While the recent events have caused severe price declines, continued dumping through inflationary farming (either manually or through vaults) has led to a slippery slope where room for natural growth is completely negated due to the overwhelming downward sell pressure.
We make the following simple and temporary solution to mitigate such effects while not drastically affecting current levels of liquidity provided.
Proposal:
Reduce all inflationary rewards arising from governance and LP staking by 50%.This would still put the rewards at a very competitive rate to more benchmark protocol inflationary levels.
Redirect the remaining 50% to the community pool.This is to be later used as agreed upon by the community.
I would like to hear the community’s thoughts about this temporary solution while the team is working on a more refined product mechanism (which I have personally heard several new additions and changes upcoming in December).
Given enough initial support, I will be submitting a governance poll next week. Thanks and looking for everyone’s feedback.
Hopefully this proposal will go through without a problem. Staking rewards are too high that it hardly affects the token price.
Slashing it by 50% is a good temporary idea. Hopefully this post will be pinned in TG channel for the information of the whole community and hopefully this will go through a governance poll voting.
Being an LP farmer my self, who is currently subjected to around a 50% capital reduction due to the price collapse, I’m not sure what to feel about the proposal.
If the rewards are slashed, it will take much longer to gain what has been lost. But if it means that the price will stabilize it could be ok.
If the price does not, and rewards are halved, it’s just salt in the wound.
Baybe I’m ignorant to other factors at play, please educate me if that is the case.
Do you have evidence that the sell pressure is coming from selling staking/lp rewards ?
Slashing rewards might accelerate the exit. People staying today for the rewards will sell, with a risk of dropping the price even more before the token can recover.
Why not massively reducing the airdrops amount instead ? From my point of view you just need a small amount to remind people about the token.
Or maybe adding a linear vesting period to staking/LP ?
I would try to reward long term behaviors before punishing the people who stayed with you.
I agree with Nadalak’s suggestions. Reducing rewards now will just lead a lot of those like myself who have been holding this whole time to bail because there’s no way of recouping losses in a timely manner. This bull run will be gone within 6 months, if not the next 3.
Reduce airdrops significantly, and entice those holding and staking with greater rewards the longer they’re held.
And improve the campaigns such that they actually give a lucrative reward for joining. 100 MINE is barely anything now, and most people unless they’re whales are not going to have anyone they can refer the project into in order to gain more VKR.
I fully agree with the proposal to reduce LP and governance reward to reduce inflation and thus reduce sell pressure.
In addition, it is proposed to use 50% of the reduced LP and governance reward in more detail.
Half of it will be transferred to the community pool and will be used for the expansion of the Valkyrie ecosystem.
Half of the VKR burn according to a set plan, and provides a Valkyrie ticket (tentative name) for the governance staker as much as the burned reward. Suggestions for this content will be made concrete and delivered soon.
Until you guys come up with a better idea on what to do with the tokens/community pool. I would add some vesting to the lp rewards instead of a reward reduction.
If you want to make a reduction in inflation, then tell me what the tokens are going to be used for. To be sitting in the community pool is a lazy move, tell me how to add value
I am in favour of lowering LP rewards and gov rewards. The emissions are unneccesary. I am not in favour of moving to the community pool unless we have a clear plan what the extra funds in the pool will be used for. Burning would be better as all holders will benefit from that. My understanding is the fund already 200M tokens per year (20% of token supply) which should be more than enough for ecosystem grants, participation or whatever governance decides.
Further I think that rewards should be lowered in a stepped fashion, maybe 10% per week over 5 weeks so that LP providers who want to exit do not all do so at once.
Hell no for me.
It will only trigger for exiting investors to exit their investment.
There are still investors who came for the high apr compared to other protocols. VKR is not necessarily farm and dump coin unlike MIR and ANC. mAsset hodler doesn’t have appealing motivation or relation to mir token so they do delta neutral and dump mir. bLuna and bETH hodlers dumping ANC for the same reason
But to farm VKR, participants have to buy $VKR so they need “VKR” to farm and sell so there are still buying and selling mechanism. The price action of VKR was caused by high apr in the beginning, yes but reducing apr at the moment will only make this problem worse.
Only way is that teams delivers harder like they do with IPC so that farmers have more motivation to accumulate the token rather than sell it.
There are many other protocols with high apr distribution and they still manage to deliver its value increase so investors can make $$$ faster. With high apr + good product delivery will be only beneficial for us. Why you guys trying to stab yourself lol as I said, inflation coming to $vkr hodlers, not someone else. So it is their decision whether to accumulate more or sell it little with their investment decision.
People just talk about “sell pressure” from high apr but not talk about “buy pressure” from new investors for high apr.
Basically myself, when vkr hit $0.4
I thought product is undervalued with this fairly good apr, if it was half of this, I wouldn’t have take a risk to reinvest it again with this scary chart.
Please consider where buying pressure is coming from and reconsider what’s been proposed from governance @Ryan_jang
And changing tokenomics(token distribution) seems quite absurd,
I won’t have much faith if team changes tokenomics here and there though it could be rightfully suggested by governance.
Given that there are varied opinions on whether or not to even reduce the inflationary amount, I will be submitting an initial whitelist poll asking whether or not to reduce the inflationary rewards for LP/Gov staking.
If the above passes, we can submit a vote about the specific percentage of reduction.
I’m a trusting and faithful Liquidity Provider (LP) to the protocol, ever since the price of VKR was above $2.40 (it’s currently trading at $0.35).
I’m a long-term investor that sees the big picture and doesn’t bailout during short-term price volatility. However, this proposal rocks the foundation of my commitment and undermines my confidence in this great project. I highly recommend the community to consider the potential price impact of an all out LP bailout due to reduced staking rewards.
In essence, I’m requesting that you please focus more energy and resources on gaining increased adoption and participation in the Valkyrie Protocol and its mission, rather than chastising and pouring salt in the wounds of the ever faithful LPs.
Thank you for your attention… any comments and/or advice is greatly appreciated.
I agree that slashing LP and Governance rewards would only accelerate the exit and further drop the price of VKR.
I also agree that slashing airdrops is a viable solution… I believe that most recipients of airdrops only participate in order to dump the proceeds as soon as possible.
I have a question regarding linear vesting… would it negatively impact on one’s ability to re-stake rewards on a daily basis?
Would providing the option to auto-compound/auto-stake LP rewards help reduce sell pressure on VKR?
Hello Valkyrians… I hope you’re enjoying the best of days.
This message is specifically tailored for the esteemed community members that do not provide liquidity to the protocol:
Liquidity Providers (LP) are crucial at the most basic level of the protocol… enabling a supply of both VKR and UST in support of any purchase or sale of VKR.
There is a negative aspect in being a LP to the protocol, and a cost that must be endured… it’s called “Impermanent Loss” (In essence, LPs lose money whether the price of VKR goes up, or goes down). Do Your Own Research (DYOR), please.
Therefore, LP staking rewards are the only source of profit that is provided to attract and retain LPs. Staking rewards are the key to maintaining liquidity on the protocol and ensure that LPs don’t take their money elsewhere.
Hence, if LP staking rewards are reduced, you can definitely expect an exodus/bailout of LPs. This will certainly drive down the price of VKR… by how much, I can’t even imagine.
With this proposal to cut LP staking rewards, we are essentially opening Pandora’s Box… we risk losing LP confidence in the protocol to recover recent losses and ultimately drive LPs to sell-off and seek greener pastures.
Thanks again for your attention and assistance… it is greatly appreciated.
The counterpoint to this is other protocols have good liquidity and their emissions are significantly less. I think yes some LPs will leave, but the VKR emissions are totally out of balance right now and the sooner we correct this the better.
Like I said before I prefer lowering the LP rewards in a stepped fashion so any LPers not happy with this change don’t leave at once.