Proposal - Activate Yield Farming for the V1_HBAR/HCHF Pool with 2% farm weight

Proposal
1

This proposal builds on the discussions from the RFC: Activating Yield Farming for V2_HBAR/HLQT, V2_USDC/HCHF, and V1_HBAR/HCHF Pools

  • Title: Activate Yield Farming for the V1_HBAR/HCHF Pool with 2% farm weight
  • Author(s): GlobeBit & HLiquity Team
  • SaucerSwap Voting Interface: na
  • Related Discussions: na
  • Submission Date: August 19th, 2024

Introduction:
This proposal focuses on activating yield farming for the V1 HBAR/HCHF pool. After community feedback, the proposal has been refined to support this pool exclusively, as LARI is the incentive model for V2 pools.

Motivation:
Stablecoins are crucial for the Hedera ecosystem, providing stability and fostering broader DeFi adoption. HCHF is an overcollateralized stablecoin backed by HBAR, offering a reliable asset for users. Additionally, HLiquity, the protocol behind HCHF, is the first decentralized borrowing protocol on Hedera, allowing users to draw interest-free loans against HBAR in the form of HCHF, a Swiss Franc stablecoin.

Given the importance of stablecoins, we propose a 2% farm weight for the V1 HBAR/HCHF pool. This is balanced against the 6.50% weight for the HBAR/USDC pool, recognizing the significant but distinct role that HCHF plays.

Benefits:

  • Supports stablecoin liquidity on Hedera, crucial for DeFi adoption.
  • Encourages the use and adoption of HCHF, enhancing the ecosystem’s stability.
  • Helps maintain a diverse range of liquidity pools within the SaucerSwap ecosystem.

Downside:

  • Allocating emissions to the HBAR/HCHF pool may slightly reduce rewards for other pools.

Links:

Website https://hliquity.org/
Documentation https://docs.hliquity.org/
Sentinel Report HCHF Sentinel
X: x.com

Voting:

  • Yes: Activate yield farming for the V1_HBAR/HCHF Pool with 2% farm weight
  • No: Do not activate yield farming for the V1_HBAR/HCHF Pool
4 Likes
2

Thank you for making a separate proposal on V1 HBAR/HCHF farms.

Now the conversation can focus on two specific topics. First the 2% weight. @GlobeBit has gave the justification on the 2% weight, comparing it to the sauce emissions 6.5% weight for the V1 HBAR/USDC farm. I’m not to opposed to the 2% weight enough to try to argue up or down percent. But if others want to, feel free to.

The second, and I think the more important issue is where that 2% is coming from. And as mentioned in the post,

Allocating emissions to the HBAR/HCHF pool may slightly reduce rewards for other pools.

which yeah, that mostly likely will happen and would incentivize liquidity changes in different pools.

Previously, votes on farms went like “the weights of select farms with APR significantly higher than liquidity-weighted average APR would be reduced” or something to that effect, but that data, while could be calculated, wasn’t readily accessible at a quick glance and the farm weights changes were only revealed after the successful approval vote. I still would want a data driven, but with the calculations out in front and the potential weight changes prior to the vote. I could try to have that calculated, but that will be in a separate reply in the future.

But for a barebones proposal to get to 2%, first a 0.10% weight reduction of V1 farms that have an equivalent V2 pool. If I’m counting and listing them correctly,

  1. HBAR/SAUCE 20.00% → 19.90%
  2. HBAR/HBARx 10.10% → 10.00%
  3. HBAR/USDC 6.50% → 6.40%
  4. HBAR/xSAUCE 2.00% → 1.90%
  5. USDC/SAUCE 1.28% → 1.18%
  6. HBAR/PACK 1.20% → 1.10%
  7. HBAR/HST 1.00% → 0.90%
  8. HBAR/WBTC[hts] 1.10% → 1.00%
  9. HBAR/KARATE 0.90% → 0.80%
  10. HBAR/QNT[hts] 0.70% → 0.60%
  11. SAUCE/xSAUCE 0.60% - 0.50%
  12. HBAR/wAVAX[hts] 0.40% → 0.30%
  13. HBAR/LINK[hts] 0.30% → 0.20%
  14. HBAR/DOVU 0.30% → 0.20%
  15. HBAR/CLXY 0.30% → 0.20%
  16. HBAR/JAM 0.30% → 0.20%
  17. ̶H̶B̶A̶R̶/̶W̶B̶N̶B̶[̶h̶t̶s̶]̶ ̶0̶.̶4̶0̶%̶ ̶-̶>̶ ̶0̶.̶3̶0̶%̶
    edit: This might actually be a mistake in the documents, as the web interface does not show farm APR for this pool

and if we really really need to get the remaining 0̶.̶3̶0̶%̶ 0.40%

  1. SAUCE/GRELF 0.30% → 0.20%
    since there’s a v2 HBAR/GRELF pool.

  2. HBAR/HSUITE 0.30% → 0.20%
    another protocol token with competing DEX.

then scrape the remaining 0̶.̶1̶0̶%̶ 0.20% from the other v1 farms

Again, this is an idea of how to get the 2.00% and the team can modify or completely trash this outline. Other options could include changing the DAO and LARI weights, though I and many others would be opposed off, especially this early. Maybe the team could settle with a reduced weight to minimize infighting over a few points. But regardless, the way we get to 2.00% (or whatever weight) would be a major obstacle for this proposal’s success.

4 Likes
3

So … mathing time. I hope it actually is legible.

APR of V1 Pools w_ Farm rewards
APR of V1 Pools w_ Farm rewards1796Ă—800 43.4 KB

I hope I inputted the data correctly, but I wasn’t precise to the penny as the value to the pools/token fluctuates. I only really bothered to 3 sig digits. The chart shows the APR of V1 LPs with farms. The line is the weighted APR average, which I calculated to be 11.63% (again, mind the lack of precision as stated earlier).

From this chart, we see certain LPs like HBAR/CLXY and HBAR/JAM being way above the average APR. Given the LPs with higher than average APR, we don’t need to allocate as much SAUCE emissions towards these pools and could incentivize other LPs.

Now, given the issue with the docs (having listed a HBAR/wBNB farm weight when the site does not), I’ll hold off on any proposed weight changes for now.

But food for thought, there’s 8 LPs with APRs more than double the weighted average (19 that’s just higher than the average). Should the weights reduction be even across the board (say an even 0.25% reduction across 8 farms), or should the reductions be weighted more towards the higher APR (something like HBAR/CLXY and HBAR/JAM getting a bigger cut than HBAR/STEAM and HBAR/SENTX).

For future reference, I hope data like this is more easily accessible at a glance. I had to manually type the data into a spreadsheet, then have to retype in a future. Additionally, I hope future proposals include the proposed weight changes so users can be better informed.

2 Likes
4

Voting is now open https://www.saucerswap.finance/governance/proposals/3
Thanks for the support

5

Voting is open, but how would you achieve the 2% emissions weight?

1 Like
6

Some clarification from the SaucerSwap team would be appreciated here. Thanks a lot.

7

But it’s your proposal.

Now, if you want to amend your proposal to trust the SaucerSwap team to adjust the weights based on how they previous done so (e.i. reducing weights of select farms with APRs significantly higher than the liquidity-weighted APR), please do so. Or trust they would change based on other metrics that wouldn’t hurt the platform.

Sure, it’s a little blackbox-y and centralizing decision making to the SaucerSwap Core team, but it could be argued that having it done behind curtains would prevent short term liquidity shifting to hit some metric to have certain farms affected/not affected.

1 Like
8

Clarification regarding what?

9

The proposal has been resubmitted without addressing the main concern of how to achieve the proposed weight change.

But this time a 0.50% emissions weight instead of 2.00%
Has not updated this discussion, or has created a new discussion to reflect this.

10

Globebit please add the importsnt details regarding how you you propose to achieve the emmissions weighting. Without these important details I wont be able to endorse this.

11

What about increasing incentives to the V2 USDC/HCHF pool instead of V1 HCHF/HBAR?

While hchf and usdc are not specifically stable against each other as one is Swiss franc based and the other dollar based, they’re at least both intended to remain stable stores of value on their own while usdc so far has more adoption.

Because they’re stablecoins, the V2 pool could use a much smaller sauce allocation than 0.5% of what’s going to V1 farms and yet with the higher capital efficiency, it could stabilize the value of hchf far more efficiently compared to using a V1 pool against HBAR. So you would take advantage of the fact that hchf is a stablecoin - these can use V2 liquidity more efficiently than any other assets.

Finally, maybe hliquity could move more of the HLQT incentivizes currently going to the HCHF stability pool on hliquity over to match the sauce LARI rewards that would incentivize the V2 HCHF/USDC pool, making it a collaborative effort to support HCHF stability.