Hi all, putting this out there as a future opportunity the community should be aware of. This play to build the slp is predicated on Saucerswap (or another Hedera dex) creating a farm for the bsl/hbar pair.
Should Saucerswap elect to create a farm for the BSL/HBAR pair, I propose we use a portion of the SLP to provide the liquidity to take full advantage of the economic energy the migration is going to attract. From discussions in chat with those active in the Hedera community it seems that many in that community are keen to buy BSL. The BSL/HBAR pair is likely to experience high volume following the migration and providing liquidity with a portion of the SLP will allow the SLP to grow via yield farming in the saucerswap dex.
What follows is an overview of the strategy I propose. Please feel free to suggest tweaks to the math or mechanism if those more deeply involved in the Hedera ecosystem are aware of more lucrative yield farms. This proposal assumes Saucerswap has the highest volume in the Hedera chain and that the BSL/HBAR will have the highest volume of all BSL pairs.
- Use a portion of the SLP to purchase BSL.
- 4% buy tax triggered and sent back to SLP
- Provide liquidity to create the BSL/HBAR trading pair on saucerswap V1.
- Stake LP in SaucerSwap V1 farm.
- Earn fees + sauce token
- Harvest sauce yield and buy BSL and HBAR in the following ratios:
- 50% BSL, 4% buy tax triggered and sent to SLP
- 50% HBAR, then manually send 4% to SLP to balance the pool.
- Add remaining BSL & HBAR yield to compound LP and V1 farm.
- Repeat at daily or weekly intervals.
And when community elects to do so,
- Create a single sided position on V2 that trades BSL for HBAR for return to SLP. More on this below.
Note - transfer tax has been eliminated from the above by assuming the LP contract can be whitelisted and thus the tax avoided.
Benefits:
a) Decent APR rates depending on farm ~ 10- 70+%. SLP provided pool would receive all of this as it’s unlikely private players will be willing to endure 8% transfer tax via adding/removing their LP UNLESS whitelisting that address allows transfers into/out of LP positions to be tax free. This part is unclear.
b) Sauce token has a stake feature that gives it utility beyond a simple rewards token which supports the sauce price.
c) This portion of the SLP will be put to work earning fees and yield. Yield in sauce token leads to steady buying of BSL token which will support the BSL price + generate fees for SLP.
d) The compounding effect of sauce back into LP pool and farm (via buys of BSL and HBAR) will continually grow the farm and thus yield.
Fivancial or whomever will need to supply liquidity in BSL to DEX’s within the Hedera ecosystem so might as well do it in a way that grows the SLP.
There may be a way for BSL stakers to earn a % of the yield but that will need to be a part 2 of the proposal. Even without this aspect, the SLP is growing and BSL price is being continually supported.
How much SLP? I propose we use the 30% approved in a previous proposal as this play will generate higher yield than staking HBAR.
Concerns:
Some may bring up ‘impermanent loss’. I suggest this is a non issue. SLP on Hedera is held as HBAR. I argue that over the next 12-18 months, a BSL/HBAR pool ( minus fees or yield) is likely to outperform holding/staking HBAR because BSL is likely to outperform HBAR (or at the very least, similar to it). As the cycle evolves and market conditions change (or more lucrative uses of the SLP present themselves), the pool and farm can be removed and all BSL/HBAR returned to SLP.
Another potential concern is what may happen when the community chooses to end the farm and return the assets back into the SLP. There will be a large swap of BSL to HBAR for holding within the SLP which could have an impact on the BSL price depending on the market and liquidity located elsewhere. The solution is found in step 9: Transfer the V1 LP to V2 LP and set a price range so that BSL is only being swapped for HBAR which will avoid the price impact that a large sell would trigger. This is using impermanent loss in our favor - in time the pool will become all HBAR without having to actually sell any BSL. Downside is this process is not immediate whereas a BSL to HBAR swap is.
Last thought is the question of who is going to be responsible for this repeating task? Would need to be a trusted member of the team.
There may be elements of BSL’s inner workings or larger scale market factors that I am not aware of and which make the above less attractive. I will leave that to the team to educate me/us on.