This is an interesting question and idea, thinking through this from an implantation standpoint, it would be relatively complicated to achieve this and might introduce some vulnerabilities, but it’s an interesting base for discussion
Im with toomanytrips in his suggestion during some calls back, instead of making the crucibles on mainnet compatible with other chains, but instead deploy this separately - I assume this is much easier to ship in a technical standpoint.
We need to have incentives aligned to have adoption if we want rewards programs for mist holder on other chains - without it being in conflict with the Aludel v1.5 on mainnet, the question im left with is how do we incentives new rewards programs if inflation is only going to Ethereum side of things.
We could also pursue a different route - Deploying the tech on different layers/chains for projects who wants to create rewards program for their users. Not necessary starting with a rewards program for alchemist holders first. Good for our exposure, no? Thoughts ?
Answer from the original post:
@Crypto420 what do you think about the above method of funding? enables us to scale organically to new chains as we grow revenues there. That way Aludel 1.5 still intact and is funded by both inflation and revenues on ethereum mainnet.
Great for exposure and to test out the waters for sure. But it would be up to @Joeh and his team to evaluate cons/pros as they run the product and would have the most visibility on pipeline, effort, and demand.
I think this is a good idea - reward programs for $mist on other chains is being incentivized trough revenues generated on that particular chain!
Is there any downside to this approach ?
yes :). Imagine the current Solana disaster. what if we had a product on Solana right now that was generating millions in revenue, and suppose that as a result of revenue incentives 50% of our MIST liquidity was on Solana. And now Solana rugged everyone. So there’s always a risk.
But at the same time… What if a new L1 comes a long that ends up outcompeting Ethereum. If we move there as a result of our products it helps us diversify risk and build a more resilient Alchemist community. Always flexible and ready to adjust regardless of what the future holds.
But 100% the right question to ask.
exactly, this is the dangers with bridges - So, create something entirely different for good OPSEC.
Absolutely worth exploring, bootstrapping liquidity across different layers just good for our growth overall, one of our biggest barrier of entry for crucibles rn is the the fees on mainnet just retarded, $200 is alot of money for the users we want to capture
I also had a go at looking at this from the opposite side and posted some thoughts here, and also again when replying to @sal_ash, hopefully there is something useful there that might trigger some thoughts
Agree with stew we start with one to test it out first (or two)
Tbh going multichain is a must and confident we can make it work tech/product wise, I suppose this is more of a policy / tokenomics talk on how to make it work
Imo whatever we do we should first consider avoiding/minimising potential impact to our holders / stakers /protocol on the mainnet, hence I also suggest against fragmenting the existing liquidity or spreading the inflation reward to other chain ON THE GET GO. (We can reconsider these action after)
Cannot afford to see holders / staker flocking on the mainnet while our success on other chain is still TBD, or else we may end up taking two step back before making three step forward.
I am just spitballing below not sure if it make sense:
How much do we have in our treasury right now? This may be a good opportunity to mobilise the mist within our treasury by swapping mist directly with L2 communities via bonding.
Killing two birds with one stone. Target being able to convert part of the mist within treasury to stablecoin while bootstrapping liquidity on the selected L2
Idea is to Create wrapped mist or gMist (similar to gOHM) that is tied to the price of mist on mainnet then create a pair on L2.
People on the selected L2 can bond stable coin or ETH in exchange for wrapped mist / gMist at a slightly discounted rate. (A discount that is not enough to entice people to sell their mist on mainnet to bond on L2, nor worthwhile to bridge back to mainnet to sell, but just enough to attract new money from L2 communities)
And then we incentivise them as per Ri to create gMist LP via crucible NFT and revenue from copper on L2
Nevertheless, I think we need Copper to gain enough traction on the selected L2 first before we do anything such that we save up enough revenue to ensure a sustainable runway for yield for aludel on L2
OR …maybe it’s time to consider kicking up a notch on the bi-weekly inflation and use the additional inflation for this purposes?
No. Teams will already have to figure out how to perform revenue share for L2s and it can be fully automated.
Do they not bridge back the 10% of revenues owned by the multisig anyway? is it an issue of frequency?
I agree automation would be a more ideal resolution, but it does present other risks. Have we thought about how to manage JIT attacks, price slippage and cross chain arbs if buy backs and distro’s are all automated?
Consider a smal liquidity pool on ‘L2 X’. A big copper sale concludes and it’s revenue is used to auto buy back mist and drop it into the rewards pool. a well capitalised actor drops a large amount of liquidity before the distro, diluting all other holders and taking a significant chunk of rewards, and then removes liquidity after claiming.
another scenario is that no new liquidity is added to the pool and the buy back is done with significant slippage. if the L2 pool is arbed compared to L1 prices before LPs claim their rewards, the benefit of that buy back goes back to arb bot operators, not LPs. LPs are unlikely to claim their rewards quickly due to the crucible multiplier so this is a significant risk IMO.
You end up with liquidity that is proportionate to revenues on those chains, so it won’t be a big deal. Our community won’t be dropping 10 million worth of liquidity provision if there’s only 20K a month worth of revenue on Polygon for example. That’s actually the other really nice benefit of establishing a reflexive relationship between revenues on new chains/L2 and the community. Everything will auto scale and incentives will align.
I agree with the points on reflexivity, it’s a pretty cool mechanic. Assuming that liquidity provision is efficient enough to respond to scale of rewards I think may not be realistic, especially given the fact that copper revenues in particular are much more event based than continuous. I think the risk of JIT and slippage could be significant if we have strong auction revenue on an L2 that hasn’t got much attention from LPs as mentioned above. non sophisticated LPs are unlikely to react quickly enough to these events to reduce JIT, slippage and arb risks.
This breaks the reflexive relationship between our products on a particular chain and the community with skin in the game on those chains. It favors incumbents, and would discourage liquidity provision to new chains that have revenue because majority of that revenue will just go back to L1 whales.
Fair points, I think it favours new participants vs incumbents in terms of reward split, but this is mitigated if inflation rewards are only provided to L1.
I would point out that an automated system on many L2s probably benefits more sophisticated and well capitalised liquidity providers than your standard user. Having a simple way to participate and ensure you gain rewards is much more manageable than constantly monitoring where your LP would produce more revenue and moving it around accordingly. As mentioned above sophisticated actors can probably game the system especially as it gains more prominence.
Alchemist having to manage LPs across chains is more inefficient. How does one decide how much LP to provide. When does it make sense to reduce. When to increase it. What if the bet is wrong. Then that LP needs to be removed. The proposed solution w/ community participating in this regulates itself and auto-adjusts based on conditions. Is there revenue on that chain? What’s the opportunity like relative to other chains? What are market conditions like and what is the narrative? Etc. Alchemist “strategically deploying new pools” would only centralize control, decision making, and the administrative burden for a decision which the Alchemist community, through its actions, is more well equipped to make. Free markets always make the best decisions when compared to a central authority. By outsourcing these decisions to the community we’re building a resiliency into the system that auto-scales with demand, our presence, and our success on new chains.
True it does introduce an element of treasury management and multi-sig centralization. I think this is a trade off that is worth considering especially if there is not alternative method to reducing JIT, slippage and arb risks.
Ultimately I think whatever is decided should be tested out on one chain before being expanded to others. The automated approach does have positives but this proposal needs to consider some of the risks I’ve mentioned in more detail here, before it goes live. Otherwise they will only be addressed when these risks are actualised.
We’ve currently got a Multisig on Polygon (which we used for sKlima tokens), I assume it would only make sense to have a multisig per chain with this kind of approach.
Regarding bridging back: We would have multisigs across all chains that we’re on anyways. We’ll need that to perform various housekeeping operations as it is.
Regarding various attacks: Revenue doesn’t need to be distributed back through a MIST buyback. Could just be the ETH equivalent on that chain.
This might be a problem only very early on. Before setting up Crucibles on these chains people will have plenty of a heads up to react and know that a distribution is coming at some point in the month.
I highly doubt most people would be constantly monitoring it. Rather they consider if they believe that chain/L2 has a future and whether Alchemist products are likely to grow on that chain.
See point from earlier about revenue distribution. In can happen in whichever token has the largest liquidity on that chain if MIST doesn’t yet have sufficient liquidity.
And if MIST does have sufficient liquidity we could still figure out a random system using some sort of oracle to introduce randomization.
I do agree that we should start with a single chain to run the experiment for a month or so to see how it goes.
@sal_ash really appreciate your thoughts on all of the above. this is the kind of constructive discussion I was hoping we’d be having in the forums. You bring up very good possible attack vectors if we were to solely do the distributions in MIST.
@Joeh is it correct that we’d be able to set up the rewards programs to handle a few different kind of assets?
Why do you think they would flock to another chain if there is no guarantee of consistent revenue there? I think the fact that inflation would be only distributed to mainnet holders and that L2 revenues won’t be large in the beginning is likely to deter a major shift.
This is an interesting idea. Would be nice to have some stables. Right now we have the equivalent of around half a million USD worth of MIST in our multisig. My concern here is that we’d want to use these funds productively or at least ensure that there’s some sort of lock up if we are to convert them to stables (possibly through large OTC trades, not sure). Otherwise we risk adding a lot of new sell pressure to MIST.
Imo, half a million is also not large enough for a decent liquidity pool. Having the community involved in building up liquidity would result in a lot more resiliency longterm. Because then we don’t have to guess on parameters and keep actively managing these pools in a centralized way. I think we’ve very clearly seen that the “Policy” way of managing things that OHM has developed has plenty of downsides.
These are just rough thoughts, so please take them with a grain of salt. Curious what others think about your idea, Asa. I do like that you’re thinking about ways to bring some stability to our treasury and agree that should be on our minds.
Yes, we can handle up to 51 different reward tokens per contract, including rebasing. Only downside is more gas is involved in claiming the more reward tokens that are involved.
Greetings everyone, I’m a big fan of the Alchemist project and have put together some notes on what’s been discussed so far alongside some of my thoughts:
The Proposed Actions:
- Allow MIST liquidity and crucibles on all the chains/L2s that MIST generates revenue on (at the moment MATIC and Arbitrum)
- Distribute product revenue from the chain it is generated on to aludel crucible stakers on that chain instead of migrating all product revenues to ETH main net.
Goal: Make crucibles more accessible through lower cost blockchains that MIST operates on. This should ultimately expand the MIST ecosystem to more users and create incentives for those expanded communities to attract more projects to use Alchemist products.
• Taking the MIST token multi-chain would allow it to reach more communities
• Interacting with LP tokens and creating crucibles would be dramatically cheaper on non-ETH mainnet chains
• Reduce operational burden of consolidating product revenue across chains and bridging to ETH main net.
• Allow for organic management of cross chain liquidity by the community
• MIST communities on additional chains are incentivized to attract more projects on those chains to use Alchemist products.
• Fragments MIST liquidity
• Introduces risk of bridge failure for community members in that chain
• Creates varying product revenue for the same MIST token across chains. From a tokenholder perspective this makes analyzing MIST much more difficult. If listed on sites like tokenterminal, MIST on ETH would have entirely different metrics than MIST on MATIC to the point they may be viewed as separate coins, and I think the consolidated revenue generation of MIST is one of the more exciting aspects of the Alchemist story.
• Could possibly further advantage whale LPs that can afford to bridge and lp in anticipation of an especially large revenue event on a lower liquidity L2, or extreme slippage may just go to arb bots.
• Could create intra-Alchemist competition and/or resentment within the Alchemist ecosystem. Instead of more projects using Alchemist products being viewed as beneficial to all community members, copper launches on Arbitrum or Matic will benefit crucible holders on those chains. More community effort might go towards convincing a project to use copperlaunch on MATIC instead of ETH rather than towards getting as many projects to use copperlaunch as possible.
Conclusion / Next Steps:
I do believe bringing crucibles to additional chains is a worthy initiative, including Aludel since that’s the most likely first program to launch in any crucible expansion. However, as it stands currently I don’t believe each Aludel program should be funded from product revenue solely from the chain it exists on.
This might mean doing non-Aludel crucibles on non-ETH chains at first, or looking into some method to simplify the consolidation and distribution of product revenues. On my end I’ll look into how Sushi handles this since they are on multiple chains and have similar revenue distribution through staking with xSushi. If there are any other examples we can examine (protocols that generate revenue on multiple chains) I’d love to hear about them. Thanks for taking the time to read, and this debate is one reason I’m so excited about MIST given its a very unique “problem” among defi as there are so few multi-chain revenue generating protocols, and most are quite large.
On the topic of treasury stability, one solution might simply be to leave the share of product revenue distributed to the multi-sig treasury in the token it was generated (usually USDC or ETH I’d imagine). This would require a proposal to alter the product revenue distribution such that only 90% would be used to purchase MIST, with 50% would distributed to aludel, 40% to team, and the remaining 10% left in ETH/USDC and sent to the multisig. This would raise stables / non-ETH MIST over time for the treasury without creating sell pressure.
Another alternative might be to engage with other projects on potential token swaps (MIST for BAL/VSTA or whatever other project might be interested in that kind of arrangement). This would not add stables to the multisig but would diversify the holdings a bit.
I think we definitely need to bridge MIST to new chains even if it will fragment liquidity if we want Alchemist to be relevant on those chains, but you make a very compelling point about the potential harm that this approach can result in. Ideally we need to find a way to scale to new chains organically without creating resentment and fracturing our community. The goal is to provide new opportunities to people not currently participating in the mainnet rewards program.
How do we create the right incentivize for the community being incentivized to advocate for our products on these new chains/L2s while also maintaining a reflexive relationship to their success?
We need to think about this more and what’s the best way to do this.
we already don’t convert what is sent to the treasury . So we’re on the right track there.
I meant the potential price impact from spreading liquidity or redirecting the inflation may cause people to flock away from alchemist in general. All good I agree with you
We should atleast start with polygon and then to L2s. No new user will be coming to ETH mainnet.
I actually raised this question earlier as well, would be awesome if anyone has an example or could provide some stats/simulation data or even an example theory of how they expect price impact to be impacted that would be awesome.
I don’t have any knowledge on cross-chain arbitrage, how accessible it is and how active arbitrageurs are. I am curious if liquidity in other chains will actually complement L1 liquidity and strengthen price impact (if we imagine there is an overall increase in liquidity for the sum of all chains), or if it will only be relevant to the chain that the token liquidity exists on.
By assumption I would imagine its a case of if a DEX doesn’t offer cross-chain routing then price impact will be relative to the chain, which is 90%+ of dexs right now, and only arbitrageurs will take the benefit of asset values between chains