Provide Liquidity - Incentive - IIP

[sato]

What do you think if we change the rules for providing liquidity a little bit, with the goal to keep the raised liquidity as long as possible?

IDEA:
If a user provides liquidity we add a time vesting coefficient factor to each provided token. The longer the user provides liquidity, the higher the reward would be. Once liquidity is removed, the vesting coefficient would reset for the specific coin/token.

EXAMPLE:
NOW = User provides PRV and gets 28% instantly.

IDEA = User provides PRV and gets 10% instantly and 15% after 4 weeks, 20% after 8 weeks, 25% after 12 weeks, 28% after 16 weeks.

In this case once a user reaches the highest level, chances would be pretty high that he does not pull out the liquidity without thinking twice, because he does not want to loose the reached level.

In order to avoid trouble, I would suggest if this would be done. To make a soft transition aka. announcement 01.02 from 15.02 onwards new provide model etc. everyone who has provided until then, will start with highest rate. Everyone afterwards will have to climb up the latter. In this case no one can be angry and in the best case, we collect even more liquidity before the new system starts, as people want to opt in for the higher rates.

What do you think guys?

[scooter]

Hi,

not a bad idea but I am not sure if it’s necessary. Do wen have a liquidity “problem” for some of the coins that are available through “Provide”? I don’t see that at the moment to be honest…

[sato]

I think in general, more and especially a stable level of liquidity is always good. I remember, when competitors started and took almost the whole liquidity of Uniswap etc. this could for sure prevented until a certain degree at least, with such an incentive.

Moreover I believe, it will lead to even more liquidity as it is more fun to provide this way (at least for new users, who haven’t provided before). It feels like a game, where you achieve certain levels. Once reached it hurts to loose them, thus you keep it in the pool etc.

[CryptoPigBenis]

I think this is a good idea but I think maybe the rates would need to be tweeked a little. Also what would be your plan to deal with the other provide options? People might move to their shorter term provide coins to other coins that have higher APYs to start.

One other thing would be to make sure that if someone withdraws a portion of their provide coins then the ones that remain continue earning the longer term rewards.
Could also get complicated to know exactly what your rate is if you have 1000 PRV that have been there for 16 weeks and another 500 that had only been there 4 weeks. When you decide to take out 400 PRV does it come from the 16 week pot or the 4 week pot?

[sato]

@CryptoPigBenis

I think this is a good idea but I think maybe the rates would need to be tweeked a little. Also what would be your plan to deal with the other provide options? People might move to their shorter term provide coins to other coins that have higher APYs to start.

Yes I agree, the rates / time frames was just meant to be an example in order make the concept clear Moreover yes this should be done for all pairs not only PRV.

[sato]

@CryptoPigBenis

One other thing would be to make sure that if someone withdraws a portion of their provide coins then the ones that remain continue earning the longer term rewards.
Could also get complicated to know exactly what your rate is if you have 1000 PRV that have been there for 16 weeks and another 500 that had only been there 4 weeks. When you decide to take out 400 PRV does it come from the 16 week pot or the 4 week pot?

Easiest solution might be, once you reached a certain level you can add as much liquidity as you want and it will start at your actual level. But once you withdraw even a little, you go back to the beginning. This would be at least the best option to keep the liquidity in the pools. In this case it should show a big warning once you withdraw, so everyone knows.

[CryptoPigBenis]

@sato

Easiest solution might be, once you reached a certain level you can add as much liquidity as you want and it will start at your actual level. But once you withdraw even a little, you go back to the beginning. This would be at least the best option to keep the liquidity in the pools. In this case it should show a big warning once you withdraw, so everyone knows.

That might be the easiest solution but I as an investor would definitely prefer the option that preserves the highest earning rate the longest as opposed to withdrawing 1 PRV to pay for some transfer fees and restarting my entire provide. Obviously all the wrinkles aren’t figured out yet and I think this idea has merit, we just need to be careful how some of it is implemented so we don’t lose providers.

[Jamie]

it would work the other way around too. If someone provided 1 PRV, left it till the highest level was reached, everything added after that immediately gets rewarded the highest rate.

as far as I know, Provide is not the end goal, it is just something put in place while working on the eventual thing. not sure it is worth changing anything now.

[Katoshicoins]

I think provide is ok for now. We should worry about that later in the future with time lock mechanism or other way!

[Mysolo]

NOW = User provides PRV and gets 28% instantly.

This is wrong. 28% are compound interest, not instant interest. It must have been 1 years to be at 28%.
If I leave 30 days, it’s not 30 days at (28% / 365) * 30

[17Strife]

@Mysolo, you are correct. It is 28% APY, not APR.