We have some mixed news about the wLEO launch. In case you missed it, Uniswap decided to airdrop and mint a new governance token called UNI last night. Users of Uniswap who have actively traded/provided liquidity to pools in the past are eligible to claim their UNI airdrop.
This has led to a massive frenzy of Uniswap users going to the platform to hit claim and start trading their UNI. The ETH network has subsequently blown up in terms of transactions. If you've been in crypto for a few years, then you can remember the Crypto Kitties event when the ETH blockchain was bogged down with so many transactions that it was nearly impossible to do anything.
Some are dubbing today Crypto Kitties 2.0. This is a fun time to see all the people scrambling over on ETH as they pay $40-$100 to get a tx approved. It's also a bad time to launch wLEO because all of us would have to pay these outrageous fees in order to wrap our LEO into wLEO and then provide liquidity to the LP on Uniswap.
We're going to monitor the ETH blockchain and wait for this UNI craze to cool off. Once the gas fees return to normal and the blockchain isn't overloaded with TX's, we'll launch wLEO as planned.
Good News and Bad
This is a mixed bag of both good news and bad. The bad news is that we won't launch today and many of us - like me - are impatiently waiting to launch wLEO out into the world).
The good news - in my opinion - outweighs this delayed launch date. A launch next week means that another cycle of power downs will come through. Many LEO stakeholders are happy in this regard because they'll have more liquid LEOs to provide to the LP.
In other good news, we'll be more prepared for the launch. We were already prepared with:
- a brand new Hive onboarding process on https://beta.leofinance.io
- our new landing page
- the wLEO explore page
- the wLEO interface
- Twitter contacts to get the word out to Uniswap/DeFi communities
- etc...
With this extra time, we're going to further prepare the explore page, increase the liquidity that we're providing and contact more people in the DeFi space.
We were 100% prepared for this launch, but the ETH blockchain was not.
Thanks to @dalz's recon work on Uniswap Telegrams we're also getting into contact with some pretty influential people in the Uniswap/DeFi arena. Since this is new territory for LeoFinance, it's important to have as many touch points as possible with influential voices outside of Hive. With extra time, we'll be able to add more contacts to our list who will help us market the launch of wLEO on Uniswap.
LP Incentives Structure
Everyone has been patiently waiting to see how the 300,000 LEO LP incentive bounty will be paid out. We promised to release the details on launch day, but since it's pushed back - you can now review the bounty structure before we officially launch.
This may get a bit technical, but the example at the end will help you understand how this is going to work. With the benefit of being on the Hive blockchain, we will also continually put out posts to update you on the bounty payouts and their accrual:
24 Hour Snapshots
The LP bounties will be calculated based on 24 hour running snapshots of LP token holders. If you don't know how Uniswap liquidity providing works, then you can check out this video where we talk in detail about how Uniswap pooling works.
Exactly 24 hours after the pool launches, snapshot #1 will be taken. This snapshot will record the LP token balances of every provider to the liquidity pool. Along with this snapshot, we'll be able to see how long you've been providing liquidity, if you've added/removed liquidity recently and importantly: your % share of the overall liquidity pool.
Payouts
Okay bear with me here. This is where nuances come into play and I may lose you. Again, the example below all of this will be easier to visualize.
Each 24 hour snapshot will also record your distribution of LEO bounties for that 24 hour timeframe based on your % share in the LP; however, your bounties will not be paid out until the next distribution cycle.
There are two different ways that the 300,000 in LEO bounties will be paid out over the 90 days that follow our launch date:
- Hive Account
- ETH Address
As we all know, ETH gas fees can be quite high. Ranging from $0.60 on a good day to $40+ on a bad day (like today).
This obviously creates issues for the distribution of LEO bounties. Most Uniswap pools solve this issue by including your distribution of LP incentives when you withdraw from the Liquidity Pool. Thanks to the 3 second, fee-less transactions on Hive, we'll be able to follow a more unique structure that is beneficial to the LP's.
When you wrap LEO and then provide liquidity, we will automatically link your ETH address to your HIVE address.
Important Note: if liquidity is provided prior to ever wrapping LEO, then the ETH address->Hive account will not be linked. This is to prevent abuse where someone could theoretically wrap LEO into ETH addresses that have already provided liquidity and falsely claim those addresses.
Our distribution system will prioritize Hive accounts over ETH addresses. Meaning that if your ETH address has wrapped any amount of LEO prior to providing liquidity to the LP, then your LEO bounties will be paid out to the Hive account that has been linked to it.
If you're providing liquidity from an ETH address that didn't wrap any amount of LEO before providing wLEO-ETH to the LP, then your address will not be linked to a Hive account. This means that the system will distribute wLEO to your ETH address from the bounty pool (less the fee cost of distribution).
There are built-in incentives for users who link their Hive account (by wrapping LEO before providing liquidity) to the LP. The incentives come in the form of 0 fees on the payouts (since they're distributed on Hive) and a faster release schedule than wLEO payouts to ETH addresses.
Distribution Cycles
- Bi-weekly LEO distributions to LP's with a linked Hive account
- Monthly wLEO distributions to LP's without a linked Hive account
Since Hive has incredible scalability (0 fees and 3 second block times), we can distribute LEO bounties more frequently to LP's who have a Hive account linked to their ETH address.
We want to provide this built-in incentive to users who link their Hive account - since the distribution is more efficient - but we don't want to give a severe advantage to these users over the ETH-only LP's. This is why we decided to do a bi-weekly distribution schedule for Hive users as opposed to going daily or weekly. You'll get paid out 2x faster (and with 0 fees) as compared to ETH LP's.
*Note about monthly distributions for ETH-based LP's: these payouts will be every 30 days give or take 2-5 days. We may do the payout 28 days or 33 days out. For your benefit, we will pick a date and time with the lowest possible gas fees so that your rewards aren't severely impacted.
This may seem complex, but we're just saying that the distribution will be roughly every month and will simply go out to every ETH-based LP on a day/time when ETH network usage is low.
Here is another reason why we created the $100 minimum for LP's to be eligible for the LP bounties. If you provide less than $100 to the LP, then your bounty payout will probably not be worthwhile since the gas fees will likely be > 10% of your actual distribution (not to mention the fees you'll also pay to simply provide liquidity to the pool in the first place).
Example:
Okay, now it's time for that example we've been talking about. While the mechanics seem complex since there are a lot of moving parts, this distribution payout should be easy to understand when you see it here. It will also be even easier to receive since all you really have to do is (if you're a Hive user) wrap any amount LEO and then provide $100+ to the Liquidity Pool in order to receive the bounty payouts every 2 weeks to your Hive account.
Assumptions:
- Total Liquidity Pool is roughly $100,000 USD each day throughout the first 30 days
- LEO price is $0.10
- ETH price is $400
User A provides $500 to the Liquidity Pool (2500 wLEO + 0.625 ETH):
User A holds their liquidity in the pool for 30 days. Every 24 hours of those 30 days, the snapshot is taken which shows that User A's share of the liquidity pool is 0.5%.
500 / 100,000 = 0.5% ownership in the LP each 24 hour snapshot period
User A provided liquidity after wrapping 2500 LEO into wLEO. This means that their Hive account has been linked to the ETH address that they're providing liquidity from.
2 weeks after the launch date, User A receives their first bounty payout totaling ~233 LEO to their Hive account. Every 2 weeks after that (for the remaining 90 days), User A will continue to receive their share of the daily bounty payout distribution based on their fluctuating share of the total liquidity pool.
0.5% ownership of 3,333 LEO accrued each 24 hour period = 16.66 LEO per day * 14 day distribution cycle = 233.24 LEO
User B also provides $500 to the Liquidity Pool (2500 wLEO + 0.625 ETH):
Similar to User A, User B also holds their liquidity in the pool for 30 days. Every 24 hours of those 30 days, the snapshot is taken which shows that User B's share of the liquidity pool is 0.5%.
The key difference between User A and B is that user B did not wrap any LEO prior to providing liquidity. Thus, User B is classified as a "non-linked" ETH LP which means their bounty payouts will default to being paid as wLEO in monthly cycles on the ETH blockchain.
User B will receive the same share of distribution as User A, but they will receive their payouts in monthly cycles and also will receive their payouts less the ETH gas fees it costs to distribute wLEO to their address:
0.5% ownership of 3,333 LEO accrued each 24 hour period = 16.66 LEO per day * 30 day distribution cycle = 499.8 LEO - gas fees (assuming the gas is around $0.70 the day we decide to distribute) = 492.8 wLEO received
User B received 492.8 wLEO to their ETH address after the first 30 day cycle. This comes out to 16.42 wLEO earned per day which is the same amount that User A received with only a slight amount of LEO (7) taken out of the total for the gas fees.
The $100 Minimum
I've seen a few users ask why we implemented a $100 minimum. Hopefully this example has illustrated why a $100 minimum makes sense in terms of gas fees for distribution to ETH address (in addition to the obvious economics of providing liquidity and paying gas fees for that process):
Again, sorry for the delayed launch on wLEO. It makes sense to wait for ETH to cool off from this UNI event. This will allow all of us to wrap, unwrap, provide liquidity, trade wLEO, etc. at a cheaper rate (since the fees will be $0.60 when we launch versus $40+ at the current rates).
Hopefully the above structure for LP incentives makes sense to you. As always, please drop us any questions here or on Discord.
We're also about to go live in a few minutes for the scheduled Live wLEO launch party. Since the launch has been moved back, we're going to go live and talk about more of the details behind wLEO and do a Roundtable Podcast.
I think this extra time is a blessing in disguise. Giving us all more time to get prepared and organized for the launch. I spent all day yesterday testing and playing around with wLEO and everything is looking great from a technical point of view. Now it's all about ironing out the marketing and making the launch even bigger than it would have been today.
Stay tuned for more updates from this account. We also just rolled out a major update to the https://beta.leofinance.io UI. We'll put out a post tomorrow updating you on all the upgrades we've made this week 🦁
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