Thank you and the team for hard work and also being dynamic and willing to adapt. I’ll preface this with my opinion could change as we start yield farming and receive more data points (e.g. participation rate, variance, etc). My thoughts right now:
- I think yield farming will be beneficial to the project since liquidity helps the project and we need to increase the amount of holders of m tokens. That being said, I generally support DMG required to farm as it shows skin in the game and helps prevent random other projects or farms (or both) from farming and then just selling. The yield farming incentives are quite high, and this would encourage people who hold DMG and support the project to farm (or newcomers would have to become DMG holders as well). However, I’d prefer if it did scale. This way it would not hinder smaller farmers and would also be more impactful to the larger. I have concerns that if implemented and not scaling, another farming system could just pool a bunch of USDC and eth together and farm hundreds of thousands (or millions) until the season is over, then exit. Since it would only be one combined entity, they would only be required to hold 2500 or 5000 DMG tokens. If implemented as a percentage of the total farm liquidity, then this would scale much better. I am thinking 25% is a reasonable number, and this should be based on the liquidity when entering the farm and also the season price for DMG. As an example, this season pegs DMG at $1 for rewards. If someone wanted to farm with 10,000 USDC and 10,000 mUSDC tokens, then that is roughly $20,000 total liquidity. At the $1 peg, they would be required to lock up 5,000 DMG.
I realize the above solution is complex and probably not a quick solution to implement. That being said, I’d support a flat rate of 5,000 to 10,000 tokens required to farm for this initial season (and perhaps consideration of a more complex system that scales in the future).
- For yield farming of DMG, would this be in lieu of staking? Or would staking still be added. I guess I’m not sure if we need both but can see benefits to both. For staking, we could perhaps have a lockup of 30-60 days or perhaps even longer to receive rewards. For yield farming with DMG, I do think there could be benefits as well. More liquidity would likely help prevent such price movements from a few sellers. Also it is another way to earn with DMG, which is good. I’m all in favor of encouraging people to hold - and I think the foundation does have a lot of DMG to help incentivize that and I’m glad to see them thinking about uses and ways to do so.
My last thought is more general: I like the addition of yield farming and think the yield farming should last beyond 30 days and hope we can have another vote. As more people participate in these types of events, purchase dmg and m tokens, and yield farm / lock them up, the value of the project should increase. As that happens, it will take less DMG to incentivize (e.g. if $2 token compared to $1, then half the DMG required for same incentive). I think a few months of this should add quite a bit of value and stabilization to the token, and then perhaps future seasons could still be added for the duration of a year (or a long -term target), but the rewards slowly reduced.