UNCL Scarcity and yield farming
Hey guys and gals!
In this article I want to quickly touch on UNCL and how it will be used in yield farming. The time is coming shortly for the airdrop and I’d like to explain whats it's for and its economic model.
I would also like to stress that this is a generous airdrop to reward our long time community members. We really aimed to do something special for you with this airdrop and I think you will see just how decent this airdrop is as you read on.
UNCL is the token that we will be using for yield farming on our upcoming yield farming platform. By farming with uniswap LP tokens (e.g UNCX-WETH) you will earn UNCL each block. We plan to set up around 10 farming pairs a month on tokens we think are decent (to the best of our abilities). It will also be possible for the community to vote on new pairs they would like added.
So lets quickly look at current farming tokens, their tokenomics, and how we want to do things differently.
Sushi was one of the first tokens to offer farming on lp tokens. They have a block reward of 1000 tokens. This means initially their supply was scarce (like ZEC back in the day) but with inflation as it becomes more abundant the price struggles to hold as initially it was priced with a very low supply.
CURVE had a similar release. Initially scarce and then inflation kicks in and the price needs to adjust heavily to the daily amount of new tokens.
There are other examples BOND, YAM, PICKLE etc.
With UNCL we do not want to use this approach. We want to try something new. Clearly having something that is initially scarce results in a high price but once farm reards kick in the charts end up speaking for themselves. Do you remember the Zcash launch when everyone was passing around the only 1 token that existed that day? I think it was 1000 btc for 1 ZEC.
Ok so, scarcity initially then abundance is not the way to go. This is why we did an initial airdrop of UNCL to all UNCX and UNCX-WETH members who locked their tokens till today. Now we don't have that initial scarcity, we have some tokens in the wild.
At the moment - it might change- but after the airdrop there will be roughly 114K UNCL in existence. This is the starting point from which we will base our calculations on inflation going forward.
We plan to increase the UNCL supply by 80% this year. 80% of 114k is 92k UNCL up for farming this year across all UNCL pools.
Again we are doing something differently here. Most farming tokens don't offer rewards to many pools (usually around 8 or 10 pools). This results in the situation where you can only really trade your reward token for ETH.
This image is quite nice and it applies to CAKE LUA and many other farming tokens. There is only liquidity on the SUSHI-ETH pair. no other pairs have liquidity. In other words, there's only really one thing you can do with your farmed token right? And if you hold for example SUHI and the only liquid pool is SUSHI-ETH, what can you sell it for? Hence the chart.
We plan to set up 10 farming pairs a month, stimulate liquidity in that pool, and make UNCL more useful as it can be directly traded for almost any decent token you want on uniswap. By rewarding farmers in each pool I think they will become quite liquid, and allow farmers to actually use their farming rewards directly on any other token they would like instead of ETH.
For example can set up UNCL-YFDAI, UNCL-UNCX, UNCL-DEXT etc. You can then farm UNCL on UNCX-WETH and use that to buy DEXT directly with UNCL, in two transactions (less gas fees) instead of having to sell UNCL for ETH, then approve and buy DEXT. We’re reducing 4 transactions to 2 here.
10 pairs a month, that's 120 pairs a year. 80% inflation a year that's 92k UNCL we have to split among all 120 pairs. UNCX-WETH and UNCL-WETH will have 3x the rewards of any other pair and will always be the most rewarding(in terms of block reward) of any of the UNCL pairs.
Rewards will depend on the number of farmers in the pool, and the value of the staked liquidity.
This article is simply to show you our new approach to farming and initial release with the UNCL airdrop coming up, and based on how different it is to anything else we cant wait to see how this all comes together.
Most importantly, it will never be this easy to get UNCL again. Our approach is not to have scarcity in the beginning and then have a ton of tokens minted each day, but instead to start with relative abundance and then grow at a stable rate from there. 80% this year, and potentially 60% next year. We can discuss this as a community as we go forward.
Stay tuned for details on the farming dapp. It will be launched any moment now. And a shout out to chainsulting for the incredibly smooth audit process. I highly recommend them to any ethereum developers, along with QuikNode, for blazing fast dedicated ethereum nodes at a very fair price.
Mark — UNCX