As agreed on # [FIP #10] — Vote for the mining incentives on BSC, 9000 cFNX was provided as mining rewards for Pancake FNX/BUSD liquidity providers.
In the meantime, we are talking with the PancakeSwap team about the possibility to provide $CAKE as rewards.
Here is the offer from the Pancake team:
So the current way we are working with most projects coming to BSC is to add a “farm” for the LP token of their token against BNB or BUSD in return for an amount of the project’s tokens for CAKE holders to farm.
For example, we add a farm for FNX-BNB liquidity providers at a 1x multiple, which is currently earning around $21M USD in CAKE token rewards a year. We basically incentivise FNX-BNB LP token holders with around 3,600 CAKE tokens every day, which equates to around $57,000 a day. The farms and the APY can be found here: PancakeSwap. This farm will run for a minimum of 3 months, after which we will re-assess based on user activity and trading volume and may adjust rewards upwards, downwards or remain the same.
In return we would ask for around $400,000 worth of FNX tokens to allow our CAKE token holders to stake CAKE and farm FNX at a linear rate over ~2 months. These pools can be found here: PancakeSwap
This Pancake incentive program definitely deserves a vote with Yes, No, and potentially other options with higher multiplier (2x, 3x).
Is it reasonable is think about it as a trade? We put in $400,000 worth of FNX (currently ~600,000 FNX) for a 2-month incentive program. That is, ~10,000 FNX in exchange for 3,600 CAKE per day, and with the current price, that means FNX is valued at ~$1.13 in this trade. Please correct if something is wrong here.
On the second Cons item, I thought the incentives would go to FNX/BNB or BUSD LP providers, why does it fo to $CAKE stakers?
My understanding of this proposal is that liquidity providers on the FNX-BUSD/BNB pair will get CAKE rewards and the CAKE stakers will get FNX rewards.
Will the FNX tokens for the CAKE stakers be FNX or cFNX?
Could be a great way to attract more volume but like you said, could cause a farm and dump scenario. Perhaps we should wait and see how the other mining goes on BSC before exploring other options.
I have mixed feelings about this one. The only good thing about it is marketing. Otherwise, I see only issues and unfairness. FNX rewards would go to current CAKE holders, not FNX LPs. And high likelihood of dumping as I can hardly imagine cFNX being harvested this way. At this point, I would rather say no.
One more thing - attracting LPs will be very hard either way. Keep in mind that almost half (around 40%) of the current circulating FNXs are locked in the ETH mining contracts. Very likely for these 36 months. And these are the investors who would have likely provided liquidity but are locked. That’s also probably why the BUSB-FNX pool has so few FNX locked, there are simply (almost) none available or are not being held by investors who want to (or know how to) stake or provide liquidity.
But I’m afraid this pretty much always the case for the low cap projects. If the total cap is $10M, then even relatively small order in the order of thousands of USD can move the market (try getting 20k FNX anywhere). So the liquidity is pretty much a problem of perspective looking through the USD lens. With higher price, this perspective will change. So my point is that it is now more important to focus on the product, now leveraged tokens and betting options, with FNX utility implied which should lead to higher FNX price which will lead to higher USD-wise liquidity.
Also, it really seems that having a respectable CEX listing would help a lot. Pretty much all the current ones are just fake-volume exchanges with no real depth (again, try getting 20k FNX, i.e. just $12k, and you eat up the order book). I don’t know how much you can influence this, though.
My guess is that a lot of new comers simply still do not trust the platform. Legitimacy will drive the price along with adoption. When I initially invested in this a few months ago, I looked at the APR and said “no way” and invested figuring this would be a rug pull and was just gambling my money (which I’m personally fine with, but a lot of people aren’t). Getting listed on PancakeSwap would bring even more legitimacy for the unaware user or users on the edge of trusting the platform. Even if providing $FNX to $CAKE holders causes a short term dump of price (I don’t think that’s likely) the long-term exposure is worth it in my opinion. I personally stake my $CAKE for new tokens and simply hold those coins hoping they blow up one day instead of offloading them into the market right away.
Lets not forget, PancakeSwap has binary options in their roadmap which would likely eventually lead to real options as well. If somehow we can get Pancake to endorse using the FNX platform while they work on theirs I think that would drive adoption/legitimacy as well.
At first I thought this sounded like a great opportunity, but I think @FNX_Fan raises good points and would therefore consider delaying this partnership just for a small amount of time. Maybe the best option over the next month or so is to focus on adding utility to the FNX token with the leveraged tokens, options with longer expiry times, and strangle/straddle option positions etc, and then when those tokens are all available, at that point it might be good to use this marketing opportunity. If the cake farmers get cFNX and are also able to use them on the platform for leveraged products it would prevent them simply dumping them straight away.
The increased exposure is tempting but the incentives seem misaligned benefiting the platform with no risk at the expense of the liquidity providers risking impermanent loss. I like the compromise of delaying the partnership and first organically boost liquidity through the current programs running and more importantly progress on platform and token utility.