRV staking rates. The more your providing liquidity for the network, the more you can earn from just staking PRV. Even if it’s just a small increase.
Without extra incentives, I think people care more about the opportunity to make money. I wouldn’t be surprised if people started taking out their liquidity. I’m not personally, cause honestly I could care less about losing my money, but others aren’t so lenient. I honestly don’t see this turning out good for the liquidity of the network.
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Unfortunately, I strongly agree with this.
Liquidity providers need an economic incentive to provide liquidity while accounting for the relative risk profile vs just staking PRV or hosting a validator node.
For one, providing liquidity should have a significantly higher net reward than staking because:
- For the DEX to be successful we need liquidity, and there isn’t enough right now to encourage large transactors to interact with PRV.
- Staking rewards are paid continuously and available at any time for withdrawal.
These two factors outweigh the additional risk taken on by (i.e. downside of) staking vs providing liquidity which is that you have to have all your available funds in PRV to stake instead of providing liquidity.
How you structure the higher reward for providing liquidity is flexible, it could be as simple as sticking to only paying liquidity providers based on the PRV half, but choosing a total reward amount that is high enough such that when the targeted amount of liquidity is hit, the net reward is higher than staking.
I’d also like to argue that certain liquidity pools are more important that others e.g. PRV/pUSDT vs PRV/BAT, so it’s a good idea to have a separate reward pool per pair so that you can incentivize the more important pools correctly.
For these two reasons, I think that this change to the liquidity provider incentives is a step backward and needs to be tweaked.
Is 1.6m PRV the current amount of PRV in the entire liquidity pool across all pairs? Is this figure available on any of the dashboards/tools? If so, I can do a couple calculations and make suggestions if needed.
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I don’t like to say this, but voluntary risk for the benefit of the greater good never really works out. People care mostly about themselves and their family. It’s basic human nature.
I definitely think the Liquidity system needs to change if Incognito is to succeed. Right now I see providing liquidity as a detriment to the value I store. The risk seems far greater then just staking PRV.
The only reason I mention this, is because I really do want Incognito to succeed.
A quick fix might be lowering the staking rewards even more, but that might end up messing up PRV in general. You have to make sure more people stake then the PRV being generated.
I would also like to mention that this affects anyone who is providing liquidity increasing their risk of value loss. All liquidity providers should be aware of the change. I also feel like even though we don’t have a voting system in place yet, a simple poll would have been beneficial. If there was a reason things needed to be changed, their are forums to bounce better ideas.
I’m just trying to be critical to help move Incognito move in a good direction. The last thing I want is for Incognito to fail.
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Exactly.
I like your idea about if you provide “x” amount to liquidity you get a slightly higher APY for staking. A type of tiered structure approach.
It could be a certain percentage of what a person stakes will be what is needed to maintain that tiered earning. If they have a lot in staking and none in liquidity, they have the lowest APY available for staking, etc.?
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I think that would be a good direction. Massive PRV holders would now have good incentive to provide liquidity to the pools. These are the people who are most committed to the network and should honestly get the most rewards. All their PRV is going to be locked up anyways, might as well have them hosting liquidity instead of incentivizing them to stake it all.
Based on the amount of total percentage of shares you own, your staking rewards increase. That way, if your providing for a less risky pool, your staking rewards go up slightly, while alternatively if you provide for a more risky pool, your staking rewards go up more significantly. People can invest and diversify in the liquidity pools they want, and fine tune the extra rewards from staking.
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Here’s a quick back of the envelop calc with LOTS of assumptions:
I think B17 should be greater than B1 for the reasons stated in my last post. This can be quickly done by changing B10, but I think it would be more valuable to adjust this per pair because there are some pairs that are significantly more important for PRV’s long term success (i.e. USDT or USDC or DAI vs PRV pairs)
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@andrey 100% agree! I am working on my own way to actually.do just that! Flat out add too the liquidity pool for the soul purpose of helping the pDex as a whole. I will post details of how I plan to do this when finalized. It won’t a ridiculous amount of help, but in time…maybe it could. All in due time!
Main point, yes the profit potential is nice, but you must also understand the ecosystem must be able to sustain high widrawl amounts/withdrawal requests if everyone takes the classic “investor” approach and only cares about profit.
I will not lie, my goal is profits, with that said I do believe in what is being done here and will do what I can to support this project and clearly see we need to focus on the pDex as a pool to add to, not a pool to become the ATM.
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Unfortunately people with big boi money are only in it for
-Opportunity (70%)
-Privacy (30%)
Your not going to attract the money your looking for without economic incentives to do so. If I had more money to burn, sure maybe I’d help out. But the truth is, people with big boi money didn’t get their big boi money by just helping people out.
You are not wrong in saying the pDex needs to be added to, but it’s not going to get added to if the risk outweighs other alternatives like staking. I’m not saying make it a short term ATM, I would honestly prefer rewards over a longer period of time. But without economic incentives, we aren’t going to make a dent in the liquidity. If anything, it will slowly shrink.
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yes, we do not have whale type money. Main point was the pool should not viewed like the staking pool. Rather a way I look at it is the liquidity pool is your IRA for long term growth. Look to staking rewards for gains yearly or so.
Agree though!
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It’s not so much about sacrificing for the greater good as it is protecting your investment. You’re not paying, you’re just providing liquidity, which you can still cash out. Impermanent loss is a factor, but not a great risk, since you can usually wait it out.
Providing liquidity to hedge against price falls while still getting a return is better than getting a higher return in a market where no one is providing liquidity. In that case, it’s more risky to put it in the staking pool. Not to mention, if most people provided liquidity for rewards instead of Node Pool, price would be more stable, and likely increase to yield greater returns than Node Pool.
I don’t like coming at it from a profit perspective, but I do get that it is something to consider. I just think it’s a misconception that Node Pool offers higher returns. It does so only nominally.
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I can understand that, but I feel like if there isn’t a bigger incentive to provide liquidity, Impermanent loss can be more of a factor. And your right that it would be more risky to stake if there is no liquidity, I imagine it will balance out to an equilibrium.
It’s also beneficial to the platform and the stability of PRV if people provide. The real problem I was trying to get at, would be to attract bigger investors. Currently I don’t see investing in liquidity as something bigger investors would want to do. You have to trust that the incentives will bring in more people, but to me at least, it doesn’t seem like it will. We want more money in the pools and to get that we need to cater to these individuals.
At the end of the day, impermanent loss is a risk. Owning PRV is a risk. I supply for liquidity because at least I can cash out (hopefully) half of my investment in crypto if things go bad. However, the odds are if I cash out, I will get hit with losses, as an investor, that’s not what I’m looking for. I need something else to mitigate that risk. If I stake however, I’m just worried about the value of PRV. The only losses I would have is if PRV devalued.
I rather have more people in the liquidity pools then staking, but I don’t think that’s going to happen in this scenario. You need to add something to give users more of a reason to provide then to just stake. Just saying it’s best for the platform doesn’t seem good enough to me. Sometimes things happen to investors and they need to liquidate. If I have my money in liquidity I have more of a chance of taking an L then staking.
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I get what you said, what you meant is that we need to incentivized ppl to bring more users to provide liquidity. Maybe the incentives are not much but it would bring a lot of benefits for Incognito platform. If there is no incentive, it will take a lot of time for Incognito team to pitch or attract users by itself which is time-consuming and non-efficient. I guess the best way is to figure out the incentivized system which can help Incognito maximize results and it can be measurable.
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@aaron, ultimately I agree with you. I shared a similar sentiment awhile back. But I think the problem is, how do you convey that concept to investors?
Those hidden benefits are not explained when users provide liquidity; they’re not even really implied. Rather, it’s a conclusion that takes time and thought for people to arrive at. All potential liquidity providers see are the upfront numbers. And those numbers are not exactly easy to calculate (not as easy as an APY anyway). I saw some confusion from people trying to figure out the rewards for the new liquidity program. Many do not find it as intuitive (and as inviting) as a 37% APY.
I think what @Revolve and others are saying is the visible reward itself, the reward that everyone sees and uses to calculate a return, must communicate and properly weight the importance of liquidity by clearly incentivizing the behavior over others.
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I’m not opposed to non economic incentives. For example you can incentivize people to add liquidity by giving them voting privileges. Maybe you can incentivize people by creating a lottery pool (No Loss)
Who knows…
Economically you could incentivize people by raising their standalone PRV staking reward % slightly.
There are many options that don’t necessarily have to break the bank that I think we should explore. Improvement is always better, especially if it attracts new providers.
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It’s hard to say Invest in this, when people don’t fully grasp the dynamics of the platform. You want the platform to work it’s magic without users having to fully understand. Sure it’s better if they did, but unfortunately most people don’t look that deep into it. Especially if your trying to attract money from lots of people. If you want people to do whats best, you have to incentivize them to do so. This creates more reliability in people doing whats best for the network, which in turn gives them better reward stability.
So yes, you need to convince people to do the right thing by giving them something flashy, but not flashy enough where it hurts the economics of the platform.
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