Title
Distribute proportional rewards to each chain.
Summary
At this point DFX rewards for staking are weighted 80% on the Ethereum Network and 20% on the Polygon Network. There has been a significant uptick of locked value within Polygon and thus there is a fairly wide reward discrepancy within the two networks. (As of writing this, there is a 20% APR discrepancy between the CADC/USDC Pool on Ethereum vs. Polygon).
This proposal is to shift the rewards from being fixed to being proportional by the total amount of FIAT value staked within DFX. For example, if the Ethereum network has 80 Million of FIAT value staked and the Polygon Network has 20 Million of FIAT value staked then the Ethereum network should receive 80% of the rewards allocated and the Polygon network should receive 20% of the rewards allocated. Likewise, if there is 60 Million of FIAT staked within the Ethereum network and 40 Million staked within the Polygon Network then the Ethereum Network should receive 60% of the total rewards allocated and the Polygon network should receive 40% of the total rewards allocated.
Motivation
DFX being available on Ethereum and Polygon should be recognized as a strength. That being said, market forces should be the key to ensuring reward fairness. The market will choose which blockchain is more valuable in the long term. It may be Ethereum, it may be Polygon, but at the end of the day, the market should chose and reward allocations should follow what the market decides.
Secondly, Telcoin, (who is a major partner of DFX) has shifted towards being mainly on the polygon network. This will require a significant amount of liquidity to be made within the polygon space and proportional rewards would help strengthen that partnership.
Specifications
A snapshot of liquidity provided on both markets will need to be taken on a bi-weekly basis. The timing of this snapshot would not be disclosed to the public to ensure fair market participation. The purpose of this snapshot would be to obtain the total FIAT locked up on both the Ethereum and Polygon Network. The values coming out of the snapshot would be used to calculate the proportional rewards on either network. Within 48 hours the values would be implemented into DFX and changed within the website. A social post would be made to inform the public that the rewards have been proportionally adjusted.
For
Supporting this proposal will balance the rewards between Polygon and Ethereum.
Supporting this will make it easier for large DFX Partners such as Telcoin holders to find value in DFX.
Supporting this proposal is to support the overall market choice of where users want to āparkā their Liquidity.
Against
The snapshots of wallets will have to be made and rewards shifted on a bi-weekly basis. It adds another task for the DFX team.
I am a huge ethereum fan and really liked the original 80:20 split, and concentration of liquidity on ethereum (due to security reasons). But now, i totally see the need to do this. So i voted āyesā to this well thought out proposal.
Outside of this, i will encourage core team to consider expanding pools to arbitrum, avax (and other EVM chains). I am pretty confident Avax (and others) will offer additional incentives as well to boost APYs. Avax will have gnosis support soon, and we can ensure DFX can be used for voting as well.
I have changed my vote to disagreeā¦ Liquidity mining incentives need to be used strategically and I think it would be better to have a committee analyze pool usage to determine reward allocations on a biweekly basis. That way, we can even experiment by increasing Polygon rewards to drive liquidity to Polygon and see if weāll see larger swaps.
I personally on-ramped USDC instead of CADC before because the price impact wouldāve been too high on the USDC/CADC pair, so I would like to see more liquidity on Polygon, but we also need to consider that the APY is quite high already for a stablecoin pair. There are many factors to consider, so that is why I think we need to be more strategic with how rewards are used.
i think this proposal is just requesting redistribution of rewards (between ethereum and polygon) rather than an increase/decrease in DFX rewards overall.
I am in FULL support of this proposal, as long term TEL holder i see the eco system being created with DFX playing a major roll in stable coins with cheap and fast transactions. With the high cost of using the ETH network the Poly network is a great layer 2 and I will be bridging all possible assets i own to the POLY network.
Also with the ability to purchase CADC-P through Paytrie, it would be nice to see more incentives for the POLY network as its a more attractive onramp for new comers to the crypto space.
I sincerely disagree with this proposal and is a clear that Telcoin users are attempting to milk DFX of its rewards and have more influence on DFX. We know their users are typically stuck on polygon and want more rewards. While I think its been a good partnership this is a step way too far.
Downstream Effects
This would have horrible downstream effects. LPs would remove and add their liquidity based on which network pays more. This causes liquidity to be further split and inconsistent for users. This would cause liquidity providers (my firm as well as others Iāve talked to) to leave the network as this change goes against the initial premise of Lpāing on DFX.
Note on Polygon in general
Not only is polygon centralized and not very secure, but other layer 2s are getting more traction each day. Iām not sure how long it will even be around as we approach the Eth 2 merge in a few months. I see no real reason to use it to invest our resources in Polygon right now with such an unclear future.
Hey John. I donāt know what you mean by Telcoin users are attempting to milk DFX of its rewardsā¦ The only way they can do this is by providing liquidity which is exactly what DFX requires. We should be thankful when ANY community wants to join the DFX community.
I also donāt understand your comment regarding removing liquidity based on which network pays more. This proposal is set to balance out the rewards so that both networks have similar rewards which would remove any element of bouncing around to chase rewards.
DFX is on Polygon. From what I understand DFX is not going to remove polygon as an LP option.