I’d say that even though, the liquidity is not big enough.
The pools are incentivized with premiums and high mining rewards, but the growth is slowing down.
I agree that some adjustment needs to be done, but I doublt that lowering the fees would change that.
Compared with other platforms like Hegic, the fees are not so big. Hegic collects 1% on the collateral when buying options, and still attracts great volume.
I believe the imminent problem to solve is how to make a proper adjustment to the mining rewards, maintain healthy inflation while protecting miners. A healthy monetary model will benefit the FNX holders in the long run, though it might seem to be less appealing in the FPO mines.
It is tricky but I suggest we could initiate voting on what to be expected. Please continue to add your options below:
What @pasha suggested before, according to the number of users/addresses is very difficult to implement and easier to be manipulated.
Also, it is unfair to maintain the original mining parameters for the old miners while changing the terms for newcomers. The mining rules should be always the same for both old and new miners.
Thank you @Ryan, this seems like a reasonable summary of what is possible and reasonable.
I have a very high preference towards Option 4 (cutting the basic daily reward by 50% after TVL reaches some level).
I think conditioning on TVL is better than on a date, even though conditioning on a date ensures that the rewards will be cut at a predictable time.
Also, I think cutting the basic daily reward rather than the boosting factor is better because we want to motivate for longer locking, don’t we? Also, mathematically speaking, cutting the basic reward and boosting factor should be quite proportional, i.e. it will have the same effect on the overall outcome but cutting the basic reward and not the boosting factor still motivates to lock for longer. Although cutting the boosting rewards might have a compound effect on the average boosting factor because stakers may not be willing to stake for 3 year that frequently.
Although, now that I’ve written it down, I might actually prefer the regular halving of base reward in time. Because if I’m willing to stake for 3 years, I would like to know how the rewards will look in these coming years, and time-wise halving,i.e. every X months, gives me the idea. Hmm, not easy this one 
Either way, before voting, the XXXs should be made clear. For TVL, I can imagine a step of 10M USD? For dates every 3 months starting 1 April?
Adjusting the rewards in the second month after the start of a new mining program reflects poorly on the project.
This makes it look as if it was intended from the start to generate the greatest possible hype.
320x boosts and cartoons that encourage people to lock their FNX for 36 months … all while it was known that the incentives weren’t sustainable and would need to be (manually) reduced.
I also do not understand the fascination of the vanity metric TVL. Right now we have a collateralization ratio of less than 1%. The current TVL is more than enough for the project at this stage, it’s time to incentivize the actual usage of the platform right now.
I love the ideas here! Personally i think setting a TVL goal and then changing mining rewards would be a good idea. That way we reach our goals and also keep the mining healthy. We all know mining can’t go on forever and needs to be limited at some stage. The 320x boosts were for very early adopters.
I certainly agree here that changing the rules a month after the new rules were introduced does not reflect well on how these rules had been actually thought through.
Anyway, as it seems that the team wants the change, it really needs to be made sure that it does not change for a year or so. Changing rules every two months is not very attractive.
Just a note, when setting the parameters, we really need to specify what we want. And also the numbers we are working with. As an example, let’s have two scenarios:
Scenario 1: Daily reward halves every 3 months, starting July 2021 (starting April 2021 would probably be a bad signal, changing rules too soon), always halving. With maximum boosting of 15x, that gives us around 53.5M FNX mined between Apr 2021 and Dec 2022. Going from 9M mined in Apr 2021 to 140k mined in Dec 2022.
Scenario 2: Daily reward halves every 6 months, starting July 2021 (starting April 2021 would probably be a bad signal, changing rules too soon), always halving. With maximum boosting of 15x, that gives us around 74M FNX mined between Apr 2021 and Dec 2022. Going from 9M mined in Apr 2021 to 1.125M mined in Dec 2022.
So you can see the differences are huge as halving has an exponential effect.
To be completely honest, I looking forward to others’ ideas as I’m quite torn. It seems that keeping the current system is out of the question (even though short-term it is best for the early miners).
Time-wise halving is good for planning, even though the rewards for each miner will still change in time as new ones inflow, so the rewards are still not set in stone.
TVL-wise halving is not as simple planning-wise, yet it still has an appeal as it somewhat reflects how much is staked and it kinda goes against dumping the mined tokens.
Yes it’s not ideal to change it now. A lot of us locked tokens for a very long period and now those rewards will be changed after just 2 months. I think that will piss a lot of people off. I’m not concerned with volume on platform as that will increase over time as more products and intergrations are released. I remember uniswap and kyber in the early days, they were lucky to generate a couple hundred thousand of volume per day for spot markets. Decebtralized Deravitives are only in the very early stages so volume will grow significantly over the next few years. My main concerns are offering more features like leverage tokens and reduction of gas though vaults
I believe that optimizing for TVL is the wrong way to approach decentralized options.
I would like to see a focus on trading volume instead, increasing TVL is more like a necessary evil to increase liquidity when necessary.
Liquidity is not the issue right now though, the issue for traders are the entry and exit fees.
Yes volume is obviously important but we are in the very early stages of decentralized options. Hegic is the only platform that I’m aware of that has decent volume. In my opinion no one knows the options space better than the finNexus team, their previous reports are very impressive. I
just look at the volume that charm generated with a small trading competition - and they launched their mainnet in January 2021 and haven’t done a token offering yet.
I honestly believe that getting more trading volume is “easy”, but right now the projects that are doing incentives are focusing on LPs.
Obviously the current emission rate is not healthy at all for the project and it should be adjusted.
However, should we consider reducing the basic mining in a more moderate manner? Let’s say starting from April 1st, the amount of basic mining will drop 0.5% or 0.3% or just 0.2% everyday. Then over the course of 3 to 6 months, the 50% cut of basic mining will still be achieved.
In a sense, the next few months will be the time window for early supporters/investor to get more reward.
I think the trading volume will increase once the team release the margin token, as that is far more popular in crypto community than the current options.
Agree! Let’s open another thread to gather suggestions on how to improve Finnexus trading volume @Ryan.
Yes, let’s have a separate topic for this. Very important as well.
My suggestion:
The parameters can be certainly different, mainly in Option 3, passing 10M seems rather close and halving the reward this early would be controversial (and rightfully so). So maybe every 15M or 20M.
We could combine any reduction in mining rewards with a one time payout to stakers in FNX, based on their Lock Time (e.g. 80% (?) for 30-36 months stakers, 60% (?) for 20-30 months stakers, …).
A one time payment would make long term stakers happy (though not as happy as a continuation of the current farming rewards) and solve any future rewards crisis.
One more thing. It might be a good idea to have two rounds of votes. The first one “should there be a change?” and second one on an actual change if voted yes in the first round. Because otherwise, we can have options same-change-change with results 40-30-30 so that no change wins even though 60 voted for a change.
Option 4 seems like the most prudent option at this stage as I believe the platform should prioritize a stability/gradual increase of the TVL. We would need to have a consensus on what a reasonable TVL we should target at this stage. Based on the actual utilization the current TVL seems more than adequate so an immediate 50% decrease in the basic mining amount would be fine even if some LPs did exit the mining.
Once we hit a higher % of collateral utilization then it would make sense to re-visit the mining rewards to see if an adjustment is necessary to increase TVL further. The hope is that at a higher utilization, the premiums provide enough incentive for LPs and without needing to increase the mining rewards again.
We really do need to find ways to increase the trading volume, so a separate thread for ideas in that regard makes sense.
Can you please re-explain the mining mechanism?, because I was always under the assumption the total CFNX reward pool was 20 000 per day and the miners competed for this. I thought 20 000 CFNX was the hard cap per day and didn’t think that the CFNX reward pool per day was elastic. Please refer to the mining mechanism posted in your blog, it says the same.
Calculations:
User’s mining score = amt of FPT-USDC/USDT + amt of FPT-FNX + min(amt of FPT-USDC/USDT, 10×amt of FPT-FNX)×20
Share of a miner = one’s mining score / total score of all miners
Basic mining Amt = Total Basic Reward × Share of a miner
*Total Basic Reward = 20,000 FNX/Day
https://www.finnexus.io/blog/understanding-the-basics-of-the-new-mining-mechanism
20,000 FNX/Day is the basic reward as mentioned in the docs.
There will be another lock time modifier, which can be 16x if one locked their FNX for 36 months.
Therefore, the real reward will be larger than 20,000 FNX/Day.
Good idea, I think we shall vote on whether there should be a change to the incentives or not first. Then start on how, if the result is yes.
