White Label Liquidity Program

FlashStaking offers startups access to capital. When FlashStaking is done, XIO is brought into circulation (Foundation Wallet), swapped for the alt coin which instantly moves to the stakers wallet. The startup receives the XIO (or corresponding ETH depending on which liquidity pool they use). This is great.

A problem arises if the startup has little liquidity to begin with. If demand is high slippage will lead to high volatility on the pair making it difficult to scale.

Here is what is proposed:

Instead of ‘just’ offering startups capital (which yes, could be turned into liquidity), XIO can install an automated service offering startups a way to establish a growing, well distributed pool of liquidity (white labeled liquidity program). XLP has been a really successful concept. Why not transform it into a service for startups?

Instead of having one staking option,

  • receiving startup’s tokens,

we can offer a second option:

  • receiving UNI-V2 tokens of the startups liquidity pool.

This way the startup can distribute and grow their liquidity pool nicely. Before launch the startup sets aside an amount of their tokens as liquidity incentives for all participants of the staking pool to earn from. Just as with the XLP.

If we now find a solution to balance impermanent loss, that could be a really neat tool to offer.

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At the moment, I and many others minimise the downside of impermanent loss by allocating a portion of our capital outside of the liquidity pool by holding the token itself.

I would much prefer to put in all of my capital that I want to allocate into one token. I would also like more exposure to the liquidity pool, but the impermanent loss creates a real disincentive.

What if at launch a derivative (to steal your term) XIOu is issued.

We offer a derivative that is fully redeemable for the underlying assets such as a combination of startup tokens, UNI-V2 tokens and even non-fungible tokens (NFTs).

The combination could be set by the startup depending on their requirements, and there could even be conditions attached to the full convertibility, or ones ability to redeem parts of the derivative at a given time. This could then be used to both protect and incentivise, the startup and the early investor.

Conditions which could insentivise or protect could include;

time for removal of UNI-V2 which would protect the startup from having liquidity pulled.

delivering on key performance indicators (KPI’s) before founders could redeem parts of the derivative to protect early investors.

The combinations could be endless, or customised down into a few templates that the startup could pick from.

It doesn’t solve the impermanent loss issue in itself, but it could help to offset it while also creating additional benefits for all stakeholders. It would mean that startups would need to compete for capital based on not just ideas and promises, but terms which would be enforced by the smart contract.

It could also act as a deterrent for outright scams and those who aren’t genuine in regards to their intentions to deliver on their promises.

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I have been doing some research on Mooniswap. Seems they have attempted to address this problem for liquidity providers (the forces that cause impermanent loss).

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This is an interesting thing to go back and forth on.

You know I love the idea of turning XLP into a service. I believe we’ve talked about this after Zach’s video.

I believe we had discussed accepting the UNI-V2 token of (for example) the ALT-ETH pool as the item that you’re staking. So this presumes the staker has already offered liquidity, and now wants to stake his UNI-V2 tokens on flash stake in exchange for some ALT tokens.

To me, this recreates the XLP experience where XIO reaches out (outside of Uniswap) and says…show us proof that you’ve provided liquidity on Uniswap, and we’ll send you tokens on a schedule. I’ve seen many other tokens do the same. In this case, the “proof of liquidity” would just be the fact that you’re able to lock the UNI-V2 token into XIO’s smart contract.

So if XIO is now the steward of ALT’s liquidity program, the ALT coin owner can show XIO proof of liquidity by locking up their UNI-V2, and XIO will pay them the ALT tokens up front that they’d normally have gotten over the course of a few months.

So that’s one way to do it.

I see you’re suggesting UNI-V2 tokens as the reward itself. I’m trying to think that through. It would mean that someone already put funds in the ALT-ETH LP, presumably XIO.

So let’s say Mr. Staker buys 1000 XIO at $1 per token, and stakes it at 10%. You have to give him $100 worth of UNI-V2 token. In order to produce that UNI-V2 token XIO has to sell 100 XIO tokens and put the proceeds into $50 worth of ALT and $50 worth of ETH to go into the Uniswap pool.

Hmm. Well, I guess it can work that way. Do you foresee any problems here? I can’t think of any right now.

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I love the idea of expanding the service offering to startups as at the end of the day we want them and us to succeed at the same time. So recreating the XLP for the startup in some way seems like a valuable service (after all, what are you with 0 or close to 0 liquidity?).

I am thinking about this and am not sure that I get it, could you check if my understanding is correct?

Startup: Provides their version of XLP (sets aside their own token to be rewarded to liquidity providers)
XIO: Provides the liquidity pair on Uniswap (ETH-ALT)
Staker: Receives UNI-V2 tokens as a staking reward?

But doesn’t that mean that part of the UNI-V2 tokens would go to the treasury?

This is a very good idea. Startups need funding all right, but their project needs liquidity for success, which will benefit the whole community, both the startup and the investors.