Purpose: To Gain competitive advantage to achieve DEX dominance
Idea Summary: Create SuperPools with simple automatic compounder to enhance LP returns for small holders.
Superpools would be created so that every reward pool has a Superpool counterpart. Start with creating an AVAX/PNG superpool. Then create it for all reward pools starting with the PNG pools to give them competitive advantage to offset sales pressure that would occur if you do this for the non-PNG pools first. Do not discriminate against AVAX as we should treat AVAX bulls kindly to better attract them or we will lose them to other AVAX projects.
The superpool would automatically take the PNG rewards and sell them to buy the two pool components and automatically add them to the pool and deposit the PGL.
Pangolin is great because for me fees are low enough that you do this manually every day. The best time is just before 4 am UTC when the reward allocation is calculated.
I calculated my APR of compounding every other day vs. every day and my returns more than double due to the magic of compounding. At the time the rewards were 180% APR with no compounding, 244% with compounding every other day (less the effect of fees which I did not calculate) and an incredible 644% (less the effect of fees) for daily compounding. The number of PNG awarded will drop as more liquidity is attracted as the PNG daily award is fixed so this proposal will help increase the PNG price to help keep the APRs so incredibly high. The reason for the non-obvious increase in return is that the gains increase exponentially at the end for every additional compounding period added. We could enhance the returns further if the rewards were recalculated more frequently and the Superpools could compound 2x or 4x per day to increase the number of compound periods.
The automated compounding has the advantage of making this compounding benefit available to small holders. Otherwise fees eat up to much of the gains. Everyone would enjoy enhanced compounding returns from the reduced fees and those pennies saved at the start will become massive gains over time.
I have noticed that most users do not compound daily even if they can afford it. Many cannot take the time each day to do so manually. We will attract countless new users who are attracted to the “do it once and enjoy superiors returns”.
Daily compounding of the rewards almost always more than makes up for impermanent loss (“IL”). Almost eliminated IL for most users will attract the masses that do not use LP pools because of the IL boogieman.
The Superpool would have a lock in effect as it becomes so easy to deposit into a Superpool and leave it. The group can discuss whether they wish to impose a lock in period. The Team might advise if a lock in makes it easier to code. For instance it might be easier to code with all deposits made only on the 1st and 15th of the month and all withdrawals made at the same time with a 15 day lock up. Perhaps the interface could be on the PGL page so that where the claim button is you have a Superpool button nearby. Users would click on the Superpool, select what proportion of the PGL in that pool to Superpool and confirm. Those PGL would be moved to the Superpool on the 1st or 15th of each month just before the recalculation.