Secret X Shade DeFi Campaign Proposal

Secret X Shade DeFi Campaign Proposal

Table Of Contents

  • State of Secret DeFi
  • A Vision For Secret DeFi
  • Proposal
  • KPIs Impacted
  • Liquidity Projections
  • Risks
  • Go To Market
  • Timeline
  • Conclusion
  • Team
  • History
  • Contributions


Secret 2.0 Blog

State of Secret DeFi

Secret DeFi to date has attracted a variety of builders, but fundamentally we have collectively struggled to accumulate and attract sticky liquidity that is key for builders to create layered financial products. In essence, Secret Network unlocks vast variety of DeFi use cases but we need the fundamental building block (baseline DEX liquidity) to sustainably exist before we can attract these builders and use cases.

Currently, net TVL across all Secret Network DEXs is ~$4M. This level of TVL makes it difficult to attract both builders and users. To kickstart Secret Network TVL in a sustainable fashion, we believe intimately partnering with the L1 on this initiative will be able to get us back on track for the $20M - $50M TVL range (as just the beginning). Note that there is a precedent for this on JUNO, EVMOS, and Secret Network.

A Vision For Secret DeFi

Fundamentally, Decentralized Finance is incomplete without privacy.

Transactional privacy is key for commerce in our every day lives:

  • Purchase a product without having other vendors be able to track your purchase metadata
  • Keep employee payments private
  • Keep contractor payments private
  • Tipping
  • Anonymously donate to a specific cause (perhaps polarizing)
  • Donate to a person anonymously
  • Maintaining privacy with app interactions
  • You think crypto will achieve mainstream adoption meaning everyone will have access to all this information (retailers, banks, potential employers), and you question if they will use the information ethically.

In addition to transactional privacy, smart contract privacy (which Secret Network empowers) allows for novel protections that transparent blockchains cannot provide. Some examples are as follows:

  • I want to open a lending position without the whole world knowing my liquidation price point
  • I want to trade without everyone following my asset movements
  • I want to lend out an assets privately
  • I want take a significant position in securing a blockchain through a staking derivative without losing my anonymity

The world of private smart contracts opens up a vast array of financial products that will power Web3 and Web2 as we know it. If transparency is a feature, so is privacy. And I fundamentally believe in order to onboard the business, consumers, and institutions of the future, we must bring parity (or improve) the degree of privacy that we all deserve and expect.

This is why I am here. This is why many of us are here.

Totally transparent blockchains are a future of ubiquitous surveillance. A decentralized panopticon. A desert with no forest coverage. [Credit]

Freedom is transformative. Privacy liberates communities. It gives them agency and sovereignty.

A future of privacy is possible when builders and users unite - and I firmly believe that privacy is the key to unlocking the full value of a decentralized future.

That future is Secret Network with Secret DeFi.

Proposal

With the launch of Shade Protocol’s StableSwap on the near horizon, Secret Network has a unique opportunity to attract sticky liquidity to this brand new UI/UX and protocol. Shade Protocol proposes 100,000 SCRT incentives that will be distributed over the course of 4 months towards pools that involve SCRT, stkd-SCRT, and stablecoin pools. Importantly, this 100,000 SCRT would be converted into stkd-SCRT before getting distributed as rewards.

KPIs

The primary Secret Network KPIs impacted (net positive) are as follows:

  • Active wallets
  • Daily transactions
  • New Wallets
  • IBC bridge activity
  • Secret DeFi Builders
  • SCRT TVL
    • Stablecoin liquidity
  • stkd-SCRT total supply

With additional liquidity, new users will be attracted to Secret Network to create wallets, interact with dApps, and to bridge in their assets to trade. Builders will be encouraged by seeing the commitment of Secret Network to DeFi - making it more likely for teams to build and experiment with privacy-preserving DeFi. Finally, the staking derivative will see additional usage, locking up additional SCRT into staking.

Liquidity Projections

  • SILK/USDC
  • SILK/SCRT
  • SILK/stkd-SCRT

For the purpose of simplifying TVL projections, we will assume 100% of the rewards go to the SILK/USDC pair. We will also assume that 1 stkd-SCRT = $1

Market will find equilibrium with how much risk it believes any given pool holds. The lower the risk the pool is perceived to be, the more TVL is attracted in relation to the provided APR. We are projecting an upper-bound 20% APR on stablecoin pools using a market rate for perceived risk based on benchmarking against Curve, Platypus Finance.

Net TVL = ($Total Monthly Rewards * 12) / APR

Example: $100k * 12 / 20% APR = $1.2M / 20% APR = $6M TVL

1 Month APR $ of SHD $ of stkd-SCRT Total Daily Net TVL
SILK/USDC 20% $75k $25k $100k $3.3k $6M
SILK/USDC 15% $75k $25k $100k $3.3k $8M
SILK/USDC 10% $75k $25k $100k $3.3k $12M
SILK/USDC 7.5% $75k $25k $100k $3.3k $16M
SILK/USDC 5% $75k $25k $100k $3.3k $24M

It is important to note that Shade Protocol will be emitting value to more pools than just SILK/sSCRT and SILK/USDC pools - but this shows that ~$100k in incentives partnering with Shade Protocol incentives has the opportunity to attract $5M - $24M in liquidity depending on what APR the pools settle on.

Across all stablecoin pools and SILK pairs, Shade Protocol is targeting $25M - $50M in TVL during these market conditions.

Go To Market

The following are key Go-To-Market items for ShadeSwap to ensure the success of these incentives:

  • Hosting the Cosmos Stablecoin Digital Summit
  • Weekly Twitter Spaces
  • Written articles
  • Written tutorials
  • Video Tutorials
  • Video Promotional Materials
  • Into The Interchain Podcast w/Cosmos Founders
  • Dev roundtables
  • Circulation of StableSwap whitepaper to key DeFi builders
  • Engaging the Shade Protocol VC community to bring liquidity
  • Partnering with other protocols to bring external incentives onto ShadeSwap
  • Additional airdrop (pt.2 - 4) to re-engage ATOM & SCRT DeFi community**

Risks

  • SILK de-peg event
  • SCRT sell pressure from incentives
  • ShadeSwap smart contract risk
  • stkd-SCRT smart contract risk
  • KPIs not being achieved due to market conditions or lack of marketing
  • Secret Network reputation is supporting a dApp with L1 incentives - this can create political conflict among dApps that also want support

Timeline

These rewards will be deployed side-by-side with the launch of ShadeSwap in Q4 2022/Q1 2023.

Updates will be given in the forums/twitter as SCRT is converted to stkd-SCRT, justification behind pools selected for stkd-SCRT rewards (if anything changes), as well as when stkd-SCRT gets deposited into rewards contracts.

Conclusion

This proposal is an opportunity to revitalise Secret DeFi by signalling to the larger Cosmos and developer ecosystem that Secret Network wants to help create a floor of DeFi liquidity as a public good.

Shade Protocol is committed to growing Secret Network through collaboration, marketing, and integrations. We believe we collectively have a unique opportunity to bring Secret Network technology to the entire world of Web3/Web2. And it starts with taking leaps of faith on builders that are committed to pushing the boundaries of what is possible on Secret Network.

Thank you for reading this proposal, we look forward to your feedack!

Long live Secret DeFi.

-Carter Woetzel (Lead Researcher w/ Shade Protocol)

Team

History

The Shade Protocol team started its roots in the summer of 2020, forming a validator called “Secure Secrets” - this team of 5 individuals created written and video content, bringing education to the Secret Network community. Over time, this validator has become the 8th largest node on Secret Network.

While securing the network, builders Mohammed Patla and Carter Woetzel became passionate about leveraging the privacy-preserving smart contract technology of Secret Network. We saw a distinct need for DeFi with privacy - specifically the need for deeper stablecoin liquidity on Secret Network.

Thus, Shade Protocol was born; a vision for an entire suite of privacy-preserving DeFi applications starting with SILK, a stablecoin.

Shade Protocol submitted a grant in late August of 2021 - marking the beginning of the journey of actually building out this vision.

SILK Announced

Shortly after the creation of an MVP for SILK, Shade Protocol began a $5,000,000 private raise devoted towards software development of the underlying protocol. In February of 2022, Shade Protocol performed a multi-chain airdrop of $SHD (the governance token of Shade Protocol) to $SCRT, $ATOM, and $LUNA stakers.

$5M Private Raise Blog

During this time, SILK began an intensive overhaul of mechanics - trying to iterate on the UST model by adding privacy + a decentralized peg targeting a basket of global currencies and commodities.

SILK evolves post UST

While this development was underway, Shade Protocol closed key grants to begin the development of ShadeLend, ShadeSwap, stkd-SCRT (a SCRT staking derivative), SILK Pay, StableSwap, as well as research into SILK’s basket composition.

stkd-SCRT (built by Shade Protocol) launched in March of 2022 - rapidly gaining 1,000s of users interested in a SCRT staking derivative. Currently, this derivative has more adoption than any other SCRT staking derivative.

Shade Staking Derivatives Blog

During the summer of 2022, the collapse of UST brought SILK development to a grounding halt as the model had to devolve back to a more traditional overcollateralized model. SILK had similar model assumptions to UST, such that the vision of a pure algorithmic stablecoin had to be tabled in favour of safety and security. Regardless, development continued.

ShadeBonds launched in September of 2022 - the first ever COSMOS bonds product. Shade Protocol acquired a staking position on Secret Network, improving the security of Secret Network. ShadeBonds also included additional smart contracts tied to admin authentication and oracles.

Shade Bonds Blog

In November of 2022, the second airdrop was unlocked for qualified stakers along with V1 of Shade staking. This brings us to where we stand today. Q4 aims to bring the following:

  • SILK
  • ShadeLend
  • ShadeSwap
  • StableSwap
  • ShadeDAO

Currently, all of these are actively under audit. ShadeSwap is on testnet, with ShadeLend to follow shortly.

Contributions

Overall, here are some of the key contributions of Shade Protocol to Secret Network:


13 Likes

What source would you be seeking these funds from, the community pool?

1 Like

Correct :+1:

Open to hearing alternatives - this seems like a solid way for the community to signal their support :slight_smile:

2 Likes

given that Shade decided to stick with Secret Network whereas many other projects didn’t + they haven’t really asked funds from community pool before + they have been a major source of publicity and job creation on the network. I definitely support this ask and wish them all luck

6 Likes

Support this proposal

3 Likes

I don’t really have much to say other than that shade has our full support. The team is set to usher in a new era of adoption within the network, and continues to be heads down building. We all wish 100k SCRT was worth more than the current valuation, but the amount is not too huge an ask for such a potential impact. This is an important launch for the network and we need to be throwing out full support this team.

6 Likes

Well said. Kick-starting DeFi projects such as Shade is the best use of the community pool’s funds, imo. I’d be shocked to hear arguments that incentives offered are not well worth the impact. I would love to see a similar bootstrap funding granted to Blizzard Finance as well. The network would greatly benefit from the development of a respectable DeFi ecosystem, which has been neglected for far too long imo.

5 Likes

TL;DR Don’t think we should frontload so much liquidity initially. Opt for sustainable rewards. As $SHD accrues more value via protocol development, it’ll be more and more attractive to hodl rather than sell.

I think this is a huge step in the right direction for the secret DeFi ecosystem, however I do have some concerns with such massive infusion of incentives.

My initial thought and main concern is this: four months worth of a very generous amount of liquidity incentives may not have the desired effect as the team desire.

Here is my reasoning:
$75k Of $SHD liquidity over 4 months will have two possible effects:

  1. $SHD is being infused into the markets, SHD starts to have heavy sell pressure due to market conditions / confidence in team → TVL starts to stagnate as rewards and liquidity starts to decline in value…potentially rapidly
  2. $SHD infused into market, Market have full confidence in SHD and cannot get enough → Stake/LP squeezed will cause SHD to go up, and DeFI degens to push liquidity to higher / desired margins.

My point is this:
We need $SHD and $SCRT/stkd-scrt to continue to be attractive rewards. Heavily infusing it initially may reduce the overall attractiveness of infusing more liquidity.

How do we approach this then?
Osmosis is a great example. Initially OSMO rewards shot OSMO’s TVL sky-high, but quickly depreciated due to the massive inflation. Once the dust settles, and osmo settled at a price level with strong support, liquidity providers had no issues providing massive amounts of liquidity into a protocol. Take a look at OSMO/USDC initial release → Currently 30m TVL, and had strong growth curve.

In conclusion… I don’t think we should use a linear liquidity bootstrapping approach, but rather a curve of some sort.

Initial liquidity bootstrapping → Leave as is. Should be a great starter to increase TVL
Mid-late stage bootstrapping → Slowly reduce incentives so that inflationary & sell pressure is at least consistent (rather than overwhelming).

1 Like

Osmosis isn’t the best example for this. Their relatively rapid rise and fall had moreso to do with the extreme overreliance on UST / Luna as a source of liquidity. Once that collapsed, it took Osmo’s price volume and TVL down with it. Nothing changed regarding incentive allocation when they grew their stable pools afterwords.

1 Like

ShadowRealm fully supports this. Strong defi and properly aligned economic incentives for users (mostly stakers) and builders is the only way to Valhalla

5 Likes

Given that ShadeLend is not mentioned, this proposal seems to primarily solve for the acquisition / disposition of SCRT on a DEX workflow:

Bridge USDC to Secret with Axelar <=> Swap USDC for SILK <=> Swap SILK for SCRT or stkd-SCRT`

So, I’d be interested in seeing this evaluated against the comparable workflow on Osmosis given the incentives they provide:

Bridge USDC to Osmosis with Axelar <=> Swap USDC for OSMO <=> Swap OSMO for SCRT <=> Swap SCRT for stkd-SCRT

USDC-OSMO is at 69% APR
SCRT-OSMO is at 63% APR

Ultimately I have three questions:

  1. Under what circumstances will providing liquidity for SCRT (and/or stkd-SCRT) on ShadeSwap yield higher returns for LPs relative to Osmosis?

  2. Under what circumstances will acquiring / exiting SCRT (and/or stkd-SCRT) on ShadeSwap cost less for users relative to Osmosis?

  3. How will the answers to (1) and (2) change once L1 incentives expire?

3 Likes

Overall I really like and support the proposal!

@Carter-Woetzel I believe your identification of attracting and retaining sticky liquidity/ users as a key pain point is spot on, and I think it can be broken down into 2 main components:

  1. How easy is it for the users to find out about Secret (and how it’s better than their current fiat setup), onboard their fiat, & deposit into a trustworthy long-term asset pool? I.e. marketing campaign grabs attention, Kado Pay seamlessly deposits into Secret from the bank, & they are redirected to Shade Bonds and to deposit into a safe 6-month Bond.

  2. Does Secret offer enough attractive long-term investment plays to enable users to set and forget about the liquidy with the confidence that they are making competitive yields without having to check often. (I.e. Silk savings account with APRs higher than Traditional Banks).

Initial brainstorm on how to realize some of this:

  • Marketing Campaigns through an email newsletter: For example, when users enter the Shade website or protocol, they can add their email to the newsletter in return for 1 Shade or 10 Silk. If emails and wallet addresses were able to be stored securely and privately (maybe with Akash). I believe this would open up the door to significant user retention campaigns!

  • Referral Program with Rewards: I.e. you help set your buddy up with a Keplr Wallet and deposit some money into Shade Bonds. Your friend enters your referral code, and you are both rewarded with 3 SCRT. It would be tricky to implement verifying if it is an actual unique friend or if it is someone gaming the system without introducing KYC. However, if pulled off, I think this could bring in a surplus of new users and liquidity.

-BTC Savings Vault: Thorswap has just introduced single-side native BTC earn. In terms of long-term holdings and liquidity on Secret, I think this could be revolutionary if Shade is able to partner with Thorwap or implement a similar feature.

-Kado Money: Integrate Kado directly to Secret. (Ik Shade Bridge is coming so that might be already included) If fiat can come directly into Secret & Shade and it has all of the financial vehicles you would want with competitive APRs - why ever leave?

-SILK Savings w/ auto DCA & Arbitrage included: For the investor that wants a competitive APR over the longer term and doesn’t want to have to check on their investments constantly. Shade could potentially offer a SILK savings pool on an automated schedule DCA into ATOM, BTC, ETH, SCRT etc. Furthermore, a similar pool could offer auto arbitrage (White Whale) where the user is earning an attractive 4% normally on their savings, and when a good arbitrage opportunity is presented, a predetermined % of savings is withdrawn, deployed towards capturing the arbitrage, and the value captured is deposited back into the savings account.

I believe some people will always be on the hunt for the highest possible yields (no matter the risk) across all asset classes and, thus, will pull their liquidity out of SCRT when the incentives run out. But if SCRT & SHD are able to provide competitive, trustworthy, low management (set & forget), private, & long-term investment strategies - sticky liquidy will start to pile into the ecosystem.

As always, the SCRT & SHD teams continue to absolutely crush it, and I cannot wait to see what is to come!

Looking forward to hearing people’s thoughts on any of the ideas I presented above.

Cheers :slight_smile:

4 Likes

Agreed I think the incentives would be a great kickstart for the SCRT ecosystem. One step further: I would like to hear thoughts on how the incentives will start to transition to real yield at scale once the incentives start to run out. In order to keep the liquidy captured during the incentives phase, sticky

2 Likes

I support this. stkd-SCRT or Die!

Great question, I think the narrative that SHD should play to as well is the fact that $SHD is accruing value through its products. Something that I believe SHD will strongly outperform over osmo. Less $TKN APR return, but overall more value accrual due to earning more $SHD.

Great points & questions btw

1 Like

Would love for this to be elaborated as well

1 Like

I definitely support this.

DeFi on Secret is a primary need.

I would also be open to a similiar round for blizzard, should they ask.

My liquidity needs a home. And that home needs to be on Secret Network.

3 Likes

Let me start with the conclusion: SCRT Labs supports this and once we sort the open points we’ll gladly vote in favor. Strong yes, especially for Shade who have to date proven themselves again and again as great actors and extremely capable. Also, finding sustainable TVL on Secret is critical.

What are the guidelines?

Now to the details. Clearly, this sets a precedent. There have never been L1 incentives sponsored by the chain and to support a dApp, but we’ve already established that it’s a good idea. With that said, what are the guidelines we are setting to make sure the community pool (or, if Secret 2.0 comes to be - the liquidity fund), isn’t abused? I’m aware of two additional teams that are already using this a signal to make a similar ask.

Here’s an initial list:

  1. What ratio of rewards in the dApp token ($TKN) should the team put? Shade proposes 3x $TKN:1 $SCRT I assume?

  2. Team’s likelihood to succeed - a poor product will not onboard and retain users, so throwing money at them would not be useful. Shade has demonstrated strong ability and has a large team, which to me puts the confidence level at very high. This is the most problematic guidelines since it’s qualitative, but we can’t ignore it.

  3. Can a team ask for rewards more than once? Only at launch? Whenever?

  4. What’s the path to sustainability after the rewards ends. In this case, the window is 4 months.

  5. Are rewards given all at once or based on success metrics. For the very least, TVL projections should be present (Shade provided these already, which is great).

  6. What else?

Other questions

  1. I’d like to see a concrete breakdown of the actual pools that will get incentivized and their respective APRs based on projected TVL. I also agree with @winston that a comparison to benchmarks is needed (e.g., Osmosis, or outside of it if that doesn’t exist). This is how we always calculated rewards and it’s obviously the right way to go!

May have more, but this is for now.

TL;DR - Strongly in support. Let’s refine the details as this will set a precedent!

9 Likes

We are in support of this proposal and will be submitting our own for Blizzard.finance with a focus on traditional assets such as SCRT, ATOM, BTC, ETH, and USDC. Final details are being determined this week.

5 Likes
  1. What ratio of rewards in the dApp token ($TKN) should the team put? Shade proposes 3x $TKN:1 $SCRT I assume?

Typically, DEX x partner deals push for a 50/50 split on $$ amount of rewards unless there is a distinct imbalance in offering. Shade proposed a $3:$1 offering as I think its good to ask for less (when setting a precedent) in order to prove out KPIs & the effectiveness of the campaign.

Tldr; scoped experiments are good

In the future, if these types of incentive campaigns result in excellent KPIs, I think 50/50 splits are reasonable for partners that are generating excellent results. I think initially, it is good to be weighted towards a conservative ratio.

  1. Team’s likelihood to succeed - a poor product will not onboard and retain users, so throwing money at them would not be useful. Shade has demonstrated strong ability and has a large team, which to me puts the confidence level at very high. This is the most problematic guidelines since it’s qualitative, but we can’t ignore it.

Agreed on this front - I believe audits, documentation, open-source code, and contributions should all play a role in the assessment of risk.

  1. Can a team ask for rewards more than once? Only at launch? Whenever?

This is ultimately up to the community to decide - if the experiments are effective, I wouldn’t say we should push for one and done. As per the Secret 2.0 blog post, I think it would be fair to perhaps slow down on these types of incentives once we hit a collective $20M - $50M in TVL on the network.

  1. What’s the path to sustainability after the rewards ends. In this case, the window is 4 months.

The path to sustainability comes from a large # of users and capital trading/using the app repeatedly. Uniswap doesn’t incentivize the majority of its pool as there is enough users creating volume that trading fees alone are enough to incentivize liquidity providers. By offering a best in class UI/UX, a whole suite of DeFi products, Shade Protocol would aspire to not spending any emissions on liquidity once a properly large user base has been captured. Protocol Owned Liquidity through bonds also opens the door to this being possible. A similar analogy is with Frontier on Osmosis - other protocols are deploying incentives that are not being matched by Osmo.

  1. Are rewards given all at once or based on success metrics. For the very least, TVL projections should be present (Shade provided these already, which is great).

I’d advocate for “all-at-once” in the form of small experiments that get bigger and bigger each time instead of a rolling management of rewards from the L1. I’d be curious what other people think about this.

tldr; simplicity is preferred, as long as the experiments start small.

So I want to address this concept in DeFi - the market determines the APRs of any given pool, not the protocol.

Simple example:

  • ShadeSwap puts $1000 worth of daily rewards into a pool
  • One LP provider puts in capital, they are on track to earn 1000000% APR (large number to make the point) because they alone are claiming 100% of the rewards + trading fees
  • Another LP joins, LP#1 now is earning 500% APR and LP#2 is earning 500% APR because they are now splitting the rewards
  • This happens rinse/repeat until the market hits an equillbrium. This equillibrium is based on the perceived risk of IL within the pool. Higher APR = a more volatile pair. Lower APR = less volatility.

tldr; we can’t definitively say in advance where the equillibrium point for any pool will be in advance - however, we can give projections on TVL based on potential APRs.

This is why SILK pools are awesome: lower APR is good because this means more TVL is attracted with less emissions expended.

Now, to @winston questions:

  1. Under what circumstances will providing liquidity for SCRT (and/or stkd-SCRT) on ShadeSwap yield higher returns for LPs relative to Osmosis?

stkd-SCRT pairs should offer a greater yield on a stkd-SCRT / ATOM pool than a SCRT / ATOM pool due to the staking derivative yield. The pseudo equation would look something like this:

staking yield + emissions yield + trading fees - increased in risk from it being a staking derivative pair = APR equillibirum

This gap is a pretty sustainable advantage on Osmosis.

However, for LPs more focused on trading fees, the Osmosis pool will be the better pool until more users are trading on ShadeSwap than Osmosis for sSCRT / ATOM or sSCRT / OSMO. We essentially need to win users over to ShadeSwap as their DEX of choice when on-ramping or off-ramping into or out of SCRT. We do have a path and strategy to do this with our bridge UI/UX.

We won’t know until the pools are live, but my gut says the pool APRs will be lower while LPs are simultaneously earning more from one of their assets earning staking yield.

  1. Under what circumstances will acquiring / exiting SCRT (and/or stkd-SCRT) on ShadeSwap cost less for users relative to Osmosis?

It will cost less when the liquidity is deeper. Note, we have a path to concentrated liquidity on ShadeSwap such that an ATOM/SCRT pair could be much more capital efficient than what exists on Osmosis. But until that exists, or until the pair liquidity is deeper, users should be biased towards acquisition through Osmosis.

  1. How will the answers to (1) and (2) change once L1 incentives expire?

It is the job of Shade Protocol to attract sufficient volume on the DEX for it to be attractive for folks to liquidity provide in the absence of emissions. We plan to do this with excellent bridge + viewing key + permit UI/UX, our privacy offering, as well as our multi-primitive approach. If this is not achieved, than it is a failed app. If it succeeds, it is a massive win for the network. But the success of ShadeSwap does not live or die by L1 incentives, it is enhanced by it.

I’m happy to follow up with some TVL projections for pairs such as SILK/sSCRT, sSCRT/ATOM & SILK/ATOM. It is important to note that due to the routing contract, it will be highly beneficial for SCRT liquidity to have one exceptionally deep pool tied to SILK that other trades can get routed through. If the community prefers direct pairs (ATOM/sSCRT, OSMO/sSCRT) we definitely can make that happen, it is just significantly less capital efficient.

5 Likes