The SUNDAE token has been subject to criticism, due to its high inflation and lack of liquidity in SUNDAE pools with other tokens. This proposal aims to address these concerns and provide a framework to drive SUNDAE’s long-term value.
SUNDAE inflation is a major problem that could undermine its value in the short, medium or long term. Currently, APPROXIMATELY 400,000 new SUNDAE are issued every day, representing annual inflation of approximately 14-16% per year. This inflation could reduce demand for SUNDAE, as investors may choose to invest in tokens with lower inflation.
The lack of liquidity in SUNDAE pools with other tokens is also an issue that could limit the value of the token. Liquidity is important for users to be able to exchange SUNDAE for other tokens efficiently.
If SUNDAE pools with other tokens that have low liquidity, users could face difficulties to exchange SUNDAE e.g. SUNDAE for iUSD Djed and others and vice versa, then this could decrease demand for SUNDAE.
Pairs that do not include SUNDAE are present only by farming being rewarded with SUNDAE, then this is a problem because it extracts liquidity or capital from SUNDAE.
As SUNDAE decreases its capital, so does the interest in adding liquidity to this protocol, which makes SUNDAE a higher risk asset and loss of interest.
This is despite the fact that 30% of inflation goes into the ADA/SUNDAE pool. If SUNDAE pools with other tokens have low liquidity, then SUNDAE users could face difficulties as they lose value in SUNDAE annually until the protocol no longer has any value or incentive.
There are already several protocols that offer interesting farming and propositions, such as Minswap with its Fee Switch and Staking, or VyFi with its asset buyback by depositing the fees in the Bar. This makes Sundaeswap less necessary to provide liquidity, and farming only serves to generate more SUNDAE for common pairs that already exist in other DEX and lose value from it (unnecessary CAPITAL drain). These DEX mentioned above manage 0.3% fees that are closely linked to ADA. On the other hand, Sundaeswap has no advantage over other DEXs, except the ability to create exotic and unique pools, as would be SUNDA/DJED, for example, and this pool could charge fees of 1%, 0.3% or 0.05%, which is a great advantage. Now, SUNDAE holders have the power to vote on which pools can have rewards in farming.
The proposal consists of a series of measures that address key sustainability and liquidity concerns. These measures are as follows:
- (NO DAO REQUIRED) Creation of new SUNDAE/xTOKEN pools: this measure would create greater demand for liquidity for SUNDAE and help increase the intrinsic value of the token. Here we have to agree on ALL, to create SUNDAE pairs:
A-With low fees (0.05%) to increase in VOLUME and the number of transactions.
B-With normal fees (0.3%) to lower the volume and the number of transactions, but increase the profit by fees.
C-With high fees of (1%) Same as above, but we increase a lot the LP Profits with SUNDAE.
D- Do nothing.
(NO DAO REQUIRED) Redirection of voting power: My intention is not to change any of the protocol, but rather to use our SUNDAE voting power to reward and allocate farming rewards to new SUNDAE/xTOKEN pools with x% in fees. This would involve including higher market cap and larger Cardano assets. We could vote in a synchronized and committed manner for the following assets and options:
A. Those already existing in farming, but instead of ADA, it would be SUNDAE: INDY, NMKR, FACT, WMT, SNEK.
B. SUNDAE with fundamental and usage assets, such as INDY, MIN, xVYFI, DJED, iUSD, LQ, LENFI,SHEN.
C. SUNDAE with INDY, MIN, xVYFI, DJED, iUSD, LQ, LENFI, HUNT, SHEN, iETH, iBTC, cBTC, NMKR, FACT, WMT, SNEK.
D, SUNDAE with assets such as, INDY, MIN, xVYFI, DJED, iUSD, LQ, LENFI,SHEN,iETH, iBTC, cBTC, HUN, (WANCHAIN and tokens DAI, USC, USDT BTC).
E. Do nothing
Regardless of whether or not we own certain assets, our voting power is divided according to the option selected. Let us take, for example, option C. If I hold X amount of SUNDAE, I agree to divide my voting power equally. Since option C consists of 16 assets, I split them 100%, which means that each pool would receive 6.25% of my vote.
If there are assets in that list that you do not want, you can distribute your vote among the assets you prefer. Suppose there are 5 (20%) assets that you consider worthy of your voting power and that deserve a share of the inflation and swap fees. In that case, you can vote for the ones you consider most appropriate. Remember not to select any others that are not in the selected option. Otherwise, we are not doing anything.
It is important to note that encouraging liquidity and maintaining volume with Sundae is crucial to preserving its value. Otherwise, there is a risk that SUNDAE and you will lose value.
- (REQUIRES DAO)This point is crucial and of great importance: currently, 30% of SUNDAE’s inflation is exclusively allocated to the ADA/SUNDAE Pool. Personally, I consider this percentage to be quite low. We need to increase interest in SUNDAE and attract more liquidity to increase volume. This is something we can achieve if we Sundae holders agree.
This effort is important to reduce the price impact within the ADA/SUNDAE pool. According to my theory, if this one does not fail, they could buy a large amount of SUNDAE and then sell them for other assets, thus taking advantage of the arbitrage opportunity.
Therefore, I think we should consider increasing the 30% inflation earmarked for this pool and distribute it among three other options. This could help balance the distribution and attract more interest to SUNDAE.
A- 30% to 35%.
B- 30% to 40%.
C- 30% to 45%.
D- Do nothing.
The proposal has the following potential benefits:
Increased liquidity: new SUNDAE/xTOKEN pools would attract more users to provide liquidity through POOLs participation and compound interest, which would increase liquidity and create arbitrage opportunities between SUNDAESWAP and other DEX. (Very important)
More efficient distribution of rewards: Farming rewards would be allocated to the pools that contribute the most to the value of SUNDAE. In the long term, each person would contribute his SUNDAE in the pool that benefits him the most.
Increased intrinsic value and fundamentals for holding SUNDAE: Increased liquidity and demand for SUNDAE would create a stronger intrinsic value for the token.
Sundae would become a Deflationary asset thanks to those who hold their SUNDAE and they would passively and constantly accumulate SUNDAE.
To illustrate the potential benefits of the proposal, we can consider the following examples:
Increased liquidity: if five new SUNDAE/xTOKEN pools were created with 1% fees, this would attract more users to provide liquidity to these pools. For example, if the current liquidity of each pool is 100,000 SUNDAE and 100,000 xTOKEN, with a 0.3% fee, the liquidity provider would receive 30 SUNDAE and 30 xTOKEN for every 1 million SUNDAE/xTOKEN exchanged. With a 1% fee, the liquidity provider would receive 100 SUNDAE and 100 xTOKEN for every 1 million SUNDAE/xTOKEN exchanged. This would amount to a 333% increase in revenue for the liquidity provider.
More efficient distribution of rewards: If voting power were used to allocate farming rewards to the new SUNDAE/xTOKEN pools, this would ensure that these pools would receive 70% of the rewards. For example, if the current farming rewards are 10 million SUNDAE per day, and are distributed to all pools, including the ADA/SUNDAE and ADA/xTOKEN pools, this would mean that the SUNDAE/xTOKEN pools would receive a fraction of the rewards. If the farming rewards were distributed only to the new SUNDAE/xTOKEN pools, this would ensure that these pools would receive 70% of the rewards (WITHOUT CHANGING THE ADA/SUNDAE INFLATION DISTRIBUTION).
Increased intrinsic value and fundamentals for holding SUNDAE: Increased liquidity and demand for SUNDAE would create stronger intrinsic value for the token. For example, if the liquidity of the new SUNDAE/xTOKEN pools were to increase to 10 million SUNDAE and 10 million xTOKEN, this would create greater demand for liquidity to provide liquidity to these pools.
How it would be implemented,
For the first two proposals that do not require a DAO, we, as SUNDAE holders, will select the POOLS when voting. I suggest that on the 31st of this month, after voting here, we choose the option that got the most votes in this forum. In addition, we could agree to adjust this distribution monthly during the last five days of the month.
For example, if Option B wins in the Redirection of Voting Power, each SUNDAE holder, as well as those who see this posting in this forum, would have an autonomous commitment. If the pool does not exist, I commit to create it with a MAXIMUM value of 100 ADA (ONLY FOR ASSETS APPEARING IN OPTION B) per pool and wait for the adjustment date.
It is also important to know what percentage of the fees will correspond to those pools, so we should also vote here in the Forum. If someone wants to add another asset to option A, B, C or D to receive Farming, we can implement it and come to an agreement as long as it has a minimum of 5K ADA (to avoid confusion) in the pool with SUNDAE. (Here I do not commit myself to create it).
In case option D wins and some or all of the Pairs do not exist, there would be a vote to create the Impulse of assets until they are created at the end of the month. I could do it myself, but not with significant capital and provided I see willingness of SUNDAE holders to support me.
Concetrar Poder de voto en pools
- A-SUNDAE/xTOKEN 0.05%
- B-SUNDAE/xTOKEN 0.30%
- C-SUNDAE/xTOKEN 1.00%
- D- Do nothing.
Redirección del poder de voto
- A-INDY, NMKR, FACT, WMT, SNEK
- B-INDY, MIN, xVYFI, DJED, iUSD, LQ, LENFI,SHEN
- C-INDY, MIN, xVYFI, DJED, iUSD, LQ, LENFI, HUNT, SHEN, iETH, iBTC, cBTC, NMKR, FACT, WMT, SNEK.
- D-INDY, MIN, xVYFI, DJED, iUSD, LQ, LENFI,SHEN,iETH, iBTC, cBTC, HUN, (WANCHAIN y tokens DAI, USC, USDT BTC)
- E. No hacer nada
Increasing ADA/SUNDAE Farming by redirecting ingestion (REQUIRES DAO)
- A- from 30% to 35%.
- B- from 30% to 40%.
- C- from 30% to 45%.
- D- Do nothing.
NOTE: At the current rate, SundaeSwap would be released in approximately 5 years. With my proposal, Sundae would be self-sustaining by then and would not rely on any other system or mechanism to provide value. The accumulators of SUNDAE will, over time, place value on it and decide which LP to place their SUNDAE in or if they prefer to just keep it to maintain value.