Could Yield Farming Work For Tipping Tokens

in LeoFinance27 days ago

They yield farming frenzy has given me a lot to think about, and as I mess around with it more, I'm learning all sorts of new things. I recently got involved in farming another meme coin called Salmon on TRON. I wouldn't recommend it. I like to learn about different revenue and tokenomics models.

While checking out their discord, I saw a post about the market markets using some of their returns to burn supply to improve token prices, and it got me thinking wouldn't that be a great model for tipping tokens.

Tipping tokens have been popular on STEEM/HIVE for a while, but for the most part, it's been a fun community project to show your appreciation for engagement or content. We have coins like ENGAGE and BEER that seem to be the most popular.

How tipping tokens work

Tipping tokens as far as I can see require a user to stake a certain amount of coins and then they'll have access to a set amount of daily inflation for distribution. It doesn't seem to compound so if you don't use it the inflation is just lower for that day.

Having an erratic inflation model like that leaves things open to a lot of speculation in markets.


Side note: Wouldn't it be cool if we had front ends that reminded us of our tipping token allocation and remind us to use it? Might help with a regular rate of distribution, but anyway, that's a story for another time.


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Tipping tokens are highly illiquid

So with such a low distribution of tokens but to a wide variety of people due to the way, it's distributed the coins are sparse and in short supply. To buy up tokens at market values to have an allocation so you can tip can be tough and normally the token owner sets the price since they sit with a massive stake to set the initial market price.

As more people get involved, they would naturally dilute the token owner's stake.

But apart from having fun with these tokens, there's not much value to them, and the token owner sort of has to create the market.

If however more people were market makers and added depth to these token tipping tokens, we could see more people willing to buy the stake they need to be able to qualify for tipping since they won't have much.

Buyers and sellers

Tipping tokens are minted erratically when users with stake tip, and that's how a token comes into existence. Once the token is added to someone's wallet via a tip, they have two options, stake enough to tip or sell-off and take the reward.

This makes the market for buyers and sellers; the more people want to reward, the more tokens, the fewer people reward, the fewer tokens.

The more competition for tokens, the higher the price, making it valuable to get a tip. Tipping tokens are great because they allow you to reward outside the seven-day window and give users a new way to participate in the ecosystem.

At the moment, tipping tokens are more for fun, but what if the could also be for value?

Creating a closed-loop

So back to my experience on TRON farming, if you set up markets for tipping tokens, provided liquidity, it helps this market tremendously like I said it's very illiquid.

This allows more people to get in and get out of the tipping token easier without affecting the price too much. Then you take some of the fees from the said market and burn the supply making it even less readily available over time.

I realise people want to make a profit in stake based, but burning some of it can make your stake worth even more. Your principle remains, you make a little on the top, and you reduce the supply with a portion of what you make.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

Let's connect

If you liked this post, sprinkle it with an upvote or esteem and if you don't already, consider following me @chekohler and subscribe to my fanbase

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I shared this post on Twitter to try and get your work in front of more people.
You can find your post and me on Twitter if you like? https://twitter.com/dick_turpin
I've also upvoted you and shared your content on Hive.
Hope That Helps.


"If you don't have enough power or Crypto to upvote me; reshare me instead. Reshares are worth their weight in gold!"
Don't forget, you can upvote peoples comments too!

Wow thank you so much, I appreciate the fact you felt my content is worth sharing!

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This time this Beer was in perfect situation LOL

LOL exactly, now If we had market makers I could sell this beer easily and support the ecosystem having my fees on the trade stack up to reduce the supply so the more buying and selling the better for the price

You know that it is possible to be market maker at hive engine. Just go for it !
But - I think you need to pay some to get access to the service.

Yes I know, I just need to buy more BEE since you need 100 per market you set up and i'm still testing out profit potential before I jump in fully and make more markets

Go and buy them ! Run and buy it (will not tell I already bought and want the price go up )

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Have Arsenal cooperation with sportsbet.io? Wow! Your club goes crypto

Yeah I’m not happy about it I don’t care much for gambling! Lots of kids watch arsenal and now we promote gambling to them

Thats a Good point!


Hey @chekohler, here is a little bit of BEER from @minimining for you. Enjoy it!

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 27 days ago Reveal Comment