# farming token model research
https://hackmd.io/@WsWACVT3QOy5_gRc2Z3ZGg/rJBktemH_

### Main Competition token models
##### Resources
- articles
- https://blog.chain.link/defi-yield-farming-explained/
- [[mechanism design(token model)]] https://medium.com/alpineintel/your-token-model-is-a-beautiful-water-wheel-27d2be90d86f
- https://www.cryptonative.ch/vampire-attack-an-attack-on-liquidity-dependent-protocols/ [[Vampire Attack – an attack on liquidity dependent protocols]]

**List of successful protocols**
*Lending protocols* => closest to our model
Resources
defipulse

- **Compound**
- Aave
- [[Synthetix farming]]
- [[Compound farming]]
- Uniswap
- Curve
- SushiSwap
- https://insights.glassnode.com/sushi-token-economics-impact-of-inflation/
- fee allocation
- .3% from every trade
- .25 to LPs
- .05 to
- ?? Badger DAO
-
- **Compound**
- Description
- Fixed number of tokens every block divided by all? liquidity providers
- Incentives
- **USE** of the protocol
- borrowing
- lending
- Self regulating mechanism
- More people farm, less reward they get (dividing same set of rewards to more participants)
- Inflation rate is fixed
- the same number
- "Fair" distribution mechanism
-

### What do we want to achieve?
What is most valuable to us? **How** should users **use** our platform to derive best value for others and the platform?
- create involved community
- some part of yield could be based on participation in governance
-
- long term use > short term
- more stable
- too many withdrawals are bad for UI
- more value locked
- less headache

- Incentivise protocol use => what exactly do we want users to do?
- Why
- Network effect
- snow ball effect => more users gets more users
- get us on the radar (defi-pulse)
- more gas efficiency
- "Fair" distribution mechanism
- How
- Stake using our protocol
- ? is the system better in some way if we have more Liquidity locked?
- lower gas fees for user (gas cost are socialized)

### Important principles
- We can test and change the farming mechanism as we go =>Synthetix does this
- changes need to be gradual see [[Synthetix farming]]
- ? what can we change?
- amount of tokens paid out each block
- Fair launch
- No premine if possible, tokens with no VC premine seem to do better
- ? Can we do this, how do we get funded??
- Our [[investors]] could be the first "Whales" using the protocol => getting disproportionate amount of tokens.
- **TODO** talk to potential investors about this
-

### Parameters we can affect by yield f. mechanism
- For **how long** is value locked
- e.g. we can start counting MRN tokens towards user's balance but unlock them only if funds have been continuously staked for a week (x number of blocks)
- Discourage liquidity drainage
- ? can this be counterproductive?
- Probably not if this mainly concerns governance token and not staked assets
- ? give more rewards if address locks more funds?
- NO goes against defi etos + our principles

### Possible token uses
- Governance
- Buyer of last resort
- akin to MKR token, if there is Staker failure of some kind and users' money get lost, MRN token will be minted and buy out positions to minimize loss of funds by users
- Funding protocol development
- Yield generation
- % of protocol fees could be redistributed to token holders

## Farming mechanism design proposal
[[farming token model solana design]]
### Main
- ** incentivize early adopters** to come in early
- 5% tokens minted monthly to LPs until 1M Locked funds is reached.
- This percentage will go down as various trenches are reached. (2M, 5M, 10M)
- incentivize LPs to **keep funds locked** for long periods
- longer LPs Marinade their their funds, greater percentage of newly minted tokens are allocated to them
- <1 month == 1 x tokens provided
- <2 month == 1.4 x tokens provided
- <4 month == 1.6 x tokens provided
- >4 month == 1.7 x tokens provided
- constant amout of tokens are distributed every block to LPs
- keeps inflation stable + predictable => good for pricing of MRN token
- motivates LPs to come in early
- 0.3% / 0.5% withdrawal fees distribution
- .25% to LPs (83.3%)
- .05 to token holders(16.6%)
-
- values of parameters are not sacred, we can change them based on protocol use LP behaviour, DeFi is unpredictable

### Description
- Fixed number of tokens every block divided to all participants based provided liquidity
- longer lasting deposit == more coins
- > have block tresholds (after n blocks locked funds, baseReward * 1.5)
- ? Convex distribution curve (more tokens are distributed to early adopters)
- incentivizes people to become early adopters
- No premine
-
- Incentives
- **USE** of the protocol
- staking
- Self regulating mechanism
- More people farm, less reward they get (dividing same set of rewards to more participants)
- Inflation rate is fixed
- the same number
- "Fair" distribution mechanism