[Vote proposal] Redistribution of the BeamX allocated to the Liquidity Mining program

BeamX DAO Proposals
1

Context

On March 2023, in Epoch 18, the BeamX DAO voted positively to allocate 12% of the total supply of BEAMX (which corresponds to one third of its “Liquidity Providing Allocation” pool) towards a 2-year Liquidity Mining program over some key DEX liquidity pools and over the Nephrite stability pool.

The first vote approved the distribution of 6,000,000 BEAMX (6% of the total supply) to “support ongoing liquidity over a set of pools chosen by the DAO. Proposed set of pools will include BEAM/BEAMX pool as well as BEAM/NPH (Nephrite Stable Coin) and BEAMX/NPH pools”.

The second vote approved the allocation of additional 6,000,000 BEAMX (6% of the total supply) to “Nephrite LPs” and to “distribute these tokens to its Stability Pool depositors for 24 months.”

The first vote also acknowledged the “Early Bird” bonus for those who provided liquidity to the BEAM/BEAMX pool during the Price Discovery and Liquidity Accumulation phases (i.e. before the release of the DEX).

As of today (September 18th, 2023 UTC), the rewarding system has been implemented in the Nephrite DApp. On the DEX side, all the 6,000,000 BEAMX were initially allocated to the BEAM/BEAMX pool only (with a rewarded locking mechanism). On August 23rd, 2023, one third of these rewards were then reallocated to the BEAM/NPH pool with a similar locking mechanism (although, as of now, the implementation done on the smart contracts has not yet been echoed in the “Liquidity Mining” DApp GUI).

Now, the present proposal suggests a new vote in order to refine the list of pools towards which this Liquidity Mining program is applied.

Remark 1:

It is important to note that none of the two past votes constrained to a definitive determination on this matter:

  • The first vote did “not detail the specific farming percentage each DAO pool will receive”, and it opened the door to adjustments as “The DAO will periodically review the effectiveness of the farming rewards and make necessary adjustments”, and also as “The exact distribution of the farming rewards within the proposed amount of BeamX allocation within this proposal may be changed in the future according to DAO voting to keep the ecosystem alive and healthy.”
  • The second vote indicated that the BeamX shall be allocated to “Nephrite LPs” and “will only go toward LPs to make Nephrite more stable” (and we can consider that both the DEX BEAM/NPH pool and the Nephrite Stability pool are “LPs” and both contribute to the overall stability of Nephrite).

Remark 2:

  • This proposal (and its earlier versions) was initially posted and discussed in Beam Community’s Telegram channel (https://t.me/BeamPrivacy). Many of the points raised here come from these discussions.
  • Also, a quick opinion poll was made there (https://t.me/BeamPrivacy/572971), which -as of today- has 36 votes and shows that about 61% agree with the idea of the proposal, 11% don’t agree and 28% don’t really care.

Objective

The main objective of the reallocation proposed here below is to achieve a more efficient distribution of the DAO rewards by applying it over a larger set of key liquidity pools.

In particular, the proposed distribution aims at balancing incentives to strengthen internal pools of the Beam ecosystem (such as the BEAM/BEAMX pool, or the Nephrite stability pool) while also instigating the intake of external liquidity (by rewarding some key DEX pools linked to the Ethereum-to-Beam bridge, such as BEAM/bETH and BEAM/bUSDT).

This last point should lead to increased liquidity in two DEX pools that allow the acquisition of BEAM by newcomers, without their depending on the listing of Beam in centralized Exchanges.

Proposal

In the frame of the on-going Liquidity Mining program, it is proposed to redistribute the rewards allocated by the first two votes in the following way (for the remaining rewards available over the initial 12,000,000 BeamX, and for the remaining period of the 2 years):

  • 1/6 for the BEAM/BEAMX pool (reduction from the current 2/6)
  • 1/6 for the BEAM/NPH pool (as recently implemented)
  • Nothing for the BEAMX/NPH pool (as the two above already cover that)
  • 2/6 for the Nephrite Stability pool (reduction from the current 3/6)
  • 1/6 for the BEAM/bETH pool (to incentivize external liquidity)
  • 1/6 for the BEAM/bUSDT pool (to incentivize external liquidity)

Remarks

  • The above proposal allocates half of the total rewards to NPH-related pools, thus remaining consistent with the decisions taken in past votes.
  • It also maintain rewards to two of the three DEX pools cited in the first vote: BEAM/BEAMX, BEAM/NPH and BEAMX/NPH (this third one being somehow “redundant” with the two others).
  • The Early Bird bonus mechanism is not affected and remains in place for the BEAM/BEAMX pool.
  • The same locking mechanism is expected to be applied to all the rewarded DEX pools.
  • The DEX pools considered above are the ones which currently have the most liquidity, which are the ones with 1% fee tier.

Pros

  • The proposed distribution maintains incentives in line with the first two votes, by still rewarding strong pools of key internal assets such as BEAM, BEAMX and NPH.
  • In parallel, rewarding DEX pools related to the bridged ETH and USDT will help increase their liquidity, thus bringing more external value into the Beam ecosystem.
  • Stronger BEAM/bETH and BEAM/bUSDT pools will also serve as on-ramp for newcomers wishing to acquire BEAM in a decentralized and confidential manner, thus relieving Beam from the dependence on centralized exchanges.
  • With a wider set of options to provide liquidity and receive fees and rewards for it, the proposed distribution enriches Beam’s DeFi ecosystem with more yield streams and thus increases the overall value proposition of the ecosystem.

Collateral advantages:

  • Having this vote now, will help keep the DAO active, and will demonstrate its capacity to evolve and adapt. This is particularly important as we enter the last phases of the transition from the Beam Foundation governance into the BeamX DAO governance.
  • This vote will also promote the utility of BeamX as “voting power”, and will probably help increase its value as people might want to buy it now to weight more on the vote.
  • Through the discussions and the vote itself, this operation promotes participation and engagement in the DAO, thus strengthening its functioning.
  • The vote is also an opportunity to communicate and Tweet about it, and to promote not only the on-going transition towards a DAO governance, but also the lively and rewarding DeFi options currently available in Beam ecosystem.

Cons

  • Based on the first vote, some BEAM and BEAMX are already locked through the “Liquidity Mining” DApp, and thus will not be available to weight on this new vote.
  • The new distribution will decrease the amount of rewards provided specifically for these locked assets (although we could argue that it will be putting those rewards back to what was initially supposed to be, i.e. one third of the allocated 6,000,000 BEAMX). However, it is expected that this new distribution will help increase the overall value of Beam, thus also increasing the value of BeamX.
  • The new distribution also decreases the rewards allocated to the Nephrite Stability pool, where important amounts of NPH have already been provided. However, this liquidity is not locked and it can easily be reallocated to other pools at almost no cost. Moreover, It should be noted that within the new distribution the Nephrite Stability pool still remains the one with the higher share of reward allocation.
  • Beam currently suffers from a very low market cap and it might be risky to dilute too much its liquidity by incentivizing too many pools. However, it is one of the main objectives of this new distribution (with rewards to pools of bridged assets) to help bring more liquidity into the ecosystem.
  • For its assets to be rewarded with BEAMX, the Bridge DApp should probably be considered as a “BeamX DAO DApp”. Is it the case? If not, should it be included within this vote (as it was done for Nephrite)?

Text of the vote

(The exact text for the vote will be proposed here after final discussions about the proposal)

4 Likes
2

I just thought of maybe some other drawbacks of this proposal:

  • The implementation of this new distribution will require time from the devs (likely Vladi), both on the smart contracts and on the GUI of the Liquidity Mining DApp.
  • As the rewarding system becomes more complex (multiple pools, multiples rewards, multiple locking options, early bird bonus on one pool only, etc.) and will also requires a migration from the current running program (i.e. with a careful computation of the timing and amounts), the odds for a bug or an error strongly increase. Which implies that the calculations and code changes would need to be carefully reviewed before applied.
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3

Sorry to bring this up now after so much discussion already took place but wouldn’t it be smarter to fund a pool for BEAM/Beat (bitcoin) considering Nephrite is the confidential stable coin of the beam ecosystem, Bitcoin is the most popular crypto currency, even more popular than USDT and Bitcoin also has lots to gain from a cheap/private transaction alternative.

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Why was USDT chosen in particular?

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The thing is that currently we only have a bridge for Ethereum. Bridging Bitcoin into Beam would probably require a custodian solution (like WBTC is), as it does not allow smart contracts. The “Beatcoin” confidential asset is currently just a placeholder with no actual link to the real Bitcoin.

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6

Good question. Currently the Ethereum tokens that we can bridge into Beam are ETH, USDT, WBTC and DAI. To avoid diluting to much the rewards, and in the spirit of incentivizing people to bring liquidity from the Ethereum chain in order to then help people buy and sell Beam in our DEX, I thought that the most efficient solution would be to incentivize both the BEAM/bETH and the BEAM/bUSDT pools.

However, we could also decide to reward the BEAM/bWBTC or the BEAM/bDAI pools. But as far as I see, these pools are almost non-existent. The only tokens that have been bridged until now are ETH and USDT.

We could also decide to incentivize only one of the two pools (bETH or bUSDT). That could be another option. But what I see as a good point of incentivizing both is that ETH is a pure crypto asset (like Beam), with all its volatility and behavior, while USDT is linked to fiat (and would thus somehow relate to NPH too).

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7

Yeah I guess you’re right. When looking at exchanges BEAM/USDT are a lot more active than the BTC ones.

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8

I simply don’t consider it to be ethical to change the BEAM/BEAMX distribution considering that there may be providers locked in for up to 12 months.

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9

I appreciate the goal of the proposal, but I agree with SirWolf that it’s a bit detrimental to change the distribution after people locked its BEAM for months. I have a counterproposal then: what if we allocate other BEAMX (not the 12 Mil already set aside) to the new pools? 12 Mil is around 10% of the supply, if I’m not wrong, we could allocate another few millions without causing too many issues.

3 Likes
10

That’s a concern indeed. Maybe the most important one.

For disclosure, I am personally in that case as I have a large part of my Beam/BeamX locked for a long time, as a consequence of the first vote.

However, this drawback can be counterbalanced by the following:

  1. The spirit of the first vote (as I guess many understood it, because that’s how we discussed it beforehand) was to allocate 2M BEAMX to the Beam/BeamX pair, 2M to the Beam/NPH pair and 2M to the BeamX/NPH pair.
    The fact that the Beam/BeamX pair started with 6M was a dev mistake (as Alex Romanov explained). It was later corrected by moving 2M to the Beam/NPH pair, and it will likely see 2M more moved to the BeamX/NPH pair. Thus going back to the initial intent of 2M allocated to the Beam/BeamX pair… which is exactly what this proposal sets!
    In that regard, this proposal does not change what was initially planned for the Beam/BeamX pair through the previous vote.
  2. The previous vote was clear about the fact that the allocation of the rewards could change if the DAO decided so (see the quotes in “Remark 1” in the proposal above).
    I personally locked by coins knowingly that the rewards could indeed be reallocated anytime. But of course I trusted that the DAO would do so for good reasons, that would be beneficial to me anyways (see the next point here below).
  3. Currently Beam value in fiat is at an all-time low and privacy coins are getting delisted from the main exchanges. It is thus urgent that we provide secure decentralized ways for people to buy Beam. Because that is what will make Beam’s value grow.
    And we have a ready way to do that: Using the Ethereum Bridge and the DEX! But that will only work if we manage to provide strong liquidity in the Beam/bETH and Beam/bUSDT pairs… which is one of the main objectives of this proposed redistribution.
    At the end of the day, I believe it is much more important for everybody to see Beam price increase than to engineer some small optimizations to the BeamX rewards we can get.

Actually, another way to see this proposal could be to consider that it does not change anything to what has already been voted except:

  • Move the 2M planned for the BeamX/NPH pair into the Beam/bETH pair.
  • Move 2M from the 6M allocated to Nephrite Stability pool into the Beam/bUSDT pair.

Remark: In my proposal above, I did not use the absolute amounts (2M, 6M, etc.) because part of that initial allocation has already been distributed. So the proposal is redistributing the remaining amounts. That’s why I used the corresponding shares instead (e.g. 1/6 of the initial 12M was 2M, etc.).

For clarity, if I rewrite the proposal using the initial amounts, we get:

  • 2M for the BEAM/BEAMX pool (reduction from the current 4M)
  • 2M for the BEAM/NPH pool (as recently implemented)
  • Nothing for the BEAMX/NPH pool (as the two above already cover that)
  • 4M for the Nephrite Stability pool (reduction from the current 6M)
  • 2M for the BEAM/bETH pool (to incentivize external liquidity)
  • 2M for the BEAM/bUSDT pool (to incentivize external liquidity)
2 Likes
11

As far as I understand it, there is a “Liquidity Providing Allocation” pool of 36M BEAMX that is available to reward liquidity providers (see graphic on https://www.beamxdao.org).

But not all BeamX has been unlocked yet (as its emission schedule spans 4 years). As of today (as shown as the “BeamX DAO” DApp in our wallets) only 44% of it has been unlocked, which means that only about 15.8M BEAMX were available in the “Liquidity Providing Allocation” pool.

The first two votes allocated most of that amount (12M) for this first round of the Liquidity Mining program. We could indeed decide to allocate 2M or 3M more (but not more, as it is not available yet) to cover the Beam/bETH and Beam/bUSDT pairs. And if those two pairs receive rewards clearly inferior to the other pairs, they will certainly not be the preferred destination of liquidity, which would hinder the objective of the proposal. Also, we would be using the DAO BeamX reserves for the future, which seems a little bit a waste since we are currently not many users of Beam.

We can also consider that, in retrospect, rewarding the BeamX/NPH pair was a bit redundant, as we are already rewarding the Beam/BeamX and the Beam/NPH pairs. And the Nephrite Stability Pool, although very important, probably doesn’t need such a disproportionate share of the rewards (6M), if we compare it to the DEX rewards (and that point was, by the way, already raised during the discussions about these two first votes). In that aspect, this proposal tries to better balance the overall distribution (while still keeping a significantly higher share of rewards for the stability pool).

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12

Thanks @dbadol for the clarification. It makes sense and I agree with you about the importance of the bETH pairs. Let’s not be greedy (at the current price levels it’s senseless anyways :)) and work together to build a solid future for Beam.

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13

I am adding here one more advantage of this new distribution, that I just thought about:

Before the end of this year, we will have the EVM compatibility layer. All the devs that know Solidity will then be able to come and develop on Beam blockchain too. And with them, will also come more external liquidity from Ethereum!

It’s thus now really the perfect timing to start building some strong liquidity pools that will allow converting Ethereum tokens such as ETH and USDT into Beam!

2 Likes
14

This is the proposed text for the on-chain vote:

Redistribution of the BEAMX rewards within the Liquidity Mining Program

Special Technical BIP, type A.
https://forum.beam.mw/t/vote-proposal-redistribution-of-the-beamx-allocated-to-the-liquidity-mining-program

Purpose:

In the frame of the on-going liquidity reward program (as per votes on Epoch 18), it is proposed to redistribute the remaining rewards (from the initial allocation of 12% of the total BEAMX supply, and for the remaining of the 2-year period), proportionally to the following distribution:

  • BEAM / BEAMX pool = 2%
  • BEAM / NPH pool = 2%
  • BEAMX / NPH pool = no rewards
  • BEAM / bETH (id36) = 2%
  • BEAM / bUSDT (id37) = 2%
  • NPH Stability pool = 4%

Benefits:

The main objective of the proposed change is to incentivize liquidity on pools related to the Ethereum-to-Beam bridge, in order to facilitate decentralized trading of Beam with external liquidity coming from the Ethereum ecosystem.

These liquidity pools will help limit the dependence on centralized exchanges, and will be of particular importance with the upcoming EVM compatibility layer.

Also, the new distribution better balances the allocated rewards over a larger set of liquidity pools, and enriches BeamX’s DeFi ecosystem with more yield streams and options.

Notes:

  • This proposal does not contradict the votes held on Epoch 18. It simply extends over them.
  • This proposal does not affect the “early-bird” multiplier already applied to the BEAM/BEAMX pool.
  • All the DEX pools above are the “1% fee tier”.
  • The same locking mechanism (up to 12 months) shall be applied to all DEX pools above (and no locking for the NPH stability pool).
  • As a collateral effect, the Bridge DApp (that controls bETH and bUSDT) shall be formally considered as a “BeamX DAO DApp”.
  • As per the previous votes on Epoch 18, the DAO will continue reviewing periodically the effectiveness of the farming rewards and make necessary adjustments based on the feedback and results, in a culture of continuous improvement and adaptation.
2 Likes
15

We are now entering the second year of this 2-year liquidity farming campaign. So I bring back up this proposal, so that people can still discuss and comment about it. Hopefully we can get it to a vote (and then an implementation by the smart contracts and DApp devs) soon…

16

Of course, I mostly see advantages to such a wider distribution of rewards (as extensively stated in he posts above), but to be fair I’ll try to list here the main negative aspects that have been raised:

  1. Those who locked (or are currently re-locking) their LP tokens in the two pools currently rewarded will see their future rewards on those pools reduced.
  2. We will be including in the reward campaign two tokens from a contract (the bridge) that is “centralized” (in the sense that the contracts are not renounced). However, we can note that is already the case with Nephrite.
  3. After the vote, two devs will need to work to update the liquidity farming smart contract on one side, and the associated DApp frontend on the other.
  4. With increased complexity in the rewarding mechanism, the probability of a bug in these new developments increases.

Did I forget anything on the “cons” side?

1 Like
17

Hai-

I think expanding the accumulator liquidity rewards to other pools specifically the bridge liquidity is a great idea. While I did lock coins in the accumulator and will see those rewards reduced I am thinking of a bigger picture here which is that more brdiged assets may flow into beam if there are rewards for them.

The only one I have a gripe with is the BEAM/bETH pool. I think it should be the BEAM/bWBTC one instead. There is more to gain for the network if we have brdiged wBTC instead of ETH with the argument being that if more wrapped BTC flows into beam it may attract more users to the DEX so they can swap in and out of BTC for spread trading profits. I see wBTC more valuable as an inflow to BEAM than ETH. I.will note that I also have liquidity in this pool and am not trying to be biased as to receive rewards for my bridged LP assets. I just think Bitcoin is a better asset than Ethereum.

2 Likes
18

This proposal “proposal” shows that the proposal system is flawed in itself. Or maybe just that it isn’t active in any practical way, if we need to have a 6 month discussion before forwarding a real proposal on the DAO.

My two cents.

  1. We should not reward another stable coin, i.e. bUSDT, for example. It should be more high-on-the-list to promote and advance BEAM’s own stable coin.

  2. Rewarding ETH holders to come to BEAM via BEAMX rewards is hardly rewarding as BEAMX has no true value. It is basically listed nowhere and HAS NO USE, as can be seen by there being no proposals. It has gone from initial 2:1 to BEAM to where it is now which is more like 1:10.
    If BEAMX is ever going to be useful, then a proposal at that time might better justify rewarding external chains to “wrap”/“bridge” their coins onto BEAM.

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19

I don’t know why it’s taking so long either but at least something is happening I guess.

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20

I don’t know what you’re complaining about.
Creating a forum post about your proposal before it gets voted on so people can discuss it beforehand is pretty normal.

Yes a 6 month long discussion is necessary when 4 out of 758 people(current thread views) are in this thread discussing the BIP.

If you have a problem with the “proposal proposal system”, write a BIP, tell us what exactly you don’t like and propose a solution.
Tiny discussions in the DC/TG are easily overlooked and forgotten. If it’s serious, please go to the forum.

Well for one exchange listings are expensive, we’re talking $10k-$30k.
And since the MC → BEAM/BEAMX rebranding, we can’t get the BEAMX ticker anymore on a lot of exchanges.
So what should the ticker be?

Only complaining about BEAMX having no use doesn’t solve the problem.
We can only develop something— give BEAMX a use case, when we know what you want.
A BEAMX casino gives it a use case, does it make sense? No.

If you’re unhappy about something, please speak up.
My DMs are always open.

Our dev-time is very limited, we’re doing what we can.

3 Likes