Yield Farming Proposal

Since the vote for yield farming is imminent, I figured I’d create a topic so that there’s a place we can discuss it, it’s potential impact, and it’s (inevitable) passing.

This is taken directly from the Medium article, so no credit goes to me:

Introducing Yield Farming into the DMM Ecosystem

After the recent launch of the DMM Governance Forum, the DMM Foundation (DMMF) is proud to announce the next governance vote! Left for approval by the DMM DAO, the DMMF will propose the addition of yield farming to the DMM ecosystem. With the launch of yield farming, mToken holders will be able to seamlessly farm DMG tokens by staking their mDAI, mETH, mUSDC, or mUSDT.

How will Yield Farming work in the DMM ecosystem?

Users will mint either mDAI, mETH, mUSDC, or mUSDT from app.defimoneymarket.com and deposit those tokens together with the underlying assets in Uniswap to create a secondary market (and receive LP tokens for doing so). Farming will be run as campaigns for “x” amount of time, in which mToken holders are able to stake the liquidity pools created to earn the DMM governance token, DMG. For example, if a user had 100 tokens composed of 50% mUSDC and 50% USDC, they would deposit those tokens into a Uniswap pool to create liquidity for mUSDC and its underlying asset, allowing users to stake those LP tokens to yield farm DMG within the DMM Yield Farming contract. Farming campaigns will end when they are cancelled (via governance vote or emergency shutdown through the DMMF) or when the DMG from the farm is depleted. This will provide the ecosystem with a lever to facilitate ecosystem development, allowing the DMMF and asset introducers to effortlessly onboard new assets and raise capital while bootstrapping the system.

How do you Yield Farm or Liquidity mine?

In order to partake in yield farming, users will be able to interact with the Farm tab on the dao.defimoneymarket.com landing page. This tab will allow users to effortlessly add liquidity to pools on Uniswap without the need to directly interact with an external interface. Since yield farming has no lock up period, users can add or withdraw liquidity at a whim; however, users are incentivized to stake their tokens in order to reap the benefits of a bountiful DMG harvest.

Why is Yield Farming an important addition to the Ecosystem?

Yield farming will be an integral part of expanding the DMM ecosystem and will bring it one step closer to democratizing access to permissionless yield. In the case that the debt ceiling is reached in a short period of time, yield farming will ensure that mTokens are still readily available to all by creating secondary markets where these assets can be traded at a premium. Not only will this allow mTokens to appreciate in value, but it will also allow DMG to be appropriated to those who contribute to the growth of the ecosystem, in this case, by providing liquidity. Yield farming allows greater accessibility to the DMM: governance token. This is an important utility to the ecosystem as it allows more users to become members of the DAO. Ultimately, this mechanism is an essential utility to further decentralize the protocol. Since farming is run in campaigns, the DAO will be equipped with a switch to facilitate ecosystem development, allowing the DMMF and upcoming Principal/Affiliate members to effortlessly onboard new assets. Yield farming is a major stepping stone in fulfilling the DMMF’s mission: greater accessibility to permissionless, stable yield to make finance more inclusive globally.

Overall, yield farming will provide an integral mechanism to perpetuate growth in the DMM Ecosystem(DMME) and help further decentralize the protocol as a whole. The DMMF will be proposing yield farming to the DMM DAO later this week. We look forward to seeing all DMG token holders participate in the vote and join us in our mission to make finance more inclusive globally!

3 Likes

While yield farming will certainly be a great addition to the functionality of DMM, I am still on the fence about its implications for the DMG token. While DMG is surely going to profit from all expansions of the eco system in the long run, the DMG that are rewarded to yield farmers will (at least partly) add more sell pressure in the short term.

This is why I would have liked to see the token burn with excess revenue being implemented before yield farming is introduced. That way the added sell pressure from yield farming could be countered with more buy pressure, which would help to stabilize the DMG price in the short term.

However, from a solely functional point of view, yield farming can only benefit the DMME and I am also planning to participate in it as soon as possible.

I would suggest to add mHUSD in the yield framing program as well.
It will attract more Asian Pacific users to come. That’s a good thing for diversity of DMM community and one more asset to choose from can lower the systemic risk.