Description of the problem:
Mercenary Farmer Farming and Dumping HAPI after high rewards after the farm finishes leaving little to no Liquidity at all left for the protocol to be able to support itself with Liquidity.
Solution:
There is already a solution on Ethereum called OlympusPro (Watch: This explains Protocol Owned Liquidity: What is Olympus Pro? | Can bonds really replace liquidity mining? - YouTube), but we know Ethereum is expensive to use given scalability issues. InvictusDAO is built on Solana, a few weeks ago they responded to Solend about being able to launch their a product ‘InvictusFlare’ that will allow POL (Protocol Owned Liquidity), I’m sure they will be working together as it is a huge problem which is plaguing the whole of DeFi1.0.
The way it works:
- The Protocol offers LP Farmers to buy their bonds at x% discount which is then held for x days before being claimable.
- The protocol can choose how many bonds it wants to sell at any time.
Example: Farmers sell their HAPI/USDC LP for a Bond which gives a 10% discount, in which after 5days they can claim, instead of farming and suffering Impermanent Losses. In return HAPI owns the HAPI/USDC LP and continue to let the AMM/DEX have liquidity for them. HAPI in turn ends up owning a large chunk of it’s own Liquidity.
Cost of InvictusFlare or OlympusPro:
- Currently from what I have seen the protocol fee would be 0.3% of those that buy the Bonds (ie. HAPI/USDC LP) goes to their own Treasury.
Potential Risks:
- Those that Buy the HAPI bonds can dump it, but if many do that, the price of HAPI can go down, but if it is below what they bought the bond for, they will reconsider of course no one wants to buy high and sell low.
- There will be Impermanent Loss for the HAPI team, but they are there for the long-term of course $100m in liquidity is still $100m regardless of if there is more HAPI or USDC in the LP.
Additional advantages for HAPI:
- HAPI can also gain by partnering up with Invictus as well and help these Protocols, AMM/DEXs have their Liquidity and allows HAPI to embed their Smart Contracts in it.
- HAPI will continually also earn those fees from those that trade on it as well as they own majority of their own Liquidity.
Closing Statement
I don’t believe the traditional model of DeFi1.0 will last forever as there are many flaws currently. Mercenary Farmers just cares about their own pockets instead of the longevity of the protocol. This is also another way that HAPI can survive in the Bear market.
Stages:
- Probe - low threshold voting to detect general interest in a proposal.
Voting is taking place here: Snapshot