I’m new to sovryn right now I have everything in the pools but I think this is a good idea for long term insensitive.
Simply taking a cut of AMM fees is not such a simple solution. The reason AMM fees exist is to incentivise liquidity providers. Removing 15% of their fees earned will impact their desire to provide liquidity.
So to properly do this, we need to have a better understanding of what LPs earn in fees, and what the impermanent loss is. Currently AMM LPs earn about 0.2-0.4BTC a day.
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Just a note to say that since this discussion, I’ve learned that there has been work to exclude unvested (locked) tokens from any FISH rewards, and that may be the source of the confusion I and others had. @exiledsurfer was kind enough to take credit for a communications mistake, but I believe the FISH rewards decision is the most likely root of this kerfuffle.
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I just posted on this in the “Value Capture for SOV Stakers” thread.
Yes, we need to keep the LPs incentivized, but stakers need to earn a cut from everything that goes on on the platform. They are securing the platform so there can be an LP.
Increasing the fee does not sound good to me since that makes the platform less attractive. Therefore the cut must come from LPs share. So what’s the smallest we can take?
0.035% would be nice for stakers, which is 13.5% of the fee.
0.03% is 10% of the fee.
I believe foregoing 10-13.5% of their cut is a bearable tradeoff for LPs in order to secure longterm succes. 0.265-0.27% is still decent, and if it helps SOV number to go up, we will be able to build a stronger platform and thus drive more volume, so LPs win in the long run.
(Tokenomics | Sovryn Wiki June 17th 2021)
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In thinking through the platform economics, I keep coming back to fundamentals. Basically - sharing in FEES vs sharing in REWARDS/Incentives.
Since I have heard many times that SOVRYN is working to provide access, SOVRYN-ity, reduced costs (50x lower now and 50x THAT on the way), etc -all of which is GREAT - promising a sharing in a revenue stream that is being aggressively attacked for good reason is not very compelling. Further - it sets up a dynamic of “You lose, I win”.
What I liked about the rewards share (and maybe even 10% would work) is that it taps into a current and community wide effort to grow LP. Additional value from drops and other expansion of platform value will be attractive in the long term as frequency goes up but the circulating pool will end up diluting the impact of what looks like a big reward today at the early stage.
Further - as a share of reward side income - growth of any beneficial activity will ultimately reward SOV stakers - not just one area like LP participation.
I agree that a potential concern exists for foundational shares but I would rather focus on the growth, future, and win/win dialogue than be concerned how someone who launched the platform or bought at $0.18 is going to come out of the deal.
Seems like @AlykzAlex and @exiledsurfer agree in principle. Unfortunately - I do not have a 1% stake so cannot submit a SIP along these lines but I would sure vote that way!
I’m definitely in agreement with @exiledsurfer. The question is how little we can take from LPs share to minimize their pain whilst still providing a tangible reward to Stakers. I found 0.265% / 0.035% to be the sweet spot, perhaps tilted in favor of Stakers.
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If it’s confirmed the 50mil are earning fees. Why not take the fee cut from the 50mil pool instead of the LP’s? Is there a reason those 50mil are earning rewards? maybe its by default? Another option could be to remove some of the 50mil to more evenly distribute rewards to people staking out of the circulating supply. That’s assuming the rewards are based at least partially on the stake size. That 50mil must be pulling in rewards that are just compounding.
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The new token ideia is bad. Adds more risk and complexity.
I’ve got in to SOV because i saw it like a stock, was amazed by the ideia. But the “dividends” are really bad, and the fact that the whole vested SOV are also receiving is really strange and should be warned. And that seems to be the biggest problem here. Because I understand that the fees will increase with more TVL but if we are competing with the full SOV supply this won’t work. I don’t see why anyone would even buy SOV tokens right now. It’s best to just use the dapp. If I knew that the dividends would be so low that would really change my perception of the token value
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It is confirmed, yes. To answer your qn - I assume that commitments to that effect have already been made to outside investors, etc. so it’s neither practical nor ethical to change their current reward structure.
But it’s a different matter if any future SIPs are passed that give separate rewards (LP share or otherwise) to voluntary stakers of circulating coins.
Perhaps we shouldn’t hurry with the staking rewards and instead focus on growth. Sovryn needs to remain competitive in the space. That’s the number one thing to focus one. There won’t be NO future rewards if the platform does not grow and now is the right time to gain momentum while the competition is not so fierce. Although I’m confident that the community we have already built can deal with some heat. 
A short comparison with Uniswap: The swap fee there is 0.3% - same with the V2 pools on Sovryn.
Uniswap has their governance token - UNI. They also don’t offer YET any share of the swap fees. Lowering the LP rewards here would probably make a part of the liquidity providers “move the house” elsewhere, thus damaging the growth of the platform.
Instead I think the team should focus on building more interest around the other products of the Sovryn platform from where SOV stakers gain fees:
- Lending & Borrowing
- Margin trading
I’m gonna make some suggestions in this regard in the coming days once my schedule clears up a bit.
I hope I have made a point of why allocating even a part of the LP fees to stakers can negatively impact the growth of Sovryn.
The SOV holders will eventually reap the rewards of the growing pains that we’re supporting now. View it as an investment - postponing current rewards for greater ones in the future.
I totally agree that focus should be on growth but I wonder if you have factored in the loot drops in play currently. I also wonder if you have considered the different mechanisms be employed to reduce total cost of system operation and their impact on the total cost of a transaction. If the reward mechanic is driven to SOV and the main value of receiving SOV is to either sell or stake - having no value for staking increases pressure to sell which depresses return. Having value in either direction (stake or sell) provides more value and stability (IMO ) across the platform. Again - I agree that promotion, features, content, reward etc to drive participation should be the focus but I also believe in returns for all participants.
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I’m sure there are some factors that I haven’t factored in my post.
I see loot drops as a tool to attract liquidity to the system. Sovryn is a rather new platform so in order to gain momentum some promotional efforts are needed.
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Cost of system operation? Can you elaborate a little on that please? You refer to developers, hosting, etc.?
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I see the total cost of transaction as a function of the volume and the rewards received by LPs and in the future, by stakers as well. Don’t get me wrong, I would love to get a share of the swap fees. I don’t think it is fair for the stakers to not get a loot. But currently I don’t see a solution that won’t damage the growth especially that the volume is not so great on the platform. But maybe we can come up with one.
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From an investment standpoint we all want rapid capital return. But we need to ask if the return is sustainable on the long-term.
Let’s come with workarounds. Here are some conclusions I’ve ended at:
- SOV staking is not incentivized in the platform’s current level of development.
- Cutting LPs share with even the slightest bit might make some leave the platform and offer liquidity elsewhere. (ex. they can get 0.30% on Uniswap) Although liquidity mining rewards are an incentive to stay atm (but I suppose these won’t continue for much longer)
- Margin trading, lending & borrowing - competitive advantage that Sovryn has over the competitors, but the volume and implicitly the fees generated from these are minuscule in comparison to the swap fees that stakers don’t get a share in.
- Raising the swap fee will most probably cause a drop in the trading volume.
Current solutions:
- Better development and marketing for margin trading & lending/borrowing products.
Questions:
- What is the plan to move a part of the swap fees from LPs to stakers? - Will a big trading volume enable us to lower the LP rewards in favor of the stakers? - But a bigger trading volume might also need thicker liquidity. What other plan can we come up with in order to transfer a part of the value created by the swap service to the stakers?
Here in forum we swap opinions only, i think the devs or their representatives should come with some opinion about it.In TG group the people asking about staking and the only opinion for now is long-term optimistic option.I staked till 2024, I believe in this project, but there is some questions that is come out. They must be answered, and the people that ask for APY for staking, the admins of TG have to clarify that is below 1%, because we will lose this people and believe or not people are talking each other. Yeld Farming right now is killing spree, but only for now. My opinions is to have good and constructive conversation with devs and move on, to be the best defi over bitcoin.
p.s. Staking sucks
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Appreciate the great thoughts and your effort to present them in a very easily understood manner.
To clarify my costs comments - I was referring to total costs of interacting with the platform - not just the fees that SOVRYN collects and distributes but costs to bring in funds, swaps, send out, etc. Not all of those costs to the funds provider are fees collected by SOVRYN per se but there is a focus on reducing those costs and making it easier to interact with the platform - which I was trying to underscore as a benefit. Not well - obviously.
One fundamental point that seems to keep slipping though when I mention win-win, people who are “pro-staker rewards” agree with some incentive coming from LP rewards while people who are “pro-LP incentive NOW” argue it will hurt the platform and the stakers just need to be patient.
Fundamentally - if everyone is supposed to believe in the long term success of the platform and Bitocracy is driven by people who think that way - should they worry about a short term impact to LP? Fundamentally - the platform needs to promote, grow, attract, and build itself into the compelling value proposition we believe in and fundamentally equitable, win-win, mutually rewarding structures would promote that in the long run - right?
I agree that external focus is a priority but I also see broad agreement that the current situation does not benefit stakers and some change to address that is beneficial to the platform/ community as a whole. Incentives do exist for now so why not expect them to offset a minor share in the upside?
I am very interested in other proposals that take this dialogue forward. Thank you for sharing your thoughts and letting me share mine!
Stay SOVRYN!
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I agree wholeheartedly. IMO, the need to incentivize staking sooner rather than later becomes even more important when we consider the tremendous increase in circulating supply that is still to come. Currently < 5Mn tokens circulating, it’s going to go up to ~ 25 Mn circ in just a few months and ~50 Mn in a year from today. This is going to add significant selling pressure over the next 3-12 months which may or may not be offset by demand alone in the medium term. If staking can help reduce this, it’s a good thing.
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I’m new to all of this been in crypto since 2017, but first time yield farming.
Finally defi on bitcoin amazing!
I don’t t know the math good enough but only feel that long term incentives from Sovryn users should be encouraged for the ecosystem. Maybe staking is not as beneficial right now but hopefully it will be more attractive in the future when the plattforms expands and trading volumes are higher.
I want to say you guys are doing a wonderful job and I feel very welcomed here in the community.
Been active in the Sovryn telegram and had a really good experience.
Thank you!
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I am newbie in english language both written and speaking i been in crypto yesterday i mean last 2017 bullrun, i been playing my little purse of peso and lost and win Learn my lesson as well from those loses and receive airdrop money or free money or UBI from uni, 1inch, and received also forth token recently and lost or rug pulled some of them…its a huge money in my 3rd world country perspective philippines. Been a big fan of Edan Yago, Andreas A. , Max Keiser, M. Saylor, R. Ver, Anthony Pomp., R. Breedlove, Jeff Berwick, Exiled Surfer what a great educator this people are even if english is not my language i stll understand them as if they where speaking like filipino tagalog.
I was here because of Bitcoin the sound money. Now that bitcoin has its own defi based on sound money principle robust security almost north of a decade holding value securely and decentralized way.
Even if i dont earn a massive apy like eth defi… I know this is huge like Bitcoin itself 5 to 10 years from now…i know all of my airdrop money will be lost in eth defi ponzinomic, token staking flash loan scam soon if i will chase greater return on my money and suffer hearth breaking lose…
I might as well put my mind and money in rest here in SOV staking,
I am here because of sound money principle…and SOV is out of the brightest mind of those early adopter. If i missed the opportunity of bitcoin $1 , $0.3/btc… maybe this is my second shoot…
Regardless if i earn or not from staking right now because SOV is a walking baby bitcoin i am betting from this Bitcoin son and wait 5 to 10 years on horizon and hope to reap a reward on year 2024 and beyond…nfa, dyor, ths is my own opinion…
I know the future of my well being is in Bitcoin and Crypto in general so i am here to stay in SOV to find comfort and hopefully can travel the world like a millionaire do a decade from now because of SOV.
Again NFA, DYOR, my own point of view and i am sovryn individual.
Thank you all SOVRYN TEAM esp. Edan Yago, Exiled Surfer for the message, i hear you guys loud and clear even if i was from far distant place and 3rd world country.
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Bottom line is, Sovryn needs to find product market fit. The ability to earn attractive defi yields on Bitcoin holds a lot of promise, but the SOV token is unstable, and, with the long lock ups, makes yield farming on SOVRYN very risky, and painful from a user’s perspective. (watching your staked value fall 80%)
Personally speaking, I would love it if Sovryn offered yield farmers a way to earn BTC while staking BTC and other pairs with BTC as one side. Isn’t that why we are all here? If the team could figure out a way to reward early adopters by paying us in Bitcoin, I think the platform would take off.
I will put some thought into how this could work. Just sharing these high level thoughts for now…
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I am introducing SIP-0021 on behalf of Sovryn Protocol Stewards and The Sovryn Exchequer Committee, in order to address issues raised by community members regarding the imbalance between rewards paid out by the protocol for staking and rewards paid for providing liquidity to the AMM pools.
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As currently written, this SIP confuses the meaning of the word “Vested” and this pull request fixes that confusion. Just to clarify:
Vested means “unlocked” as in “my shares are fully vested, so I can now sell them on the market”
Vesting means “locked” as in “My shares are currently vesting for another three months”
Unvested means “locked” as in “I have 42 unvested shares, can’t wait until they are fully vested”
Vesting and Unvested are synonyms, and Gimp suggested vesting is clearer so I went with that convention.
This is standard terminology for any shares that vest.
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