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.
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)
- Which liquidity mining programs (rewards programs) are most appealing to you personally? What do you like about it?
- How could this be a good inspiration for Flash V3? How would you adapt it to attract Flash v3 liquidity?
- 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 )