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Liquidity v.2

#55

Ah I think I know where your misunderstanding is coming from. Provide is not based directly on liquidity providing. It’s a kind of in-between.

Generally for pools you need to have both sides of the liquidity pairing to be provided at the same time. Overtime that creates what’s called devergence loss (aka impermanent loss). Because when one asset is bought from the pool your portion of the share to the pool will be different. Effectively you lose a little bit over time unless the prices go back down the rate you provided the pair in. This is a good video on it.

Provide works a bit differently. On the incognito network all pairs are matched with PRV on their respective pools. Provide allows people to not need to buy PRV (with high slippage) to still provide liquidity into the pools. It’s a good middle ground. Rewards from any liquidity being provided into pools are handled by a PRV reserve. Projects like these live and die on the liquidity. PRV’s value is directly tied to the utility of this network. It makes sense why the incognito team wants to upfront PRV to make it much easier for people to provide liquidity in the network. That increases the price of PRV which makes it less of a burden overall and increases their own PRV value.

When a pair is in the pool it much be remained in the pool. Lending it out or doing a secondary restaking isn’t how these systems work. You can’t borrow something which is put in a pool. Let alone where would the reward come from? The reserve?

You can’t double dip or think that funds in pools are unused funds. The funds in the pool provide direct liquidity to make trades. Borrowing it makes the proportion in the pool incorrect and thus the pool value is incorrect.

This is a blockchain project. PRV is chained to the blockchain. That is how we can be certain no double spends happen and exact supply can be verified.

A fractional reserve system cannot work with automated market making because the automated portion of that assumes all funds in the pool are well in the pool. There is a whole lot of things just wrong with your assumptions about how these systems work.

Please watch this to learn how these pooling systems work.

2 Likes
#56

Yes this is correct, I was just suggesting a crazy idea to tweak it to allow this functionality. It would definitely make things more complicated, and the reward would come from staking and fees from liquidity providing. It would probably require an in-between pool of PRV as well. Either way, no matter what solution we do, we are still draining funds out of the Incognito platform to solve the problem.

Before Provide was a thing, we had two separate functions. We had in-app PRV staking (at a really high rate), and Add Liquidity. Provide was the marriage of these two things.
In-app PRV staking allowed you to add and remove PRV at will. The return was something like 50%. Incognito had a small intermediary pool to allow people to pull out and put in at will. The rest of the PRV was being staked in a node. At one point everyone started pulling out which resulted in the the intermediary pool being dried up, this meant that the node had to be unstaked to give people their PRV. This took many days to do as it’s random. The reason why I mention this is because the framework to do this is still there.

Yes this is true, unless you lie and say it’s still there. As long as it’s there when it needs to be there no one will know the difference. I’m not saying lie to the people, i’m saying lie to the algorithm.

You can make an exception to the rule in this specific instance. Add a modifier to the coins to allow something like this to happen in this particular instance only. Make it public like anything else on the blockchain.

I’m saying tweak the system at it’s fundamentals. The amount of PRV borrowed would be minimal and as trades go on, the amount of PRV that needs to be there will be there. Sure it might not be valid in our current state, but the idea is to explore all solutions. I understand how AMM’s work, but that doesn’t mean we can’t add new features or change things to make them a bit different. You don’t even need to technically change how they work, just modify them a bit to add another function that stores Actual Value stored and Supposed Value Stored and tweak a bunch of other things here and there

It was just a crazy idea anyways

4 Likes
#57

I follow your idea @Revolve and like the idea of it. This out of the box thinking is what we need more of in this thread :slight_smile: I’ll see if I can continue this thought and come up with anything.

I’m not ready to admit that the simple, provable, and longstanding option is to make LP rewards come from the block rewards is the only way to go. But it likely is. :confused:

Keep up the good creative thought process!

2 Likes
#58

Crazy ideas are good for brainstorming. Great ideas, eventually, come from discussing the ideas, clarifying thoughts, bringing in other perspectives. There is no harm in them, they won’t all make it to be implemented/executed but who knows what comes from it. You are doing great.

Your idea in non technical words would be to put a note in the “liquidity vault” saying “hey I took x coins, let me know when you need it back”, and then use those coins somewhere else.

Moving coins from the liquidity vault would affect the price as our pools are balanced. So we leave the coins in the liquidity vault, but virtually take them out, by… creating new coins and use those. These coins can not be PRV, as we can’t create PRV like that, maybe pPRV? But for what? I forgot what we are trying to solve.

3 Likes
#59

Hi, I’m new, can anyone help me find the apy rate for adding pair btc-prv or usdt-prv

1 Like
#60

hey @JackWu current thread is a discussion about improvements for the pDEX and liquidity.

Actual rates for providing liquidity you can find here -> Provide

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#61

Hey @everyone! @duc, just published a technical design for single-sided liquidity. Please jump in and let’s continue the discussion in his thread.

6 Likes
#62

Should I be withdrawing my rewards every week and reinvesting it into provide? Or does it automatically compound?

#63

Interest for funds deposited in Provide are automatically compounded every hour.

If you deposit 100 PRV, you will earn 28% APY interest that is compounded every hour. This interest is paid as PRV.

If you deposit 100 XMR, you will earn 13% APY interest that is compounded every hour. This interest is paid as PRV.

For non-PRV deposits (ie BTC, DAI, XMR above, etc) – if you would like to earn the higher rate for PRV on that newly earned PRV, you would need to withdraw your rewards to deposit them in the PRV Provide pool.

This strategy allows you to:

  1. Deposit BTC, XMR, etc
  2. Earn interest at the applicable rate (11% APY, 13% APY, etc)
  3. Withdraw the interest every so often
  4. Immediately deposit in the PRV Provide pool
  5. Earn hourly compounded interest on that interest-as-deposit at 28% APY

The frequency of these withdrawals is up to you. Very large deposits may generate enough PRV to warrant a withdrawal daily or every other day. Smaller deposits will likely warrant a weekly or every other week withdrawal frequency.

Or you could simply leave the interest earned on BTC, XMR, etc Provide pools as-is, and continue to earn compounded interest at those “lower” rates without the hassle of regular withdrawals & deposits into the PRV Provide pool.

9 Likes
#64

Wait, so all my interest i have made on my btc is now earning at btc rates and NOT prv rates?!

Are you 100% positive?

1 Like
#65

Unless you’ve withdrawn those rewards and deposited them in the PRV Provide pool … then yes, your BTC rewards are earning and compounding at BTC rates. This is the way the Provide mechanism has worked since v2 launched.

7 Likes
#66

Hello Mike!

Thank you for your explanation I liked it a lot :grin:.

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#67

How centralized is the liquidity pool? Better yet how centralized is the entire project?

1 Like
#68

Long story short—a lot of aspects of incognito are centralized, especially custody of funds, number of nodes of the network, control to make sure their nodes get picked more often than anyone else, access to the app (which can be turned off from time to time), control over fees charged, etc. You have to trust the team. I do but you need to make your own decision.

However, incognito’s goal is to be private–which is different than decentralized, with the progressive goal of becoming more and more decentralized over time.

There are different trains of thought but with a fast evolving project that gets updated weekly, the centralized control over the aspects ease a huge burden of upgrades and delivery of new tech.

4 Likes
#69

Thanks for the input @marko!

The mains goal is to be a decentralized privacy layer for the whole crypto industry. Unfortunately there is no way to become truly decentralized network from the day one. See Incognito's pragmatic approach to decentralization. At the same time the main goal remains the same and core team work really hard to release the network this year: Incognito's 2021 privacy roadmap for the world

6 Likes
#70

Good correction. I shouldn’t have said it was the goal to be private instead of decentralized. I should have said the approach was to build a privacy layer first, then decentralize along the way. Maybe that’s not even right—but better everyone can read it from Andrey himself :grin:

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#71

@andrey how much time do you think we can take to achieve it? What would happen to us at this „centralized“ stage if regulators start attacking privacy projects directly?

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#72

Hey @sato, we aim to keep our promise and release all aspects within this year :crossed_fingers: :crossed_fingers:

Technological Decentralization Operational Decentralization Governmental
Decentralization
Incognito v1 (2019) Yes (Fully-sharded PoS) Somewhat (2,000+ nodes but with a fixed-node setup) Somewhat (Self-funded DAO and community proposal system but manually approved by a board)
Incognito v2 (2021) Yes (Fully-sharded PoS) Yes (10,000+ nodes with no fixed nodes) Yes (DAO with 100% community-driven voting

Regarding attacking privacy projects. If someone will decide to attack privacy projects they will start with Monero, Zcash and Dash. Incognito is bellow radars and probably remains there until we became too big to be ignored (top 100 CMC or so).

9 Likes
#73

Yes, this is my main concern. I don’t want to grow too big before we had a chance to equip ourselves with a defense in the event we get targeted.

We need to decentralize decision making by allowing community members in the DAO.
We need to decentralize Bridging and make it trust-less so funds aren’t at risk.
We need 3rd party security audits to make sure everythings above board.

These are the priorities we really need to focus in on and complete ASAP. PRV has been growing significantly, especially with the insurgence of people we got from Incognito Quest. We really need to push to solve these issues quickly. Once the issues are resolved we can worry about improving other aspects of the platform. If we don’t prioritize them now, Incognito will certainly have issues in the not so distant future.

13 Likes
#74

Fully agree with you @Revolve :+1:

4 Likes