CUB Incentive Pendulum: Playing with Fire.
This has got to be the only thing bad I've said about CUB ever, even as the price has collapsed from $13 to 20 cents over the last year. I was very skeptical about the pendulum when I first heard about it, but I didn't really know much about it so I kept my mouth shut until now. Now after listening to a few LEO AMAs... I have serious and valid concerns regarding this "development".
The pendulum is good if used correctly.
The problem is, is that it won't be used correctly. It's being used to create a pump and dump and fuck over new users and the liquidity providers who are helping them to join in the first place.
The point of the pendulum is to allocate CUB yield to the areas it needs to go. That's a great idea. Fantastic. The problem? @khaleelkazi says the yield on the Kingdom is too low and yield needs to go from the LP pools to the kingdom. Really? REALLY?
Like no, we already tried this.
We already doubled the yield on the kingdom. What happened? More degens aped into the kingdom and we are now right back where we started. And what have we gained? Nothing, because CUB in the kingdom is worthless, while CUB in the LP pools provides the most valuable use-case: entrance and exit liquidity combined with stability.
So the plan is to choke the supply right when pCUB launches and we are expecting a bunch of demand? That's called a pump and dump boys and girls, and it's not a good way to play it; punishing new users and transferring the value they pump into the network to the LEO/CUB degens.
Anyone can look at the Den.
There are $3.2M in the single token staking pool.
The total market cap is $4.3M.
74.4% of all CUB is already in the kingdom
But we are going to manipulate yields to pump even more CUB into the kingdom? Am I taking crazy pills here? How the fuck is everyone on board with this? Greed. Such fucking greed. Very disappointing.
CUB needs more liquidity, not less.
We are expecting demand. LPs are AFRAID to provide liquidity, and for good reason. Impermeant losses are going to hit hard because people are buying. So our 'solution' to that problem is the punish the liquidity providers, choke the supply, and pump the token only so it can dump later? Yeah, great plan. Amazing plan. I love that.
Listening to the AMA right now...
I'm just at a bit loss for words on this one. Why would we allocate more yield to the kingdom just because degens are greedy and putting their money into the kingdom? People are greedy and thus we should cater to that greed and reward it to the detriment of the protocol? Woof.
Out of my element?
So rather than just posting this blindly I decided to, you know, 'use my words'. Always good to invoke the advice you'd give a raging toddler.
Babyrage subsiding?
Hm yeah so I've been told I don't know what the hell I'm talking about. Guess we'll find out. Either way, like I said, I expect CUB and LEO above $1 within a month or two (one). Hard to complain, but here I am complaining.
Conclusion
I'm providing a lot of liquidity to CUB, and I feel like I'm being told my contribution to CUB is less important than the greedy people who refuse to accept impermanent losses and are just holding it as a moonbag while providing no value to the protocol other than hoping the price goes 10x.
Perhaps I'm just as greedy as everyone else, but when I hear that we are expecting massive demand and the answer to this problem is to choke supply... I get pretty damn skeptical. Call me crazy. Either way it will be a fun roller coaster to ride. Playing with fire. Soon™
Even if you hate Tom Hanks Cast Away is the perfect movie to watch
because it's just him getting fucked over for two hours.
WILSON!
Posted Using LeoFinance Beta
I understand your concerns and appreciate you voicing them. Valuable feedback.
However:
"Like no, we already tried this."
We haven't. I think you're viewing the pendulum as being a static motion like things we've done in the past - i.e. where we doubled Kingdoms Multiplier.
That is simply not how the pendulum works. It's actually the opposite.
We're creating a variable measurement for liquidity across the entire platform. This measurement is used to inform the pendulum on where liquidity is needed most and cycles yield to the right places. Similar to how Thorchain's Incentive Pendulum works for LPs and Node Validators.
I think you're viewing this as: yield in the Kingdoms is increasing and yields in the Farms are decreasing.
That's a non-dynamic viewpoint. The Pendulum will swing regularly and slosh yield between the two. I think we need to see it in practice before you assume that it's simply going to work one way. I actually expect liquidity in CUB-BUSD and CUB-BNB to be significantly higher in the coming days.
Actually, if you look now it's already 20-40% higher (due largely to the increase in CUB's price). The yield is also 100%+ higher - due to the increase in CUB's price.
Yield on the farms is currently 262% APY. The pendulum isn't solely based on APY but I'd say let's focus on the fact that people are earning 32% APY on their CUB single stake (which isn't bad) and 262% on their CUB-BUSD Farm (which is amazing). Changing this is not the point of the Pendulum. It's to drive liquidity to the CUB pairs and also make way for CUB Bonding - which is quite exactly what you want.
I know you'll love the Pendulum based on this post even more than I did before I read it 😉
Posted Using LeoFinance Beta
Thanks for commenting.
I believe my knee-jerk reaction has subsided.
I need to look at this much more in-depth.
It will be good to shake things up a bit.
Maybe there is some confusion @edicted. The pendulums you and Khal are talking about are different. It needs to be communicated properly on how this whole thing works and benefits all of us without burning the LPs.
The whole idea about DeFi 2.0 is to make LPs first-class citizens. I hope there isn't any fire to burn the shit out of us. 😂
Posted Using LeoFinance Beta
Exactly. i looked at the Thorchain docs here. In that case, the rewards balance between securing the network and LPs. With CUB, there is nothing for users to do to secure the network. Khal mentioned that there are differences because of this so it would be good to see what those are.
Absolutely!
Right, although the Thorchain docs gave me an idea about the utility of pendulum, I am still not sure how it will work for CUB. Waiting for their next post explaining the differences.
Posted Using LeoFinance Beta
Na it's fine, works the same way like HBD.
Lock CUB away needs less to move price.
With compounding rewards + rage quit rewards cub kingdom is the perfect place for degens.
And if the rewards on CUB kingdom the highest, people that want to leech rewards from cub, need cub.
For now its only unfair for CUB holders. CUB needs the highest rewards.
Posted Using LeoFinance Beta
LOL @ the last two sentences 🏐
I'm glad you posted this. I find it all so hard to understand but that is the reason I'm in the Kingdom. I just want my pennies to tag along. I managed to turn $1000 worth Leo into $100ish of cub. I have high hopes and low expectations but can't wait to see what happens!
Posted Using LeoFinance Beta
I think I need to learn more about the way this pendulum is supposed to work but you make a very valid point...
If we already have a huge portion of CUB staked in the kingdom, increasing the yield would bring even more CUB there.
And isn't that going to reduce the yield as a consequence? I understand that a pendulum is supposed to go back and forth but this is foggy to me at the moment...
Thanks for sharing your 2 cents though!
Posted Using LeoFinance Beta
Eh I think it's just the initial that will swing it to Kingdoms. Kingdoms also BURNS CUB from the increased amount of staking there. You're also getting things like CAKE maybe that would have a higher APR thus more people getting in those which means CUB actully earns more Cake to burn back into CUB because of the fee collection and automation of that.
The APRs have been high on Farms for a long time now and that's clearly not making more people get in those lol
It will be interesting to see it in action. To be honest something has to be done because the entire thing is rather stagnate (which I'm almost ok with because I could pretty much bet I CUB would be in a 10% jump range and not worry about a dump or a missed out pump.
Posted Using LeoFinance Beta
If it works as described by Khal, we don't have to worry about it on the long run.
Personally, I haven't moved my CUB from the LP. But all rewards have been going to CUB kingdom for some time.
Where I agree with you is that this is not the best time for the pendulum to move rewards from the CUB-BUSD LP to the kingdom, for two reasons: liquidity providers suffer IL as the price of CUB goes up and they have half of the liquidity position counted for the airdrop, unlike in the kingdom. Plus, as you mentioned, they provide liquidity to a major pair.
Well we definitely need to think about the issue some more. I am not sure how everything will work out but I think it's better to just see how it works. If the APR drops back down, then we can say that it didn't work as Khal intended.
Posted Using LeoFinance Beta
I struggle with all of this behind the scenes maths in defi. I invest money into a few defi sites across cosmos, cub and pancake but have the majority of my stake is in the cub kingdom.
The simple reason is that it is single stake and i don't need to know any of this. It has a good return and simple to understand. Perfect for defi noobs like myself.
I've read your post but have just gotten more confused on the issue other than too much cub in the kingdom isn't good for liquidity. Hopefully we can see some clarity on this soon and make more informed decisions.
Posted Using LeoFinance Beta
PIZZA Holders sent $PIZZA tips in this post's comments:
@solymi(1/5) tipped @edicted (x1)
Join us in Discord!
This all sounds very complicated and I will have to read up on Thorchains Pendulum. All I know I never touch my LP positions. I think I touched my BUSD:CUB LP once in the past 11 month and if I remember correctly I took out about 10% Used the cub in the Kingdom and burnt BUSD on Thetan arena...
If the pendulum swings back and forth as Khal described the best strategy is to be everywhere and spread out your holdings to several LPs and Kingdoms. In this case wherever the pendulum swings you are right in the middle and will average more yield than someone following the pendulum. Transaction costs are also lower. Someone running after the pendulum will always be behind it.
Not sure if this makes any sense.
!PIZZA for reading this :D
Posted Using LeoFinance Beta
WE GO WE GO SECURE SECURE!
https://vm.tiktok.com/ZSewsRqks/