SuperPool Proposal

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.

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I like the idea of automatic compounding but 2 things:

  • your calculations about the gains of compounding are incorrect. There is only a relatively small difference between daily, weekly or even monthly compounding.
  • as far as I can tell automatic compounding is only possible if the user gives away control of the rewards, as they would have to be in a another account controlled by the contract to do the selling and staking. Many people will not want to give up control.
    But for sure, if the stake is a small amount than frequent re-staking will still cost a substantial percentage in network fees and such a superpool might be of interest.
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Snowball Finance has started working on this.

Check them out at https://snowballfinance.info/ and say hello to them on their socials. They’re a friendly bunch and would love to have more users

Please note I’m not affiliated with the team, just think they’re doing a cool job :wink:

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I wouldn’t trust some anonymous with my hard earned cash. The defi space is littered with anonymous rug pulls and theft. And also with poorly constructed and secured contracts that cause loss of assets or invite hacks.
And even if it is all legit and secure, the guy takes a 20% fee which is huuuuuge. That percentage can easily be earned back by doing it yourself a couple of times a year.
I strongly advice against depositing assets there.

I didn’t actually realise they took 20 percent. I haven’t gone through the contracts yet as I’ve only started exploring the project. Good to know though, so thanks for sharing

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Hi BobbyC,

Euler’s constant e=2.71828 which is the multiple for continuous compounding. Compounding daily is 2.71. So 0.5x365x2.7=492%. You are right the math is mistaken. Nonetheless the point that the return is much higher ie 182% becomes 492% remains true.

If the automatic compounding is done by smart contract I suggest it would be well accepted by the users. Could it be coded to automatically claim the gains, sell the PNG as needed to buy the same pair and reinvest for 30 days then return the monies to the user?

Af so that would well deserve the name Superpool. This is the strategy I do manually every day. I wanted to help others enjoy my gains so that the platform grows more rapidly.

Regards,

Scranton

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Sure, there is a big difference between yearly compounding and daily compounding. But there is only a small difference between weekly and daily compounding.

If you are going to trust an anonymous smart contract to handle your funds, you better make sure you can actually withdraw your staked funds if the website disappears. And you also better make sure the person that wrote the smart contract cannot secretly make large amounts of his own swap coins which would allow him to drain the contract of all funds.

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