Bootstrapping WHIVE liquidity via the Proposal system.

in #hive-1679222 months ago

Which came first - the chicken or the egg? In the case of WHIVE it is definitely which comes first, the liquidity or the rewards?


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The WHIVE project is pushing Hive outside of its eco-system and into Ethereum, where all the crypto action is taking place right now. But there is a problem. The liquidity available is still small, the WHIVE pools have not grown. The biggest reason in the short term is that there is no money in being a WHIVE Liquidity Provider. It is currently an altruistic experience that a few people have gotten involved in because they believe it will benefit Hive down the track. The GAS fees are large, and the fee income from being in the pools is tiny, so far.

Incentives are paramount.

Uniswap is a crazy, dynamic marketplace with an incredible growth of liquidity and assets involved. Start up coins that have been around for a few days or weeks are ripping past HIVE on a daily basis on Coingecko, pushing HIVE down to rank 128 at the time of writing this. All of these fast moving tokens have one thing in common, Yield farming. What this is is incentives from the project to people adding liquidity into pools for the token on Uniswap. These farmers see the next big thing, dive in by adding funds to the LP, make big daily returns, and move some profits on to the next big thing.

The Hive Proposal System could do this.

A proposal could be put in place, to reward Liquidity Providers with HBD from the dao for adding to the WHIVE pools. There is plenty of funds in the dao, and they are meant to fund the development and growth of the Hive Eco-system. What better way to spend some of these funds by offering them as a bounty to people staking WHIVE (along with ETH, USDT or DAI as the current options) to boost the uptake of WHIVE.

If you are not sure of the benefits that WHIVE offers for the HIVE community, check the recent posts from @khaleelkazi, @cardboard and @fbslo.

WHIVE/WLEO pair.

If incentivizing WHIVE does become a thing, then a WHIVE/WLEO pool becomes supper attractive. Hive incentives, plus LEO incentives could produce a very attractive yield, bring eyeballs into the space and as importantly, new investment. IF you haven't already seen it, the post from LEO

@khaleelkazi understands that to get liquidity happening, an incentive has to be on the table. By incentivizing LEO HODLers to participate with tokens from the Leo Bounties account, he is enabling the WLEO participation to ramp up quickly. Most investors are at least slightly rational, and won't move their position unless incentivized to do so. In this case, unstaking LEO (losing out on Leo curation rewards) to wrap it into LP's on ETH won't become a popular move without an incentive. The benefits of being on ETH are lost without a real, decent sized liquidity pool - as Khal says at least $50 - 100K

WHIVE is currently at around $10K liquidity on Uniswap and largely being ignored - with little to no volume and transactions occurring. An incentive would change this.

How could it work?

  • Firstly, I don't think I am the right person to launch such a proposal - It would need to come from someone with more clout and influence.

  • Would need some coding to automate distribution of rewards.

  • Participants would have to register their ETH address - that they are using to stake into WHIVE pools. This could be set up via the WHIVE website, so that the ETH address is linked to a corresponding HIVE account name.

  • A bot would regularly scan the registered ETH addresses and record pool contributions.

  • As the DAO funds are received, they get distributed to participants according to the proportion they have contributed to the pools.


In my humble opinion, the WHIVE pools will struggle to gain traction without an incentive. Us Hiveans are used to no fee transactions, and ETH gas fees are a major pain point in this process. Some incentivization is required to overcome this problem, and make it worth peoples while to participate in the WHIVE project.

I'd love to hear everyone's thoughts and feedback on this topic in the comments.

Regards,

JK.

Posted Using LeoFinance

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Agreed .... a DAO/DHF proposal should be put in place and bump up the liquidity.

It just makes so much sense in my head - I hope the wider Hive community get it.

Posted Using LeoFinance

It is currently an altruistic experience that a few people have gotten involved in because they believe it will benefit Hive down the track.

It's exactly what you say. There's no economic incentive to provide any liquidity, but I hope for something good to come out of my general investment in hive.

As for the proposal, I would vote for it.

Screenshot_20200901-074653.jpg

Absolutely love the idea! Was talking to @cardboard about getting wHIVE onto LP farms like https://bit.ly/DeFiTrade or https://growthdefi.com/, through Balancer Exchange pools.

But your idea is ideal! Hive should just kind of replicate what https://bit.ly/DeFiTrade did with their LP yield farming pools, and us as a community should get to contribute the liquidity and earn a yield in the form of funds from the DAO or some other hive-engine token.

However, this project would require more dev time and resources. The alternative is to simply create wHive pools on Balancer, Mooniswap, etc. and reach out to the already existing yield farming pools like https://bit.ly/DeFiTrade to see if they can get the wHive pair pool listed on their site. Also, keep in mind that the liquidity providers may prefer to earn in a different token other than HBD, and the pool will have to offer a competitive yield relative to the other yield farm pools in order to attract outside liquidity.

100% Upvoted, reblogged and bookmarked your post.

Cheers!

That's a good idea and I support it. As I mention in the other whive posts, we, here, in Hive ecosystem need a kind of pool to collect all small Hive amounts, let's say >50 or 100 Hive, which will care for liquidity and someone who is interested could prepare the proposal to develop it.

Maybe splinterlands cards or hive governance tokens!

It does make sense if you think about it.

I want to know if the virus or the exosome came first.

LIQUIDITY is the name of the game that can make or mar a project.
So if it is an incentive that is required to fill up the liquidity pool so be it
As WLeo's success can be a gamechanger not just for LEo but for other hive tokens , Hive and the entire blockchain.