After having a close look at innovative products promised and delivered by other decentralised exchanges, DeerSwap has decided to work on its own unique feature: Dynamic Farm Multipliers (DFMs).

The issue DeerSwap tries to solve with Dynamic Farm Multipliers is inefficiency in native token rewarding and its issuance, to some extent. In most cases the sole purpose of a native token is to attract liquidity and volume to its native protocol. However we noticed that liquidity isn't properly captured throughout various non-custodial exchanges. Thereby TVL/volume ratio slowly soars over time while the native token price plummets, failing to attract investors. This happens because farm rewards don't offer the right incentives and people end up providing liquidity to the "wrong" pools : this is what we call a "liquidity hatch".

That's why we spent weeks working on what we have decided to call Dynamic Farm Multipliers (DFMs). Despite being dynamic, DFMs don't modify logarithmic emission rates of our native token however they adjust the way reward tokens are issued in DeerSwap Farms. If we get into the details, rewards are automatically readjusted every two days and don't affect usual emission rates.

DFMs take into consideration three different types of liquidity pools to rebalance rewards: stable pools (USDx - USDx), volatile pools (Vtoken - USDx) and very volatile pools (Vtoken - Vtoken). Depending on how liquidity is allocated by our users and where volume is actually being traded, farm multipliers are updated to foster growth.

The DFM makes sure that "useful" liquidity is properly rewarded instead of stable pools where no volume is actually being traded. All of this while DeerSwap offers the best trading rates. For transparency reasons DeerSwap farms display a daily percentage return (DPR) instead of an annual percentage return. This gives an idea of what native token yield one should expect short term.

Lastly DeerSwap is currently working on other use cases for its native token so that we can publicly release DFMs code and make it fork-able right after public launch. We have a bonding mechanism in mind but feel free to leave some suggestions in our Discord.

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