Open Discussion: SCRT / SEFI Value Capture and Creation

  1. Discontinue no risk bridge mining. Incentivize people to LP
  2. Take part of the 0.30% fees and put them to SEFI buyback. My preference would be as a dividend.
  3. Expand the pairs eligible for rewards and redesign them. This was my criticism of the bridge mining program. The minimum threshold required to become eligible for rewards puts too high a hurdle on any one individual to take the first step. I think we should brainstorm on a design to encourage LP providers to start the new pairs with SCRT or SEFI (no pair without oe of these should be drop eligible imo to force lockup of them). This could be a type of parabola where LP Pools < 500k get the same type of APY as the high impact pools to provide the extra push to bootstrap them.

Hearing a lot of arguments for discontinuing bridge mining entirely and initiating SEFI buyback mechanisms. In my estimation, there’d have to be an order of operations to ensure overall liquidity wouldn’t deteriorate. The most important things seem to be 1) creating more immediate utility for SEFI in governance and 2) implementing some sort of value capture mechanism, which then provides a strong foundation for further experimentation.

That experimentation can include new pool eligibility, intra-ecosystem cross-mining (SEFI / SIENNA), inter-ecosystem campaigns, changing pool multipliers, etc. Curious what other experimentation you’d all like to see prioritized and whether you agree on what needs to happen first to support that.

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I understand the concept of getting rid of bridge rewards for people that have been on board for months, but are there any newcomers? I think this community needs more patience in at least the short run of things(1 year). Keplr has only been out for 1 year and there is already talk of deleting work that has taken days to create on the secret network bridge. Upgrades are great! How about focusing on making things run smoothly for folks instead of getting rid of them? I also don’t see an absolute need to do anything with SEFI other than to keep market buying it, imo. I have ideas to share, but this is my response to what I have seen so far here.

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Regarding ending bridge mining:

I agree this needs to happen. However this would be quite a bad time to do it. Last I checked, the majority of TVL is from people using bridge mining. If bridge mining were to end right now, of course some of this value would be transferred to SecretSwap liquidity. However the reality is that the vast majority would simply exit the ecosystem. This overnight rapid deterioration of TVL would be quite bad from an aesthetics point of view, from the perspective of an outsider.

I am of the opinion that we should wait until we’ve managed to lock in more value in various other parts of the ecosystem before ending the rewards. This would ease the blow of the inevitable large amount of capital leaving the ecosystem.

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Would be quite bad for those liquidity providers that are receiving free money for no reason now only.

The entire point of the incentives was moving these people to secretswap once it released. The reality is nobody will move from free money with no impermanent loss.

If anything, I would say its a net negative right now. All it does is generate a consistent downward pressure on SCRT.

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Great,It is really important to stop sefi’s single currency mining and give more rewards to liquidity providers to improve liquidity.

I think there were a few good points made in this thread so just expanding and adding a few thoughts.

For the SEFI token economics,
• I fully support the idea of SEFI buyback with portion of the fees as it will increase the demand for SEFI as increase in volume will result in more fees earned for SEFI holders thus aligning the long-term values.
• For pool incentives, I think the targeted pools should suffice as allowing all pools to earn reward could result in exploit such as last year with BAL mining. I don’t think we are ready at the stage to whitelist individual tokens yet so I think our priority could be focused elsewhere first to avoid being distracted and revisit this at a later date.

For SCRT token economics,
• I would support reducing the inflation and make adjustments to the target bond ratios. Higher inflation does not help getting more users will benefit whales as they accumulate more SCRT.
• I would also propose creating a formal council (similar to other projects such as SNX’s Spartan Council) where we can elect representatives who can encourage more active discussions for Secret Network’s future and bring on more members who can directly contribute to Secret Network’s success.
• For bridge incentives, I agree the SCRT reward should be discontinued, but I would recommend replacing with SEFI incentive as a gap to reduce the likelihood of having all assets removed from the bridge and the SEFI reward can be slowly phased out.

Other general thoughts/ideas,
• To increase utility, cross chain would be an option, but I think we can also focus more building out Secret’s complete ecosystem to have applications such lending platforms or derivative/options so assets on the bridge can be utilized much more. After that, we can be more visible and we can be more active in getting SecretSwap listed on CoinGecko/CMC.
• One hurdle is user experience, right now even with SEFI trading, some still go to Uniswap to purchase SEFI vs using the Secretswap which has much more liquidity. Most users are already having difficulties using ETH wallets and the bridge process just complicates more. I think instead of just targeting wallet integrations such as Keplr, we should also try to work with exchanges to directly integrate sToken withdraws similar to BSC assets. It would be hard to get large exchanges onboard but if we can work with smaller exchanges, they can potentially use Secret Network as their version of Binance Chain or Huobi Chain, and they can launch defi products to compete.
• For the ETH assets that are currently locked, would it be possible to lend them out on platform such as Compound or Aave and the interest earned could be used to buyback SCRT or SEFI? We would be increasing the utilization of these platforms which should allow more integration/usage for Secret applications.

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This is a cool idea, very simple and understandable and with the right UI could make it fun and get the process started on burning tokens

Yes, agreed on all your points. Moving the incentives from the bridge to the liquidity pools will attract the assets.

The incentives to join the LP could be made up of:

  1. Trading fees accumulated in the pool relative to share in the pool
  2. Incentives paid out in SEFI or SCRT
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  1. Bridge rewards are stopped, adding more rewards to liquidity providers.
  2. Stop single currency mining and add more rewards to liquidity providers.
    Don’t be afraid, TVL decreases. Ineffective TVL does not bring substantial benefits to the system, but the increase in liquidity will make the product more perfect. You can compare the data, before and after the emergence of sefi, the liquidity data growth, which should be the right direction.
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My primary piece of feedback with regards to increasing value capture would be to create further incentives for the SCRT community to create apps on the network. We see with Terra, now that some time has passed, that members of the community are creating protocols that either

  1. Increase profitability
    Or
  2. Create a greater demand on UST, the incentive of which is to shorten the supply of Luna. (shoutout to the Harpoon boys in here).
    Profitability potential is always a great incentive, and perhaps indirectly producing a greater UST demand also reiterates point 1.
    Without a Secret Network stablecoin to play with, the obvious choice would be to prioritise methods of increasing the value of SCRT through higher demand, as was mentioned by Tor. I believe token burns for the sake of token burns would be too lazy (though my inner degen welcomes it), and I trust we can collectively come up with a greater means of increasing value. :thinking:

Additionally, as also discussed, the interaction with other chains/networks can open up a doorway for other members of the cryptospace to come through. Henceforth each chain can draw off one another’s user base. Again, the incentives would need to be there!

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Terra has been brought a several times. I use it, like it, and am a big fan. Stealing any best practices from them seems smart to me.

Connected to that, and as some have mentioned already in the thread, building out an ecosystem of useful and unique apps is long term what will keep people here. crypto for the sake of crypto and clever financial engineering only keeps people around to chase high yield before they dump and move on to the next hot thing.

with terra, people in south korea use it in real life. there are thousands of vendors that take the coins through the chai app. I think I read chai has 2 million users. You can go to your corner store and pay for stuff with the app from your phone.

additionally, whereas on BSC, you see a lot of the DeFi action being gamified, stuff like goose finance which just seems like an elaborate ponzy scheme, terra offers synthetic stocks. access to US markets for people that otherwise wouldn’t.

I would argue that focusing developing apps that use the tokens of the network is the important part of this long term.

a couple half baked ideas that came to mind -

prediction markets - get secret assets tied up in those, creates a stickiness with the user to the ecosystem. gambling too, same argument.

I have been playing around with bitclout the last few days. they just created their first swap/exchange/cashout tool. social media is ripe for disruption from a privacy perspective, maybe find a partnership with them, or Theta, other crypto native social media projects, or someone builds something directly on Secret.

video games - somehow find tie ins the engage that userbase. there is that decentraland thing, token is MANA I think. I was reading something, and if I understand it correctly there is a casino in that environment where you can really wager, and you can buy tokens for that casino, $DG maybe? There has got to be some sort of clever way to integrate into ecosystems like that.

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Maybe SCRT network could create a stable coin sUSD.
In Terra you burn Luna to mint UST, making Luna deflationary.
Haven has xUSD and a similar burning mechanism for XHV to mine xUSD.

Maybe SCRT could be burnt to create sUSD?
See https://twitter.com/thetamind37/status/1381117958177447943?s=20

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I agree that a burn mechanism could be of great interest. Tor talked about the lever of lowering inflation, but changing the supply can be approached multiple ways. I kind of like one that changes based on growth rather than arbitrary parameters set in the protocol. I also think this approach generates more “buzz” than simply just lowering inflation numbers. Look at Akash and things launching with huge inflation…it’s not seemingly a limiting factor YET.

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I understand where the reducing bridge mining arguments are coming from but I think it is the only way to maintain or keep growing TVL for now.

The reality is that very few users seem to care about privacy right now. That may be crazy to any of us involved with this project but that is why we are involved in this project at this stage.

We know that privacy will become increasingly valuable in DeFi and that Secret Network will be well positioned when some real world event creates a tidal wave of interest in privacy. That is when it might make sense to cut off bridge mining rewards. I worry that if they are cut off prematurely, SCRT won’t have adequate assets in the network to present itself as the obvious solution to privacy concerns.

We are still a startup that needs to trade equity for customer acquisition. I think it will be more obvious when the perceived value of the network is high enough to cut off the incentives.

I second @VendibleChris that real-world applications should be the priority at this stage. These ideas and theoretical applications are what brought me to Enigma in the first place.

I second focus on Terra integrations.

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Great to see how many people joined this discussion. I would like to provide a quick update on planned development priorities for SecretSwap.

Cashback mechanism and fee collection to buyback SEFI is currently under development and we expect both of functionalities to be on mainnet within the next month. We are also hoping to launch the updated app UI in the next 2 weeks!

I personally don’t like the idea of burning tokens and would rather distributed the SEFI that’s bought by TX fees to be distributed to SEFI staking pool. However I’d also propose to add an unbonding time for this added benefit. However these decisions are probably best made once we have voting allowed with SEFI tokens.

Wrt. airdrops, if any project (like Sienna), chooses to do airdrop to SEFI holders, they can deploy a contract similar to SEFI staking that would distribute tokens to stakers of SEFI to that contract. At the moment the reward distribution contracts only work with 1 asset for rewards, so giving multiple token airdrops to SEFI stakers (in the current contract), will require some development effort.

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Reading the forum I have some doubts such as: is it possible to ask the secret network that a proportional part of the fees generated by the SecretSwap dapp be allocated directly to the SEFI feedback mechanism? I have thought that all rewards will go directly to provide liquidity in their respective native Tokens and another part to the purchase of their SEFI pair generating an LP in all pairs, now if after completing the first step all the commissions generated in LPs for treasury funds to buy back SEFI and send it to SEFI Staking rewards. This can be applied not only to the Secret network rates, it can also be applied to all LPs and Bridges comisions rates in SecretSwap, generating a feedback loop, first in native tokens such as LP liquidity from SecretSwap treasury and also increasing the price and continuous incentive for SEFI staking users +APY% (offsetting demand for locked Sefi) We must not cut incentives, only derive shortcut to expand them.
Sifchain Network has a similar logic and is thinking of creating this and more additional layers of feedback.
Sifchain similar using the first layer of commissions generated in the Sifchain Treasury by Bridges, LPs, DEFI, etc. and using these first commissions to feed our LPs from the Sifchain treasure, then using the second layer of commissions generated in Treasury LPs will now allocate if to Rowan holders in stake. This generates a liquidity feedback for the internal engines of the treasury LPs and $Rowan growing. Use the second layer of comisions in native tokens to buy back ROWAN in our Sifchain pool and increase its demand, then send the end user as rewards. The liquidity on the DEX grow ever from treasury LPs.

In the future we can add the commissions for compound staking validation of derivatives and liquid token also connecting to iBercrypto decentralize validators ( white paper soon)

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Pancake makes these burns super hype. I know you don’t like the idea, but seems like traders and LPs love them. I’m in a group where this is being talked about very highly today.

To me the thing to pay more attention is the narrative they create around burning. Even though they burn, there are more tokens minted every block. They are still an inflationary protocol - meaning more tokens are being minted. However no one seems to care that they don’t have a fixed supply.

The secret network community can add a lotto like burn structure for SEFI. The lottery contract is already out there from testnet + @taariq 's work on stakeTogether. If the community sees fit, it would be very low effort to make the lottery run with SEFI based tickets and burn a portion of SEFI that’s used in the lottery.

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Do you think it would be reasonable to set up a Secret Core/Secret Hub where users can stake SCRT, SEFI, provide liquidity and use Secretswap? Packing this in one place could then open up the door for PC and mobile apps. I obviously appreciate this is very early days, and I realise I’m probably thinking too far ahead here, but would be pretty sweet to have. :blush:
I’m no dev by any means, so maybe someone can clarify the difficulty of this were it to be implemented and in the process shed light on the likelihood of something like this happening in the first place. 𝕊.

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