The past couple of days have been a major wake-up call to me with regards to our liquidity pools and their current effect on YAPE price. Although the current structure of minting LP Tokens and staking them to mine YAPE makes sense in theory, the brutal reality is it’s easily exploitable, and as we’ve recently seen, has proven to be detrimental.
Currently, degens have the ability to come onto our protocol with massive liquidity and LP in pools such as USDC/USDT, with absolutely zero risk, and do nothing more than farm & dump YAPE, effectively tanking the price of our native token.
SOMETHING MUST BE DONE!
I propose we adopt a structure similar to Bancor’s protocol to where we offer “single-sided” liquidity pools.
In this structure, the YAPE DAO would co-invest a certain amount of YAPE when a pool is established, effectively opening up room on the “TKN” side for an LP to come in and stake their asset. Once the TKN side of the pool becomes full, the only way to open up more room is for more YAPE to be staked on the other side, and would be provided by regular HODLers of YAPE. The DAO’s co-invested amount of YAPE would remain in each pool and earn swap fees for the protocol’s treasury (no burning is necessary).
Mining APY appropriation could be set to voted/approved distributions, such as a 75% YAPE/25% TKN split, to further incentivize people to buy and stake YAPE, attracting more TKN-side LPs.
This theory is quite simple, but VERY effective in native token utilization. It makes people have to purchase and stake YAPE in order to reap the benefits of APY earnings if they intend on providing massive amounts of liquidity, or wait for someone else to do it.
We may be able to “fork” Bancor’s V2.1 structure and re-vamp it to where we take the staked TKN-side assets and re-purpose them onto Yearn.Finance when sitting idle, just as we do now, and earn more revenue for our Treasury.
Lastly, I imagine there are several logistical issues with this proposal (as I am not a coder what-so-ever), but I do understand that if we don’t make a major change to our strategy, the YAPE token will be nothing more than a farm & dump ponzi! With that said, let’s start small, maybe 2 pools, and then build from there.
Thanks for taking the time to read this, let’s make this change for the betterment of our jungle!
for further guidance screenshotted from Bancor’s informational pages