You can do that, but I already said that to increase participation, lenders and borrowers should also be incentivized whether we do peer2peer, pool2peer or both. So, it does not matter what the history is or where we are going, we have to incentivize all participants, not just AADA holders.
Lender/borrower fund is a small price to pay to realize an increase in participation, increase in TVL, increase in generated fees, increase in governance fund, increase in AADA value for holders.
To increase participation the team should try and finish the actual product people invested in them to build asap.
Until then this conversation is just speculation, youāve no way of knowing your solution will be effective.
Incentives, packaged in many forms, are and have been effective in business and politics. Even dogs require incentives to learn new tricks - so there goes the off-tangent again.
Have a great dayā¦
Why dont you propose trialing this with your tokens as the reward base.
Youāll then at least get some supporting data to make your case.
thanks for taking time to write the propsal. but if approved, you can theoretically lend to yourself (from wallet A to wallet B), collect rewards from the suggested lender/borrower fund. and repeat that with multiples of 20k AADA to avoid your cap. you can even re-lend the borrowed asset from your first in-house deal and so on. iāll have to pass on the proposal - if i misinterpreted the proposal or made a mistake down the line, sorry and please let me know
With regards to the in-house deal, remember that you have to lock up a collateral for every deal and you have to create multiple wallets to perform many deals. And if it fails (for example you have to sell your tokens before the 6-month maturation), you end up paying a lot of fees.
Also, what you have described is an arbitrage opportunity. And thatās fine. When we on-board people to the protocol, the AADA holders and the protocol itself benefits from the fees.
thanks for your reply
I agree with you that we need ways to incentivise people to buy the token.
The section of your idea where when people borrow hold and lend they earn AADA token like what indigo doing and liqiwid is going to do is good but instead of messing with the tokenism the simple solution would be to give a small bonus on top of the staking module for long term stakers.
E.g: Staker 1 stake in safety pool ā= Get rewarded AADA. If they lend out assets for full loan time lock they earn a little bonus AADA. Simple!
Long term Holders starting the 6 months min staking period earn some of the liquidated fee collected by the protocol. This would be distributed when the safety pool distribution happen.! Simple
We already have buyback mechanism! We just need the little bonus for people to earn on top of safety rewards. That incentives people
I did not know that this is done in INDY and LQ. I have to check their whitepapers.
I guess, whatever mechanism that incentivizes lender and borrower is better than nothing at all.
So, would you like to give more clarification as to what you have in mind in terms of incentives?
BTW, the proposal is actually not going to incentivize people to buy the token. The proposal recommends that lenders, borrowers, and holders are all incentivized.
Iām just making more clarification to my previous answer.
The proposal recommends that AADA staking is replaced by the circular economy. Here are the comparison between the two:
Staking / Safety module:
-incentivizes holders ONLY
-emission is pretty fast and leads to sell pressure
-does not generate fees for the protocol
-risk is assumed by holders
circular economy:
-incentivizes holders, borrowers, and lenders
-emission rate is very slow so it does not lead to selling pressure (allocated tokens will not be consumed even after 20 years.)
-risk is assumed by borrowers and lenders since they are now incentivized.
-lead to an increase in participation, therefore increase in TVL, increase in airdrop for holders, and increase AADA value.
-not done anywhere else. Something new for the blockchain technology if it gets implemented.
With regards to the in-house deals. Yes, people can do that. Thatās arbitrage, and itās limited. The more people do the arbitrage, the lower the reward. But then they pay fees that will benefit the AADA holders and protocol.
This isnt true though that the safety module has a fast emission scheduleā¦ its 750 aada per day which would last for over 18 yearsā¦
Also I disagree that this is not done anywhere else as weāre seeing derivatives of this in Indigo, LQ & Meld.
And again I feel this kind of thing is a hindrance to peer2pool (AADA V2)
This isnt true though that the safety module has a fast emission scheduleā¦ its 750 aada per day which would last for over 18 yearsā¦
Unless you have the docs, I would assume you are making these numbers up.
Besides, there is no benefit in staking AADA to get more AADA. You are not going to generate fees under this mechanism, and you are not going to on-board lenders and borrowers.
Also I disagree that this is not done anywhere else as weāre seeing derivatives of this in Indigo, LQ & Meld.
If itās a derivative, itās not quite the same. Also, if other dApps recognize that users must be incentivized, why arenāt we?
And again I feel this kind of thing is a hindrance to peer2pool (AADA V2)
Like Iāve mentioned before, pool2peer will give poor rewards for the lenders. Therefore, the circular economy which incentivizes lenders and borrowers would be more necessary in pool2peer lending.
Please check your discord messages. I sent you the screenshot taken from the white paper (Section 4.1) in the V2 part.
The whole whitepaper is available on the aada github though encase youāre interested.
I did not receive any message. Would you please put the link here instead?
Hastavistabadboy#2926?
But yeah heres a link, wasnt able post image in the comments here for some reason.
Okay. Thanks. I did read about the 750 ADA per day.
Still, incentivizing the AADA holders to assume the risk of the pool is suboptimal than incentivizing lenders and borrowers. By incentivizing the lenders and borrowers, they are now the ones taking the risk (not the AADA holders). Plus if there are more lenders and borrowers, fee collection increases, reward for AADA holders increases, thereās increase in TVL and therefore increase in AADA value.
Its only the aada holders who stake that are taking any risk. Hence why its mentioned they get this aada payout + some of the platform fees. General token holders have no direct exposure.
Iād argue that having others insure the stability of the pools is more beneficial for lenders+borrowers as its ultimately for the safety of their own fundsā¦
Real users are more beneficial than subsidised participationā¦ we will build the TVL naturally.
Iād argue that having others insure the stability of the pools is more beneficial for lenders+borrowers as its ultimately for the safety of their own fundsā¦
What are the risks?
Incentive program is also NATURAL. Every business utilizes it. A struggling economy even have a stimulus program to get the economy going. There is nothing unnatural about giving incentives.
People can do whatever they want with the protocol. If they want to arbitrage, fine. That is natural in money markets. If they want to just lend/borrow, thatās fine as well. Thereās really nothing unnatural with incentives.
Blockquote
Think this is very on point. This is the sort of things struggling economies use, aada doesnt have a struggling economy because we havent even launched the flagship product.
Other projects usually do this to get a high TVL valuation for insiders to dump their tokens at higher prices. Then as the rewards dilute the yield chasers move their liquidity and youāre back to square one only with significantly less project tokens in reserveā¦
Think this is very on point. This is the sort of things struggling economies use, aada doesnt have a struggling economy because we havent even launched the flagship product.
I was only enumerating ways incentives are packaged. There are plenty besides stimulus. Also, AADA does struggle from lender/borrower participation.
Other projects usually do this to get a high TVL valuation for insiders to dump their tokens at higher prices. Then as the rewards dilute the yield chasers move their liquidity and youāre back to square one only with significantly less project tokens in reserveā¦
You mean INDY, LQ, MELD, does the same thing to increase their TVL and dump on their users? These were the dApps you mentioned that incentivize users.
For arbitraguers, there is going to be a push and pull. When reward is lower than the fee, there will some pull backs. The pull back will make the reward more attractive, so users would then come back in. However, those who are genuinely borrowing will be unaffected by this push and pull because their main aim is the borrowing and lending, not the reward.
The push and pull is not going to be dramatic because the lenders and borrowers have to lock in for 6 months, otherwise they are not going to benefit from the reward.
By doing the push and pull, the protocol and AADA holders benefits because this activity generates fees.
Will have to reply later if you have more to sayā¦