Secret Starter: What will you build?

Hello everyone!

@Brendan and I have been working on a Secret Starter idea that we want to see implemented on SN.

Vision: There’s a blue ocean of potential projects that people can build on SN right now. Secret Starter, along with the ecosystem pool, could provide a sustainable platform to kick-start projects from the ground up, and ensure they start their journey with a substantial warchest.

Goals:

  1. Provide a platform for projects to launch cross-chain tokens (Native SNIP-20 on SN, bridged tokens on ETH/BSC/etc…) and conduct token sales. Beyond the platform itself, members of the community (Enigma, Secret Foundation and others) are committed to supporting these projects with further grants, technical and community support, etc. In other words, our goal is to ensure you succeed in building and scaling your Secret Network project.

  2. Create a supply sink for SCRT and SEFI, and give even more utility to SCRT/SEFI holders.

How it works

Contributing to a project will be done with selected SCRT-* and potentially SEFI-* LP tokens. There will likely be no minimum, and an optional maximum contribution amount (that could change from IDO to IDO). An initial proposed list is:

SCRT-SEFI LP
SCRT-USDT LP
SCRT-BTC LP
SCRT-ETH LP
SCRT-BNB LP

50%-100% of the provided SCRT/SEFI will be burned, with the project getting the other half (e.g., in the case of SCRT-BTC LP tokens, the project will get the BTC portion). In the case of SCRT-SEFI, half of the designated burn amount from each token will be burned. This should create a meaningful supply sink for both SCRT and SEFI and is in line with what PancakeSwap does with their IFOs (where all CAKE is burned).

Boosters

Ideally, we would like to reward people for staking/LPing a large amount and for a long period of time. A cool way to do this is to integrate Secret Starter with the proposed Loot Box system, where people can earn Loot Boxes. These Loot Boxes can give you modifiers for Secret Starter, such as a higher allocation or a discount.

We would more than welcome feedback on this proposal before we’re starting to build this (or funding a grant to do this). We are also exploring collaborations with other Launchpads and VCs in our network which would assist in ensuring each project that is validated and accepted to this program is a success.

16 Likes

Great idea! Can’t wait to see this live. We need more supply sinks and a SCRT-SEFI would be a good one for DeFi product launches!

Explainer on how Pancake IFO does it:

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Hi Guy,

This is really cool. If I understand correctly upon the completion of each IDO the launch team will get paid out in only the non-SCRT/SEFI coin. I wonder if it could be done a bit differently to help SEFI build liquidity upon each successful IDO. It would be interesting to burn half the LP tokens, not just one side of them. The team would get both coins, but this would lock LP in the pools indefinitely. This would “burn” 50% of the SCRT or SEFI but continue to leverage its economic value on behalf of the protocol.

There has been some discussion recently about using a fee generation mechanism on SEFI to buyback and instead of burn, LP. This would be in line with that. The goal of this type of approach is to make the protocol more resilient from mercenary capital. Over time it would create a positive feedback loop. More LP → More Arb Opportunities/More Trading → More Fees → More LP → ETC.

In the short term the person may sell part of the SCRT back, but in the long term if the amount of launches becomes material it would be a clear positive in my mind.

Ranger

5 Likes

Love this idea, only a couple drawbacks to be considered. First and foremost, in this model, the SEFI/SCRT pairing should burn 100% SEFI. Scrt will not only be burned in all the other pairs, but also provides the ICO with Gas, which if staked could potentially cover them indefinitely. SEFI could only be used for selling for SCRT. IF the funds needed to be cashed out to cover costs, then paying in SEFI would add selling pressure to BOTH coins instead of just scrt. Even though some would be burned, with other coin alternatives it would only add sell pressure and not necessitate buy pressure.

Another point worth mentioning is that it’s important that sacrificing LP tokens towards this (which I do love by the way) does indeed raise the price of the tokens so that we don’t necessarily simply lose liquidity on Secret Swap. With SCRT being proof of stake and needing a high bonding rate to lower inflation I’m nervous that the LPs won’t be easily replaced due to the availability of other methods of yield, especially if this is set up in a way that doesn’t strongly benefit SEFI, and following, the APY’s of LPs.

Lastly, how is this going to be governed? Will this be part of SEFI’s oversight? If so it would be awesome to have this as a first proposal and see where governance leads us. If not I’m worried that it won’t play well if another large governance mechanism is issued before governance, especially if its perceived to not be beneficial to SEFI holders, as some have complained about the Cashback mechanism being gamed at the expense of SEFI holders.

Again I love the idea and look forward to participating in this Starter and ICO’s on our platform however it rolls out! I’m just looking forward to more discussion and clarity as we game this out.

3 Likes

Note that this model burns only the CAKE in those LP-pairings, this speaks to my comment on burning only SEFI in that specific pairing.

2 Likes

Hi Guy,

Have you given any thought to the idea of burning the LP and locking value in SEFI? Also, will this roll into SEFI as an Enigma built finance dapp? Would be powerful start to begin executing the original vision of SEFI.

Ranger rangeR

3 Likes

Some people in the telegram channels have asked me to better enumerate my concern with specifics, so attached is an example with my thoughts in hopes of more properly gaming this out.

Is burning 50% of each in Sefi-Scrt pairing an effective supply-sink for both? Let’s use an example ICO and analyze the pros and cons. According to the forum post, initial accepted donation tokens for participating in launches are LP tokens for scrt-sefi, scrt-wbtc, scrt-eth, scrt-bnb, and scrt-usdt. In the 4 pairings which don’t include sefi, 100% of scrt will be burned, and the other coin will be given to the team to be sold for funding. This gives wonderful buy-side pressure for scrt as well as an expansive supply sink. For the scrt-sefi pairing, however, only 50% each will be burned.

Let’s say a project wants to raise $10M on the Secret Starter, which would require $20M in donations due to burn setup, and let’s say (completely unfairly as this is unlikely unless amended to be the case) that each pool contributed evenly. The resulting amounts would be:

$10M worth of Scrt

$2M worth of Sefi

$2M worth of Eth

$2M worth of Usdt

$2M worth of wbtc

$2M worth of BNB.

Here $9M worth of Scrt would be burned, and $1M worth of Sefi, leaving the team with:

$1M Scrt

$1M Sefi

$2M eth

$2M wbtc

$2M bnb

$2M usdt.

Now the team sells the $8M of non scrt based assets, but what do they do with scrt and sefi? Just sell them too? That’s possible, but as they’re releasing a SNIP-20 they’re going to always need an amount of scrt enough to cover gas fees, and since it’s proof of stake it is most likely that they will stake enough so that their monthly rewards will enable them to cover gas fees perennially.

What does the team do with Sefi? They sell it. It has no inherent value to the team and can only be sold, but, it can only be sold for SCRT ! Selling $1M of Sefi for Scrt would substantially lower the price of SEFI in terms of Scrt. At this point the team STILL has to sell the SCRT, so this wasn’t avoided at all, but now as the price of SCRT drops, it once AGAIN drops the price of SEFI, which is represented in ratio to SCRT. This means that after this is done the team still will have had the same sell pressure in terms of SCRT, but the price of SEFI was arbitrarily lowered first in the name of having a 9:1 ratio of scrt to sefi value burned, as opposed to a 4:1 ratio.

Possible solutions?

  • Burn 100% of SEFI in that pairing!
    • It won’t change the amount of scrt somebody ends up with, but won’t put needless selling pressure on SEFI without adding buying pressure, which is evidenced by the fact that most pairs don’t include it so there’s no need to buy sefi in order to participate in the launch.
  • Don’t offer that pairing!
    • If you want scrt burned then just have 100% of scrt burned and don’t offer this pairing to add selling pressure to sefi. The teams will STILL have to buy scrt for gas which adds even more buying pressure!
    • Keep in mind that you’re using the Secret Swap platform which is governed by SEFI and are doing absolutely nothing to benefit SEFI, and are now saying that SEFI can’t govern this at all… so expect some substantial backlash if this method is chosen.
  • Offer other SEFI pairings!
    • Offer a SEFI – USDT or SEFI – ETH pairing instead where 100% of SEFI is burned if one is that worried about sell pressure existing for scrt. This would benefit SEFI holders and give them opportunity to participate in the launch while creating a supply sink for the token, while not adding ridiculous double-selling pressure.
  • Create other connected supply sinks for SEFI, such as having lootboxes be paid for in SEFI and have that SEFI completely burned.
    • This would be a neat activity to not only market the upcoming launch on Secret Swap in a way that benefits SEFI holders, but also can be a neat alternative for people participating in all incentivized pairings for how to spend rewards.
  • Give those that donate with scrt-sefi a higher portion of new tokens, like a 5% boost above market rate.
    • This would at least offer some buy-side pressure for Sefi.
    • This isn’t great for the team who is holding the ICO

My suggestion? Just 1 and 4. We don’t need THAT many pairings offered on the Starter. I think the ones suggested would be sufficient, adding maybe with xmr, ust, and other key liquid L1s that get added with bridges. Burning sefi in the one pool it is offered makes it worthwhile for sefi holders, but in general I think the idea is to try to bring in more of the assets in the other pools so that scrt is burned and not sold, and that’s great! In that case we should definitely not boost the scrt-sefi pairing which would cause higher sell-side pressure for scrt.

Unless somehow the launch was more than 50% executed in sefi-scrt lp, more scrt will be burned than given as potential sell side pressure, and with the necessity of Scrt to participate at all in the launch, the sell-side pressure is vastly outweighed by buy-side pressure. Furthermore measures could be put in place to limit how much of each pairing could be donated, so that overuse of the sefi-scrt pairing could be avoided, such as capping each pool at the $4M mark.

Again I’m a huge supporter and believer in this platform and idea and am very excited about this! I hope that this writeup better enumerates exactly why sefi holders could and should be concerned with the proposition as is, and provides actionable feedback that can help make this the huge catalyst for the ecosystem that it should be.

13 Likes

Well said Eric. Agree with this 100%.

@guy please take a look at the concerns that Eric and ranger ranger have brought up.

2 Likes