Great work here. I like the line of thinking. Something brought up in another thread that I’m considering this morning is that given the high yield on DIGG from outset, price of DIGG will probably rise above it’s peg as people buy to farm leading to expansionary rebase from outset.
In my mind this will lead to a number of outcomes, one is that LPs will sustain greater losses due to the mismatch of price in wBTC<>DIGG, not the worst consequence as it will lead to the wBTC share of the pool to increase, but certainly a liquidity consideration.
If DIGG setts return is too close to LP returns, I’d hypothesize that people will forego LPing to just provide DIGG, leading to higher demand and higher price for DIGG without the gains in liquidity we might want to see.
What I think would be interesting is to look at the time since launch and see if there is an “equilibrium” BADGER reward/LP ratio (hard to say “apy” with badger price changing).
So, roughly it would be like " people stop staking LP at roughly X badger per LP". We can then use that as a metric to set the emissions at a rate that would get us to a “target liquidity”. We dont think there is enough liquidity, we can set it higher that week, theres plenty, keep it the same or lower.
took a while to catch up, but I definitely love the equilibrium arrived at with this model.
The Impermanent Loss offset by staking only Badger is taken care of
Close to 3X DIGG Rewards for users willing to take on higher risks as DIGG LPs compared to Badger LPs
Close to 3X Badger Rewards for users who prefer taking on the Badger LP Risk
The balance that’s achieved can even push users to stake 50% of their investment in Badger and DIGG LPs respectively. We can nudge this a bit, by encouraging users to try different tools for swaps (to claim airdrops similar to 1inch) taking away the barrier of high fees with swapping into multiple coins.
eg. Bob has 1000$ to invest. We can craft a story that encourages him to swap 250$ for Badger (on Matcha), 250$ for DIGG (dydx/Paraswap), and 500$ for WBTC (on DEX.AG).
He can then go on to provide liquidity in both the Badger-BTC and DIGG-BTC pools, best of both worlds!
Maybe we can even create a Furucombo that combines multiple steps like these into one!
Yeah Zapper is a simple option that can be provided too, the goal of creating the narrative around using multiple different products is to help users possibly claim some of the retroactive airdrops that may happen for some of these services in the future (DEX.AG, dydx, Matcha, Zapper etc.)
My personal feeling is that the more DIGG you release (and the faster it releases), the more likely you are to diverge from the BTC target and dip into negative rebase territory. Which is not necessarily a bad thing except that if the supply added to the circulation (i.e. your emissions) don’t also slow to match, you’re going to end up with an interesting combo of dropping spot price, negative rebase cycle, and increasing supply at the same time. To me, this feels like a recipe for continuous dumping to maintain profit-taking expectations, which isn’t very conducive to maintaining the target spot price range. The spot price of BTC is limited by the rate that miners can introduce more BTC into circulation, but that’s not true of DIGG.
True, but perhaps a time-weighted average of miner selling into the market would suffice to roughly track the rate that BTC enters the market? Or something tied to the amount of BTC mined per block instead since that would be more easily trackable and calculatable? I don’t think you’re going to be able to get an exact match on the rate of BTC entry into circulation either way, but since DIGG isn’t a 1:1 peg either, that would probably suffice.
With that being said I still feel there’s no consensus about the actual emissions of DIGG during week 1. Many seem to prefer an emissions model that benefits Badger and DIGG LPs + Stakers while ensuring the highest likelihood of maintaining the BTC peg.
I’d like to propose this model that I feel achieves both objectives. This is an approximate model and based on the total emission numbers used by @Mr_Po.
I think btc sett holders should get some digg. Most of our TVL is in bitcoin holders, isn’t the idea is to get them to hold digg. I’d take like 10% from across the other areas and put 2% digg in each btc pool.
Interesting. Where do you see that? Any evidence to support the claim? I’ve been in two of the BTC sets since the first set and haven’t sold a single Badger and I can’t imagine I’m alone in that. The yield has been compelling on both it and the Badger.
I would be wary about anything that doesn’t have a mind to incentivise TVL being maintained on the platform, particularly given that utility of wBTC is increasing as market value goes up (collateral) and Yearn V2 with their huge curve weighting will likely be very attractive. TVL drives the entire performance fee model and I think allocating some Digg as well as Badger will give folks another reason to stay involved. We want to be the preeminent BTC defi platform and I think competition will be fierce Q1 CY21.
I also don’t see the need to incentivise so many liquidity pools with the same token pairing as well. Particularly with Sushi already providing incentives of their own on the Sushi LP pair.
Thanks everyone for their contributions to the chat so far.