I made a LP for Tiny/WBTC using Folk’s WBTC. I’ll be backing it with farming rewards for October’s distribution to see what kind of impact a farm has on a brand-new LP. (Also I’d personally like to see tiny/wbtc to grow into a strong tiny-paired LP).
Another thing I’ll be looking at is if this pulls any liquidity away from the tiny/gobtc LP.
I’ll be likely recycling all earned tiny back into tiny/wbtc all month, as currently I’m planning to focus on both tokens at the expense of all other goals .
If you have some tinypower to spare and would like to vote to back the LP I’d be grateful!
Tiny/gobtc is the fifth-largest LP by TVL, and it and Alpha/Tiny are the only ones in the top 5 without a farm, although I don’t really know if you can count tiny/algo and tiny/talgo as the liquidity would likely be pretty deep (comparatively) even without the farms given it’s our parent-chain’s token at play.
I’ll also be looking to back HOOP / ALGO with 5% of my voting power, although it won’t make a large difference in rewards cause I just don’t have that much total voting power, but data is always good.
So far, even without a farm there at least has been some slight interest in the tiny/wbtc LP as I’ve added quite a bit more (relative to what was in it before) and I’ve still slipped down to holding only 3/4ths of the LP atm. (as of Sep 20, 9:53 AM)
A brand-new pool starts with almost no depth, so any real-sized trade creates significant slippage. That makes the pair hard to use in practice, even if a farm makes the APY look attractive on paper. High emissions on a very thin pool often produce eye-catching percentages, but those numbers can be misleading because the underlying liquidity isn’t actually usable for meaningful volume.
There’s also the opportunity-cost angle. Directing a meaningful share of the community allocation to a micro-pool means those emissions aren’t going to pairs that already have (or are closer to having) real trading utility — TINY/USDC, TINY/goBTC , TINY/ALGO, TINY/tALGO etc. Those pairs are the ones that improve accessibility and depth. You can’t even add any significant size to the LP without major slippage unless you deposit proportionally at a 1:1 ratio. Just look at the slippage you’d take if you tried a single-sided add with your estimated weekly governance emissions.
@Goldenalgo I agree completely. Tiny/goBTC hasn’t had a farm behind in in sometime now, not since I and kedmd.algo stopped backing it months ago. Kedmd for his part does look like he’s kinda abandoned his governance, I have at times tried to send a message asking to pop in but they’ve been MIA from voting for a long, long while now. Something that’s very unfortunate given they are our sixth largest gov.
The tiny/goBTC LP is also incredibly small compared to months past, sitting at only a few thousand in liquidity. I’m hopeful that a decent farm behind tiny/wbtc will pull some old tiny/gobtc towards this one overtime and even if it only attracts a handful of eyes from our govs, it only takes a relatively small amount of capital for us individually to grow that LP into the size of tiny/gobtc after all. And once it gets established the slippage issue will stop mattering as much.
Even if it’s JUST the handful of govs in the LP just recommitting our farming rewards into the LP, compounding will work in our favor here.
For my part I will work on cycling farming and governance rewards into the wbtc LP as they come to grow it as I can, although it will be a slow process, and hope that more tiny users especially govs, opt to put a little tiny in it themselves from time to time – growing Tiny-paired LP’s is the entire reason I pushed for a proposal seeking them to be granted voting rights in exchange for locking in the gov vault after all. Deep tiny-paired LPs in core projects is important to me.
And I’ll likely keep my tiny in place compounding until I’m interested in withdrawing for a gov vault lock – for us that would still work out beatifically to us all because that would be me waiting and growing the LP till I have 2-3M tiny in place anyway.
I’ll also plan on keeping some tiny and wbtc in Folks until I have a build up to deposit both of them into the LP. But regardless I’ll still just build and compound the LP overtime till I have enough to withdraw some for those other goals. For me tiny/gobtc farming is how I build a decent share of my tiny gov vault in the first place.
And in the event of a solid bull run I think deep liquidity in a tiny/wbtc pairing would offer us significant upwards price pressure – soaking up market tiny demand as the price of Bitcoin rises in a way we ourselves haven’t been able to do compared to sell pressure.
I’ve already dropped from holding all the of LP to just 8.39%, and based on the transactions it looks like the LP consists of three of us right now in total.
Assuming the LP stays as small between now and the start of farming next month, I’m very interested in how the size of the LP vs the rewards offered in farming effects liquidity, as well as if any tiny/gobtc liquidity flows into it and I’ll be tracking it here.
***Establishing new tiny/pairings like this is imo something we would be good at as Tiny governors, having treasury assets bare the initial hit (and recoup them with farming rewards and fees overtime of course) but I have little faith in a proposal to allocate any treasury assets into setting up an LP like this would muster the support to pass an on-chain vote atm, however I may put forth a proposal for a small initial allocation for building these pairings eventually, using some of the allocation of idle treasury assets to seed it. However I am in no mood to work on a proposal atm and seeing only 1% of tiny govs vote for it on chain. It’s a lot of work to whip votes and get community members to the forums. It’s even more work to try to get them to vote on chain.
Ideally this is something that if we had any sort of decent income outside of fees and staking rewards would be great at “seeding” pools like this by developing protocol-owned liquidity. As of yet however we don’t have a means to do this that’s practical under current market conditions, that can also pass an on-chain vote.***
And even if it does get to a vote, It’ll need a coordinated effort from us govs to message and get people to the forums to vote. Preferably a lot of us in support before it even goes on chain so we know they’ll show up come voting time.
Tiny/wbtc offered me an interesting new data point in my goal to try to figure how how effective or ineffective farming rewards actually are to liquidity providers. From where I am looking, I don’t think they matter that much, liquidity does not seem to flow that much regardless of rewards offered.
You can think of this thread as an extension of if you like:
Overall my accidental withdraw of farming support this month didn’t effect tiny/usdc that much, nor did my accidental support of tiny/tinu draw much new liquidity to that LP. So now my question is: Will a decent sized farm effect a new LP with low liquidity much at all? Bootstrapping new projects is I would assume one of the major reasons a new gov would buy up a lot of tinypower for their LPs. So how many users and how much liquidity will a decent farm behind a new LP actually pull?
Worse-case: I capture like 90% of the farming rewards myself and just re-commit them into the LP to grow it.
As of 9/22 the LP has grown significantly compared to me holding 99% of it at establishment, I’ve fallen to just 12.31% of the LP from 99%.
This experiment in part comes in part from this proposal:
These are my stances on anything that increases rewards to a mostly inactive tiny userbase:
Further farming rewards have almost NO impact in liquidity pairings at all. No one farms LPs for rewards alone, and if they do it’s only because they either own most of the supply of the token themselves, or they just move on when the farm drives up.
Our largest LPs have the smallest farms. Our largest farms have some of the lowest liquidity around. Furthermore most LP providers dont even bothering farming at all. Farming rewards are ineffective at driving liquidity to pools
My stance is, farming is not that important to govs because most of them don’t vote. Like 95-98% of our govs just ignore the farm allocation duty we have. That’s absurd to me.
I admittedly went maybe a little to far in my proposal to gut those that don’t vote for farming allocations of their rewards for the month. If I was reworking the proposal today, I would still implement a slashing of some sort, (maybe just 5-10% of rewards and burn it, something that still goes to the support of Tinyman by increasing our burn amount of the total maximum supply of Tiny even if it does not directly help akin to our BBB program).
And yeah, we cant force people to be active of course, I just like a carrot and a stick approach myself and it’s a little frustrating cause, my entire stance on crypto is not that decentralization means just no central bank, no central control etc, but the idea of many people coming together to build something greater than they could alone, Lots of people putting in a little bit of work to make something good.
Taken both of those threads into account I wondered:
What role does farming rewards actually play for us as govs. I looked up how it works out for crypto overall and the data from yeild farming wasn’t that pretty. So I thought, well ok, lets poke around and see what our data can tell us from our platform about farms, yeild, and liquidity.
And can this information be used to help formulate policy ideas that can help the community?
Just a few days from the farms going live and I’ve dropped to just 14.13% of the LP.
I’ll most likely keep feeding this LP with farming rewards and governance rewards for at least a few months and see what long-term liquidity can be built up with it. If I get it large enough I may withdraw the tiny to lock it and funnel even more rewards into the LP the next month, but I’d have to have a very sizable tiny balance to do that so it’s unlikely to be in the near future. Like I would have to have built up over 5M Tiny probably for me to feel it’s worth it – of course a sudden surge in BTC could do that as well so while it is possible I feel it is pretty unlikely. (If I held 1M tiny in the pairing and Bitcoin moons and now I have 5M tiny, it would be very, very hard for me to resist withdrawing it all as Tiny and locking it in the gov vault – but that also benefits Tinyman and Tiny price long-term as well, and I could also direct even more Tiny to building up the LP again so you know kinda win-win). Plus it would then have an even larger farm to see what eyes are drawn to it.
I also at a fundamental level don’t like holding large percentages of an LP, I think it’s bad for the entire decentralization ethos for any LP much less major tiny pairings to be reliant on just one, two, or three holders.
A big question is even if the liquidity grows large enough to easily add more tiny to it, will the tiny come, regardless of farming rewards. Personally I don’t think it will, my hypothesis is after all that farming rewards don’t effect pool liquidity as much as we all would like. People (overall) hold tokens they want not tokens just to yeild farm.
I’d love to see a tiny/wbtc LP committed to a farm with a few thousand dollars worth of liquidity in it and still holding say a 40-50% farming return to see if it would swell the amount in the pool, after all I’d like to think holding bitcoin and tiny is something all of us govs generally think is at least a halfway decent idea – but LP depth of tiny/gobtc suggests the governance community and tinyman users overall don’t.
9 people farming, boasting a 99.41% farming rate – and I’m pretty sure the other 0.59 is the portion that was locked when setting up the pool if I understand how that works.
It is now also on the first page of results if you search for LPs via Tiny.
It also holds the largest farm APR of any tiny LP, with only tiny/geo coming close.
What’s also interesting is there has been little movement in tiny/gobtc. I had thought some of it’s LP holders might flip gobtc to wbtc and deposit into this new LP given tiny/gobtc hasn’t had a farm backing it in many, many, months.
Although I suppose that in and of itself is a data-point.
9 users in the entire farm/LP. I wonder how many of them are from our discord and knew about it via my messages vs saw the LP and joined organically via the farm returns.
A full two-weeks in the LP has grown to $666.01, which isn’t bad given it started as a brand-new LP.
14 people in the LP farming, that puts us at a 90.49% LP farming rate, with a still-impressive 62.84% farming APR.
The pool-APR has also risen considerably, so it’s getting some use from traders, and I’ve dropped to under 9% of the LP share, which is pretty good for decentralization. I’m actively looking for any govs that might want to toss some tiny-power behind tiny/wbtc next month to boost it’s rewards payout to see if it’ll improve it’s November participation.
As before, I commit to cycling my governance and farming rewards back into tiny/wbtc as the LP builds to help establish it and encourage more users to come over.
Also if you have anything in the tiny/gobtc LP considering moving over to tiny/wbtc :).
I have no idea if this information or me gathering it will actually have any impact on anyone. I’m just trying to get some data to help inform future decisions using what limited abilities I have.
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