The purpose of the post is to create a discussion about the creation of a fund from the community pool to start a liquidity mining program for ATOM activities around cosmos DeFi and how to finance it.
Liquidity mining is one of the strongest crypto tool to attract users and help the hesitant ones to do the jump from a chain to another one.
Avalanche is one of the most obvious examples: C-chain activity was stagnant for several months and jumped from 30k daily txs to more than 300k daily txs just three months after they launched the incentives program on 18/08/2021, peaking at 1M daily txs afterwards. (Avalanche Stats: View Network Activity )
Of course liquidity mining isn’t enough, the actual product is what makes it useful and not just a feast for mercenary farmers.
Considering the launch of interchain accounts, which will unlock the true potential of IBC and CosmosFi interoperability and composability i think it’s time for an ATOM incentives program to attract users, make them discover interchain accounts and cement ATOM’s role as the native currency of the cosmos.
Limited time incentive campaign, targeting Osmosis only for the launch of interfluid staking with a boost APR in ATOM tokens for the ATOM/OSMO pool.
1 week boost for interfluid staking launch: target APR +50% → $5.7M of ATOM incentives to be distributed from the community pool.
(REWARDS= targetAPR x poolTVL x duration(day)/365)
More structured campaign, 1 year duration with monthly/bimonthly campaigns for different chains/dapps (bATOM incentives on Anchor, ATOM lending incentives on KavaLend, ATOM pair on Junoswap, ATOM pairs on Diffusion/Exswap/…), each to be approved by governance.
Since the community pool has around 900k ATOM ($25M at current prices) a different funding mechanism, should be considered: redirecting 2-3 bps of block rewards for [duration TBD] to the ATOM community pool, or a specific multisig wallet in charge of the liquidity mining program, would make it possible to have a perpetual funding mechanism to ensure the incentivization of ATOM activities in all the new dapps/chains that will be deployed, making ATOM an attractive asset for those dapps and chains. Users would be enticed by the external incentives, resulting in boosted activity in terms of volume, TVL and fees without any native inflationary rewards mechanism.
The result would be an increased attention to ATOM around cosmos, the development of new ATOM use cases and ATOM specific dapps.
For every new chain/dapp liquidity mining program a new governance proposal should be submitted, with a cap of [TBD] ATOM and a duration of [TBD].
Key details TBD:
- Size of the incentives program.
- Duration, the final targeted amount will dictate the duration of the program in case of funding from block rewards.
- Other funding mechanisms.