From PvP to WAGMI, why LP incentives matter

King

Commented 2 months ago

cc @kompreni @jessepollak https://x.com/kingkongxbt/status/1894443340440969507

kompreni 🚂

Commented 2 months ago

Wow Thanks King. Sup Jesse, I don't have a soundcloud to share but I heard you like $dickbutt Any interest in crowdfunding $dickbutt LP incentives? (A quick post on why LP incentives matter: https://paragraph.xyz/@kompreni/lp-incentives) Link to the $dickbutt Rebase crowdpool: rebase.finance/crowdpool/41

🍖🦙🎩

Commented 2 months ago

👀

max 🎩🚂

Commented 2 months ago

thanks for the shoutout king! recently shipped a UI refresh but already have more in the figma for the next updates and kompreni got more on the contracts side 🫡

King

Commented 2 months ago

Based! Thanks lads.

niftytime

Commented 3 months ago

Every chat with projects keen to stand up an LP Reward Campaign on Rebase includes linking to this classic @kompreni article Imho it's the best explainer of why defi concepts like market making & LP incentives matter to tokenized projects and their holdership https://paragraph.xyz/@kompreni/lp-incentives

Gramajo

Commented 3 months ago

@humpty.eth from todays morning call

niftytime

Commented 3 months ago

👀👀👀

🍖🦙🎩

Commented 3 months ago

Lp pvp move in and out to maximize returns and rewards 😎

Terry Bain

Commented 3 months ago

Now providing LP for $Bleu so I can truly bleu myself. cc @bleu.eth

🍖🦙🎩

Commented 3 months ago

Lfg let's go!

Terry Bain

Commented 3 months ago

LP is the only way to fly.

🍖🦙🎩

Commented 3 months ago

I put my Bleu into the crowd funded incentives on rebase I'll scoop up some more to lp once the incentives go live

Reid DeRamus

Commented 3 months ago

Looking for something great to read? We're back with the 28th edition of Paragraph Picks, highlighting a few hand-selected pieces from the past couple of weeks. Check em out!

Reid DeRamus

Commented 3 months ago

@beylin writes a critique of token incentives in communities, arguing that they undermine intrinsic motivation, erode genuine connections, and transform communities into transactional ecosystems. "Extrinsic incentives are the kiss of death for any real community." https://m.mirror.xyz/GNrZCiNqsf23JBLF3e4fwKxO4UmLa8t5SwQYDuOqcdc

Reid DeRamus

Commented 3 months ago

@odellhussey.eth writes about his creative journey, from studying filmmaking to becoming a multidisciplinary artist and photographer, highlights the resilience and adaptability required to navigate personal and professional challenges. "We all have our own path to follow in this life and things rarely go according to plan, being flexible & open is the way." https://paragraph.xyz/@odellhussey.eth/the-path

Reid DeRamus

Commented 3 months ago

@mleejr writes about how the transition of Popeye into the public domain has inspired the creation of $SPINACH, a memecoin that leverages Popeye’s cultural legacy to exemplify the power of permissionless creativity and collective storytelling. "Public domain properties provide a fertile foundation for creativity because they are permissionless and free from restrictive ownership." https://paragraph.xyz/@nfa/spinach

Odell Hussey

Commented 3 months ago

Thanks @reidtandy !!! 🙏

niftytime

Commented 3 months ago

people love to complain about the PvP nature of crypto and sell shame, but selling is literally the easiest thing to do and folks will always pick ez if we want more WAGMI behavior, we gotta make it easier for folks to "do better" @kompreni lays out how more folks in crypto can do better, easily, on rebase in his new post https://paragraph.xyz/@kompreni/lp-incentives

kompreni 🚂

Commented 3 months ago

better than i could've said it tbh

niftytime

Commented 3 months ago

👊

kompreni 🚂

Commented 3 months ago

"Would you commit 5% of your bag to a program that could 5x the market?" In 2024, I manually set up LP incentives for multiple projects. What I learned from doing that became the product at rebase.finance. Many still wonder why LP incentives matter. So I wrote a post: https://paragraph.xyz/@kompreni/lp-incentives

🍖🦙🎩

Commented 3 months ago

Lp incentives are important for new and established projects alike This is a must read

hellno the optimist

Commented 3 months ago

is this live? can we use this for @onsenbot?

kompreni 🚂

Commented 3 months ago

Yes. www.rebase.finance/crowdpool Just pick onsen to create the pool. Then you or anyone can fund it.

If you've been around tokens long enough, you've probably heard the term LP incentives. What are LP incentives?

LP incentives are rewards that you issue to market makers. Market makers (for crypto and non-crypto markets alike) enable more folks to buy and sell by providing deeper market liquidity.

Market making is an important part of any market. It allows traders, particularly those trading with size, to participate. Whales do not want to trade an illiquid token. If the market can't handle their typical 5, 6, or 7-figure order (i.e. it moves the market too much), they simply won't participate.

More liquidity also protects against the massive dump risk from early / large holders:

Any of these holders could crash the price of an early-stage token

What is dump risk? As the name suggests, it's the risk that major holders (often early buyers) dump their coins on the market. Their massive bags are capable of crashing it by more than 10% in a single trade.

LP incentives solve dump risk in two related ways:

They incentivize more market makers, and therefore more liquidity
Would-be sellers instead become market makers to earn yield.

Let's break each of these down.

In crypto, yield is everywhere. Even ETH holders want to know much yield they can earn staking ETH. Generally, yield is quantified as a percentage of the value of your staked assets, on an annualized basis. So if you can stake 100 ETH and earn 5 ETH over the course of a year, your APY is 5%.

Markets have yield, too. Their yield comes in two flavors: trading fees and LP incentives. Both require you to be a market maker, which Uniswap supports outs of the box:

Trading fees are the fees market makers earn when people (🥁 drum roll...) trade. On most Uniswap transactions, the fee is 1%. Uniswap already provides a way for market makers to claim these fees natively, so we won't go into that here. Just note that it is one way to earn yield.

LP incentives are another powerful way to earn yield. Projects can allocate tokens to market makers, who earn tokens proportional to how much liquidity they provide on Uniswap. LP incentives are not baked into Uniswap; this is where Rebase steps up.

LP incentives at work on Rebase. APY on the right

Rebase lets any token project create LP incentives, paid in the token of the project. In the screenshot above, $PROXY is being paid to market makers. These market makers, who provide $PROXY and ETH liquidity on Uniswap, are earning 120% yield in $PROXY.

The larger the LP incentives (the more tokens offered), the more attractive it is to be a market maker. In addition to bolstering liquidity, LP incentives mature the market for the better. Early whales have an opportunity to step up and put their bags to use. Whereas before they'd hope to "buy low, sell high" (very PVP), they can become longer-term participants, aligned through yield:

Originally, Rebase only allowed project creators to fund the LP incentives. This would require project creators to carve tokens out of their own personal allocations. We are excited to announce that is no longer necessary. Now, anyone can crowdfund LP incentives for a project at rebase.finance/crowdpools

Why would a bagholder contribute to the LP incentives? One way of summarizing the "why" is as follows:

Would you commit 5% of your bag to a program that could 5x the market?

In short, LP incentives are a powerful tool to bring in new participants by expanding the liquidity of a token. They also give existing holders a way to put their bags to work. Hopefully this brief overview has shed some light. If you have any questions dm @kompreni or post in /rebase on the purple app.