Reward system update, PNG pairs and massive whales

Seeing various proposals from the community and experiencing firsthand the experience of providing liquidity in various pairs of pangolin, I realize that there is something that we must urgently change, this is our rewards system.
First of all I want to start showing again what a user noticed, a massive whale that has practically half of the liquidity in pangolin: 0x84d34f4f83a87596cd3fb6887cff8f17bf5a7b83
Nothing more and nothing less than 70 million dollars, in this sense and analyzing the wallet I realize that this whale does not have any pair of PNGs and constantly sells its rewards in exchange for AVAX.
In this sense, the incentives of this whale and in general those that provide liquidity in pairs other than PNG such as AVAX-USDT etc. have little and nothing to lose with respect to those providing liquidity in PNG.
There is a much greater exposure and a little coherent selling pressure generated due to the nature of the rewards, it does not seem correct to me that those who provide liquidity in PNG are exposed to this and do not have any benefit in return.
I have previously commented on the importance of the PNG economy and without going into detail I want to remember the following: a good PNG price with a stable system makes the rewards more attractive and if the rewards are more attractive there is more liquidity and more volume, which are the two of the main objectives of a DEX.
It makes much more sense for those providing liquidity in PNG to obtain at least 20-50% more rewards in PNG than those who farm with other pairs by being exposed to the previously described, in addition, this system would help with the PNG economy and also counteract and maybe benefit this whale that constantly dumps png with half the total liquidity of the dex, without risking one bit outside the IL.
Lets think and discuss the following ideas.
1.- Pangolin liquidity providers are exposed to massive selling pressure from those farming in other pairs that do not run the same risks and therefore should have better rewards.
2.- Whales like the one exposed above do not risk anything outside the IL that they would have in other DEXs and practically monopolize the rewards system at a low risk generating a selling pressure that does not benefit the ecosystem, (however, it must be recognized that their contribution of Liquidity is desirable but it would be better to be more distributed).
3.- Giving more rewars to the PNG pairs not only makes sense with the incentives but it would generate a more stable pressure on the PNG price, surely if this whale were in PNG pairs it would not dump itself, or the I would least think about it 2 times.
4.- The importance of a stable PNG economy finally brings us to the 2 most important things about a DEX, TVL and volume, which I think would benefit from adopting a model with this approach.
So my question is the following, is it fair for those in PNG pairs have the same rewards as those in more stable pairs like avax-usdt?. I remember that with a lot of new DEX/yield farming proyects, those pools with the local coin had a much higher Apy, and i wonder why we have all the same.
I can think of more reasons and I could continue developing ideas about why the PNG peers should at receive more rewards than other pairs, but I want to hear what the community says and if they think that this incentive system should be changed to have a more stable economy, I read you guys in the comments, let me know what you think.

109 Likes

I Agree 100%. I thought of this after I joined 3 PNG pools. I think Zero had a higher reward system for those that joined zero pools. Makes sense to me.

15 Likes

Can we model this out to see what would be sensible. And how to strategize this over time?

4 Likes

I think this is a major issue. I provided liquidity to AVAX-PNG pool (approx. USD 25,000) which cost me more than half of my initial capital (now it is around USD 11,000), and I feel like an idiot seeing that others pairing AVAX with ETH, LINK, UNI and AAVE obtain the same amount of PNG. PNG liquidity providers must obtain more PNG rewards, since there is virtually no other benefit to holding PNG. Why on earth would anyone provide PNG liquidity in this current system? To let others, such as the big whale with 70M+ liquidity swap their PNGs? What good does it do to me?

You can analyze the structure of Pancakeswap. Although the most provided liquidity there is for BNB-CAKE pair, they still reap very competitive APR because they are the energy behind the system. We deserve some extra rewards and please fix this. @dasconnor

43 Likes

We could adjust the reward allocation so that PNG pairs get higher rewards and AVAX-PNG pair gets the highest award.

38 Likes

that right,just do it

6 Likes

I think PNG/AVAX pair should get at least 50% of the PNG shares for the first few months. Otherwise it doesn’t add up. Once Governance is on it could decrease as utility will be more evident.

5 Likes

I want to vote on this user getting a formal role with our community. Very good breakdown. All of us should look for similar patterns in any projects we are involved with. Increasing rewards for those providing PNG liquidity is the clear choice. Without a strong governance token (proper incentives), Pangolin will face plant.

9 Likes

Agree. Seems the governance token should have ample rewards.

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I want to emphasize what this decision could mean, if taken by PNG Holders in the way of a vote pegged to their PNG holding : It will show the utility of the PNG token as a means to balance the revenues for PNG Holders. It is the economic value of the token at stake. Even though governance is not live yet, I believe we can find a way to vote for this question quickly (even if it’s just sending 0.1 PNG from “YAY” addresses to one address and manually counting the PNGs from each source address to signify the “YAY” vote).

5 Likes

Yeah i also second this, what we have at the moment is a whale really taking advantage on the ecosystem and does not have the communities best interest but for himself. Constantly dumping his PNG rewards when people are buying PNG in hopes that its going to gain traction and or providing liquidity to add PNG to their holdings.

3 Likes

This is a great idea, and much needed. It counters the high initial inflation that PNG suffers by giving the majority PNG to people less likely to sell them (because they would hurt themselves by dumping). Thus benefiting holders and LPs alike. And as the OP said, a more valuable PNG is good for any and all LPs long term.

2 Likes

I agree with you, I think that the Png/Avax pool needs a boost because we are all Png and Avax holders here, it is in our best interest to succeed.

11 Likes

Totally agree with you

4 Likes

dasconnor We really need to hear from you regarding this issue. It is very important to act as soon as possible because liquidity is dropping. People from other pairs is making money on us who provide liquidity for PNG, many leaving PNG pairs

6 Likes

governance token(PNG) should have ample rewards.

2 Likes

I think we should discuss how many times higher that AVAX & PNG rewards should be than the other pools, not if we should make it higher. it has been already a handycupped reward system.

2 Likes

I support it until the end. I don’t want a whale to suck my blood.

8 Likes

Don’t we have the obvious problem that the “whale” will simply move a proportion of their stash over to the PNG pools, collect the 20-50% premium and sell the premium?

So yes, they have to buy and then stake more PNG but I don’t think that changes the selling pressure @myghty is worried about for the simple reason that incentivising a whale to move across only gives you a short-term price bump and short term supply squeeze. LPs with smaller stakes don’t move the dial on PNG prices. Then the selling continues at an even greater pace than before because you’ve just given the whale more PNG per $ invested.

The proposal needs to increase demand at spot over longer timeframes.

To move the dial I think we need to have PNG listed on other exchanges - that increases demand for the simple reason that there are now more off-ramps for PNG whales and more demand driven purely by speculation (which I don’t see much of here on Pangolin).

The other mechanism that should be investigated is a derivative and lending market in PNG. That would allow LPs to hedge PNG price risk and will definitely increase liquidity in the PNG market because someone needs to hold the underlying asset in order to offer the derivative/loan. Loans also open up short selling - again another opportunity to hedge downside risk for LPs.

Offering a premium for LPs in a specific pool isn’t enough. We need more sophisticated tools to manage PNG price volatility and downside price risk.

6 Likes

First of all, its not about a short term price bump, is about a mechanism of incentives, if the whale goes to thoe png pairss with 20-50%+ rewards it wouldn be the same selling because he will be dumping his own liquidity value, remember, this guy has almost 35% of the png rewards, so its obvious that the farming/selling mechanism would be different, you seem to not take this in account, just imagine how much money he would loose, if he dumped his own pair.
example: We know that this guy loves avax, and imagine png-avax has 20% more rewards, if he dumps himself that big ammount of png, the price of png will go down and also in his bag of liquidity he would have more png than the initial avax that he provided so you can see the point here.
If not, he stays in other pairs pools and constantly dump the png without any risk and therfore hurting other png inverstors/liquidity providers.
Also what you say about exchanges makes no sense in the way that what we want is actually to atract liquidity and volume, not to get it over other exchanges, if people want png they are invited to come and get it and try the new dex, that is the whole point.

9 Likes