Assignment | Attracting Early Liquidity to Flash v3

Attracting Early Liquidity to Flash v3

The more liquidity an asset pair within the protocol has, the more attractive it will be. Not only does high liquidity allow for larger amounts to be traded at less slippage. Whenever people trust their funds into a protocol creating high liquidity this can be viewed as the market “validating” the protocol.
In the defi ecosystem different strategies of liquidity mining exist.

These existing strategies differ widely, e.g. on the following topics:

  • Who is eligible to receive rewards? (Purely smart contract based logic vs. centrally tracked eligibility).
  • How are rewards determined? (depending solely on amount staked; derived from the initially added amount; split proportionally between all participants; does the calculation include loyalty bonuses or multipliers, which token is used as a reward, … ?)

Whoever likes to take a deep dive we recommend looking into this article.

We want to explore which approach to take for the upcoming Flash V3 protocol.

Over the course of developing Flash v3 and discussions around the economic model it has become clear that the protocol will have to attract sufficient trading volume to generate sustainable revenue streams.

“A winning program is the one that incentivizes people to buy and hold the token and at the same time ensures that there will not be much inflation and dilution, and also minimizes the IL as much as possible.” (@Panos cited from Slack)

Questions to discuss in this Mental Mining Assignment are:

  1. Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?
  2. How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?
  3. Are there any specific communities you would target with this program – be it to provide additional new liquidity or to migrate existing liquidity to the Flash protocol? How do we tie rewards into a vampire attack approach to make sure we retain what we drain? Which communities would you target specifically and why would they want to use Flash V3?

A reward of 10,000 XIO will be allocated to this Mental Mining Assignment and be split between all participants. (This is our way to Mine Your Mind :wink: )

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  1. I personally prefer something resembling Aampleforths Geyser program in which rewards are multiplied through out the longevity of the deposit. So I’m leaning towards Growth Marketing. I also see “fair launch”& “programmatic decentralization” protocols as great ideas as well. I think incorporating a little of all of them in the rewards system would be even better choice, where completing important tasks is rewarded along with community ownership through engagement in Liquid Mining (LM). The longer and consistent a user is in the LM distribution proccess the better the multipliers get.

  2. Im not really Fintech savvy to answer all this but I believe seeing that its something new and ever evolving it can get many crypto enthusiasts from all walks of life to see passive income as doable and empowering investment…well hopefully.

3.At the moment communities I can think of are FLR/SGB. As many like myself have missed out on staking rewards due to exchanges either not supporting or not releasing our airdrops yet. It’s a great time to branch out and help someone diversify, especially with in the XRP army.

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  1. Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?
    I personally incline towards fair launch and growth marketing, and seeing it worked first hand for BOMB and XIO.
    ‘Mental mining’ is great working example of growth marketing.
    The current XLP program is a great system and also personally appealing. Hence the Aampleforths program, providing the rewards on longer time frame to retain the liquidity.

  2. How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?
    Adapting somewhat same/similar approach for flash will be tricky, we will be having multiple pools and there should be Cross-pools community engagement (YAM).
    The rewards can be multiplied at certain time with cut-off frame, if users wants to keep providing liquidity, they can retain a certain multiplier with reset on the rewards multiplier. It will stop big wallets for taking the huge share of the rewards by providing liquidity for longer time and will create the fuss if/when timeframe is about to end.
    On the other hand if someone is providing LM for such longer timeframe. they truly believe in the project and need some extra appreciation.

  3. Are there any specific communities you would target with this program – be it to provide additional new liquidity or to migrate existing liquidity to the Flash protocol? How do we tie rewards into a vampire attack approach to make sure we retain what we drain? Which communities would you target specifically and why would they want to use Flash V3?
    Almost every new projects are having some die hard fans, but the only provide liquidity for certain time or until there’s new flavour in town. But seeing most of the money comes from new social media platforms (tiktok etc), we should target these communities providing them proper incentives and idea of FLASH, staking and getting rewards upfront. It’s not sustainable for long term but nothing is, in order to succeed we have to have dynamic approach.
    In long term scenarios, every day crypto user/investor is the best bet. The only downside of this is compounding the rewards. Also the major drawback is gas fee, if we are targeting everyday user (who’s not sitting on huge amount of eth) gas fees stops them from providing liquidity, because no matter the benefit or reward the amount of of tokens they are holding does not provide good trade-off. So layer 2 or addition of some different blockchain will be the best solution, and in that scenario pancake swap community is the one to target
    There is no perfect approach to avoid vampire attack, in my opinion. But try what works, so same LM as before and ability to create new pools with sufficient liquidity. Incentivising people who creates the pool, and their share of the pool.

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1. Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?

Given you normally get the behaviour you reward I think we should consider the following: 1. Reward early adopters with a premium to start the liquidity ball rolling, building early momentum will be critical. 2. Reward long term staking so that we can retain the early liquidity provided.

The reward token ideally could be selected from a range of tokens including Flash. One of the main advantages Flash has over other programs is getting your rewards upfront. Stakers will want to buy into other projects with their rewards. If they are paid in Flash then they will need to sell these to acquire the token they want. If the transaction costs to do the conversion are subtantial this will reduce the utility of the rewards. However assuming Flash will be running on layer 2 or a sidechain, lower fees will mitigate this risk.

A clear cost structure to unstake early is also important to allow stakers to make informed decision if the crypto market is volatile.

In general rewards should be proportional to the benefit they bring to the program - hence rewarding early adopters and longevity

2. How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?

We just adopt the above no need to adapt. We lead with the key benefits - up front reward, plus premiums for early staking and a multiplier for long term periods.

3. 1. Are there any specific communities you would target with this program – be it to provide additional new liquidity or to migrate existing liquidity to the Flash protocol? How do we tie rewards into a vampire attack approach to make sure we retain what we drain? Which communities would you target specifically and why would they want to use Flash V3?

People will only move their funds if there is a competitive advantage provided by Flash. We will need to steal a share of the existing market from other providers and they in turn will steal back from us as they tweak their offering or a new project hits the market. Attracting those staking in other mining programs is a zero sum gain. Having said this - it will be important for us to target the users of other programs as they have already comfortable with the concept of providing liquidity.

What we could consider is marketing ourselves as the “Entry gateway” to liquidity mining for the first timer or new entrants into the world of crypto. I think the upfront reward is a great marketing hook as it makes it very simple for the first time user to understand what they will be earning. A simple interface that clearly shows what you will earn if you do X number for Y period. Marketing is not one of my skills and unfortunately I don’t have any great ideas on how to find and target this market.

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To consider providing liquidity i would need to see 2 things:

  1. the amount rewarded
  2. the timeframe when the rewards can be claimed.

For me a good mining program has to acknowledge the early providers and incentivize them with higher rewards(what AQUA is doing now with the 13w program), and needs to have a VESTING Period … so people are more incentivize to keep the the LP running, to minimize the selling pressure.

for F.V3 it’s a bit tricky :slight_smile:

  1. because now v1 and v2 providers needs to be convinced that V3 is a totally better version… so, as soon as the project will be up and running they will not sell.
  2. if V3 prove itself as a worthy project for sure will be people(maybe whales) trying to take the profits off the table… so a vesting epoch(al) period will be the first safety net.
  3. marketing, marketing, marketing
  4. profit is not everything … considering an NFT airdrop for loyal provider citizens will be a nice way to reward them with.
  1. first i would find a way to take care of the 2.1 … it’s important as a community to take care of “your people” , this will send a strong message to newcomers and a feeling of taking part of something
  2. FlashStake fundamentally is a great project so is likely to attract all sorts of liquidity providers. I don’t know if is an efficient idea to go after another community rather than a marketing strategy to attract individuals.
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Great point in regards to overcoming the negative sentiment that surrounds V1 and V2. Not sure how practical it is to provide an additional incentive to those that staked in V1 and V2 to encourage their involvement in V3 - (FYI I did not participate in V1 or V2).

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what about point 2.4 ?
by creating an NFT, which later can give access to some exclusive perks… seems like a great incentive for the loyal providers.
.+ it can be seen as a nice trophy to hold when the project manage to go mainstream.

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great point … me too :blush:
I’ve been advocating for a community like the #xrparmy for a long time.
FLR/SGB is just a part of the community… but XRPL is a good option to build on, and now with the imminent release of the smart-contracts by the Flare Network it’s a interesting thing to see evolving and maybe being considered by BZ.

short term strategy is as gooood as long term strategy. It’s a good point to consider social media to attract new people…
In the end, i think whales will come if they see enough interest and activity

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Okok, look, I have a crazy idea, to take the staking model into LP model. The purpose of this model is to increase the percentage over time to keep LP suppliers for longer and thus reduce turnover. Yeld reset every 12 months for stability.

Of course, it starts with a lower percentage than “standard” and ends with a larger, very attractive one. By adjusting the distribution in the model, you can either create an attractive model or apply the illusion of attractiveness - depend on tokenomics.

Source: Centric Yeld Calculator

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Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?

My favorite liquidity programs are low cost (tx fees) high interest. For example, anyone can play with pancakeswap on the BSC. For most individuals attempting to provide xio liquidity, it will cost them as much in tx fees as they are able to stake. Also, in the past I tried to use flashstake. If I could only afford $100 worth and spend $100 in tx fees (which isn’t abnormal), I will never gain anything utilizing the dApps built.

How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?

IMHO, with this being the 3rd attempt at flash, I think it should be built on a different platform. 3rd times a charm right? I think we (Blockzero community) should show the world that we are adaptable and Ethereum isn’t the future as it currently stands. Avalanche could very easily take it’s place. If we adapt future projects to the future with lower and faster tx fees, the ENTIRE community will benefit exponentially.

Are there any specific communities you would target with this program – be it to provide additional new liquidity or to migrate existing liquidity to the Flash protocol? How do we tie rewards into a vampire attack approach to make sure we retain what we drain? Which communities would you target specifically and why would they want to use Flash V3?

I don’t think we will ever be able to bring other communities to ours with tx fees as they are. The avalanche community is strong and forward thinking, if we take our projects to them and utilize their platform, we will all exponentially benefit.

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Totally agree on transaction costs but I thought V3 was going to be on a layer 2/sidechain solution to avoid transaction costs.

No issue with creating a NFT but it needs to have a value to the staker. Did you have an ideas on what exclusive perks we could offer.

I’ll try to be straight to the point:
We need a reward system that does not bring too much inflation in our ecosystem.

A global multiplier for using flash or aqua or the Vortex could be a good incentive. For example, you provide liqudity for 5 months, you get a 1.1x multiplier on your flashstaking rewards. I am not sure that this is technically feasible, but I hope I sparked some ideas in the developers heads.

Also, if those rewards could be “off chain” that would be great (like the multiplier I said) because fees are getting out of hands

Totally agree, but mind that this kind of reward system brings a lot of inflation to the system. One solution could be the spread of the timeline
What i mean is that the 100% reward multiplier should be reached after 12 months of “staking” or whatever we choose to do with our funds. Usually, a 1 year multiplier will keep people into the liquidity pool for the entire duration. This will dilute the rewards.

Don’t you think that this could bring too much complexity into our already super complex ecosystem? In my opinion we should aim for much simpler solutions

Not really. There are a lot of people that are just holding tokens (even flash token itself) and are not using them for liquidity because impermanent loss is real and hard. If we have a good reward system, they could choose to provide liquidity

It doesn’t have to be a vesting period in the strict term. There could be weekly or monthly unlocks, like xio xlp

I ma sure that if such nft would be valued on the market, people would just sell it for a quick profit :joy:

You mean every 12 months my rewards go back to 0% and I have to wait 12 months again to see some gains?

Yeah, that is definetly a problem here, with the use of eth chain. The rewards should be in the order of thousands of dollars to be claimable without the fees eating off 30% of my gains, sadly. I hope flash will run on bsc

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[quote=“Pseudotwit, post:13, topic:1682”]
Not really. There are a lot of people that are just holding tokens (even flash token itself) and are not using them for liquidity because impermanent loss is real and hard. If we have a good reward system, they could choose to provide liquidity
[/quote]
I agree if people are sitting on tokens because they are scared of impermanet loss then we could attract them if the rewards are high enough - they would need to be pretty high though for someone to change their mind.
However my comment was in reference to attracting people over to V3 that had already staked in another program - I think they will need to see a significant upside before moving funds that are already invested.

what about :

  1. a X% increase on their rewards
    or/and
  2. a week as attendee at core meetings
    or/and
  3. a new discord badge/level/group
    or/and
  4. a Xdays heads up for claiming/staking in a new project

… seriously here sky is the limit with the imaginations of the perks that might be offered … and can be multiple group of nft’s … not only a one time deal.

yes something like this i was referring to,
for eg.
in epoch1 a LP is entitled 100 of token A … he will get 25A for the next 4 epoch… where maybe each epoch will represent 1week

:slight_smile: it’s a fact that some people are chasing a quick buck… but a strategy can not be developed being fearful that some of the participants will sell as soon as they get the reward …
i think we need to find a way to retain… most of the people… if we try to retain all of the people will be as bad as not retaining anybody… people needs to sell/buy so the market will set the price.

this actually is a nice spinoff of what i consider a good vesting campaign… i like it

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1. Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?

  • Fair launch: I like that everyone that meets the criteria can be rewarded but the problem is that it is quite left behind/undervalued in my opinion.

  • Growth marketing: It is quite popular and it gets the users attention for defined period.


2. How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?

I would definately try a combination of Fair launch and Growth marketing. Growth marketing for sure, i believe its the most efficient. If we for example take uniswap launch, it was great success. It would be great idea to get attention for flash and lead them to other bz projects so we can grow all at once.


3. Are there any specific communities you would target with this program – be it to provide additional new liquidity or to migrate existing liquidity to the Flash protocol? How do we tie rewards into a vampire attack approach to make sure we retain what we drain? Which communities would you target specifically and why would they want to use Flash V3?

If we are about to extend the Flash V3 total supply, it would be great to target some of the biggest DeFi like Uniswap, Sushiswap, Balancer, Curve users … Communities with staking protocols might be interested with flashstake ability.
I’m not sure what you mean by migration liquidity (from where, flash v2?)? If we are about to create new brand Flash V3 i suggest new liqudity and a fresh start. For vampire approach lower fees or higher premium would be nice to see for investors. Basicaly give them candy like sushiswap did.


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For sure, what will be suitable for everyone is a biggest reward. But I personally think XIO LP has a good reward program. It was even more interesting at the beginning. What is good here is the good percentage of rewards.
I also noticed that Cake of pancakeswap has also a good mining program on his dApp and also on Binance. They have very low fees, good percentage, about 30% and withdrawals are possible at any moment with no constraint.

I think Flash V3 will be better if we promote adding liquidity on his own Dapp. It could be similar to the liquidity on Uniswap, it should not be on Uniswap, but on flash DApp. I can’t explain this technically, but what I want to say is that everything should focus on Flash Dapp. Flash V3 dapp should be all in one.

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It’s a bit short this time and maybe not that well thought out but I don’t really have much time currently and I wanted to give my little input this time also :smiley:

1. Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?

  • I have only provided liquidity on two cryptocurrencies so far (used pancakeswap for it) so not much experience with it. Anyway, the thing that got me into it were high rewards and easy to use UI.

2. How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?

  • I think Flash could benefit from Pancakeswaps success story kinda in the way that Pancakeswap got popular. Pancakeswap got popular because at the time it offered lower fees than Ethereum and had a good branding. Flash is the same with branding as it looks really asthetic and getting your yield up-front is Pancakeswaps low fees, which noone else to my knowledge offers. As to get people to be LP I think early LP should get more rewards. For example, if I’m not mistaken then AQUA offered 100% of the fees to LP for some time.

3. Are there any specific communities you would target with this program – be it to provide additional new liquidity or to migrate existing liquidity to the Flash protocol? How do we tie rewards into a vampire attack approach to make sure we retain what we drain? Which communities would you target specifically and why would they want to use Flash V3?

  • Only communities that I can think of are any social media groups for cryptos but it’s kinda hard to find good ones. Only specific group that I can think of is Avalanche’s reddit if we are going to migrate there. Oh, and also Flash fans in Reddit or something like that :smiley: Anyway, on a serious note to retain what we drain the only things important to me about these projects are good returns on my investement so higher rewards equal more people on the platform. As to what communities to target I don’t have anything specific to recommend.

You mean every 12 months my rewards go back to 0% and I have to wait 12 months again to see some gains?

Well no. There is a cycle from X to X+Y%, so lets say you start from 12% up to 400% at the end of cycle.

Example: with “normal” but attractive LP you have like flat 80% APY. For lets say 12% for first month for easier counting you get:
1.25 multipier/month - 12% first month, 137% last month - 53% APY
1.35 multipier/month - 12% first month, 325% last month - 101% APY
1.5 mulitpier/month - 12% fist month, 1037% last month - 257% APY

Obviously this can be custimised, since this is only an example to show what I mean.

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