GP11 DeFi Rewards - Meld Gold

Hey Algofam,

Please find a link to the latest Meld Gold TDR GP11 plans HERE.
It is important to note that numbers have not yet been finalised, so figures are approximate and mainly demonstrated in percentages. They will be updated with correct numbers as allocations are confirmed.
Myself and the team are also working on additional potential collaborations and will adjust as things change likewise for any updates from community feedback.

I have also added an additional details around Meld Gold’s current focus as I believe this important information to provide context on what the current team is working on.

Please share your thoughts below.

X-NFT rewards: How do the X-NFT rewards make sense for meld gold exactly? there is literally no secondary volume for NFTs from X-NFT and its a product made my algomint not by meld gold… is there even a match by algomint? it looks to me like this doesnt help meld gold at all and only helps algomint which is not what your TDR should be about, keep your projects separate and focus on the adoption of metals by meld gold

Other rewards: Can you comment on what the most used (volume/TVL) pools are from your proposed allocation? Does the GOLD-SILVER pool get ever used by someone besides bots arbitraging? Why do you split rewards into xUSD and goUSD pools on pact if xUSD can be used to mint goUSD via the algomint basket? Why is there a big focus on pact?

Hey @lobo how are you mate?
To be clear the X-NFT component is for the creation of precious metal backed NFT rewards in the form of Lunar Coins, these are NFT’s created by Meld Gold that long term generates revenue for Meld Gold through metal holdings and royalty potential - though NFT volume on Algorand generally doesn’t lend itself to royalties currently. Meld Gold doesn’t fund any part of the actual X-NFT’s, that is left to Algomint.
Volume wise, with X-NFT I think it is fair to take in account the X-NFT token volume to at least some degree in that they are representative of NFT’s and intended to be an easier way to hold NFT’s with an increased ability to find liquidity and own a portfolio without the usual hassle of constructing one. The last 7 days there has been a little shy of $2,000 in volume.

The most utilised pools are the Tinyman ALGO pairings, we have proposed for a increase in these pools and are working with Tinyman to increase these (I will update the numbers once done). The very short notice to publish reports has made it a little harder to finalise these plans but expect an update in the coming days post numbers actually being confirmed. No project has been given numbers as yet and not publishing something (plan wise that is) by the 16th meant exclusion from the program.

GOLD-SILVER pairing has two roles, it is an interesting pair for potential metal based LP’s as they often see this as almost a stable swap pair in the sense of impermanent loss being minimised. But it also acts as a conduit to tap in to the opposing metals USD liquidity reducing slippage and with market making in place shifts are quickly corrected.

In terms of the xUSD and goUSD splitting it is for a couple of reasons, diversification of risk there is an additional layer of risk with any wrapping that needs to be taken in to account. Minting xUSD and wrapping to goUSD adds additional risk. There are also limitations on the amount of any asset that can be within the Algomint basket, meaning wrapping to xUSD isn’t essentially limitless. For GOLD-SILVER having potentially less impermeant loss and diversification of risk when thinking about xUSD are mostly important if we are talking about whale liquidity which is something we are in desperate need of in Algorand. Depending on the report and whale classification some numbers have Uniswap liquidity of importance as high as 97% whale contributed.

The main reason for the Pact focus is its strategy for stable swaps and stable asset pairings which I believe is better suited for GOLD & SILVER pairings for many of the reasons stated above. Compared to Tinyman’s focus on ALGO pairings, in saying that as I said I am talking with the Tinyman team about increasing that portion.

Thanks for the questions.

The focus for Meld Gold should be on GOLD, and SILVER - period.

I would consolidate into:

The rationale is that TDR deployment should be concentrated and focused.

• Concentrate all TDR in Pact DEX, which is in the Meld Gold family.
• The focus should be on RWA: GOLD and SILVER
• Replaced xUSD and goUSD with USDC, which simplifies it for the end user. In addition, there’s much more USDC liquidity with broader market exposure.
• Lending pools should be highly incentivized. They are much more capital-efficient and users should be directed to them.

The concern I have is that there is no way for regular users to onramp new liquidity for GOLD$ and SILVER$. Thus, Meld Gold (and partners) would have to boost on-chain liquidity to provide sufficient liquidity to enable GOLD$ and SILVER$ to be acquired through DEX swaps by users.

Hey @oysterpack how are you mate?
What is the logic here?

But why do you need to give out rewards for people doing stuff with X-NFT? As you have said X-NFT is by algomint and it seems like you are incentivizing their asset without getting anything back and therefore wasting funds that could go to people actually holding and using assets by meld gold. S how does meld gold benefit from it?

The thing with GOLD-SILVER is you are incentivizing GOLD-ASSET and SILVER-ASSET pools anyways and using aggregators people can swap between those assets easily. It might be a low IL pool for holders but does it add any real value besides that? Its pretty much useless liquidity in my opinion and encourages people to just hold and do nothing

But why xUSD and not USDC or USDt? If someone comes over from another chain which stables would they be familiar with and willing to hold? A overcollateralized native stablecoin that has no effective peg mechanism besides liquidations, a USD basket that contains xUSD again but also USDC and USDt which have different risks or just USDC/USDt?

None of the incentivized pools is a stableswap tho so that argument is not valid. So it’s just about pact giving you more of their TDR so you focus on them. What about the risks that come from pact having no team atm and the risks of them going away completely?

I updated my original post with my rationale.

Hi,

In general I like this. Good to see that you support all three platforms, Pact, Tinyman & Humble so people have more choice and can use more their favorite DEX.

I agree that SILVER/GOLD pool is important and especially people who want to avoid USD risk will prefer that over USD/GOLD & USD/SILVER pools. But can you take 2% off from Pact pool and allocate that into Tinyman SILVER/GOLD pool? so, Pact SILVER/GOLD 3% & Tinyman SILVER/GOLD 2% ?

Regards,
ROAM

Meld Gold is top RWA in all of crypto. Thank you. Very supportive here. Precious metals evolve over time… now available onchain.

Sorry for the delay guys I am travelling so might be a little slow to reply over the next week.
Appreciate the update @oysterpack and taking the time to give feedback.
There is a couple of things to unpack here.
Lending pools don’t count towards TDR for Pact or Tinyman, so pushing rewards and liquidity here penalises the DEXes and makes it harder for them to co-incentivise. There was also some issues with routing through fPOOLS which I don’t believe has been addressed yet but I will look to see if this has been sorted or when it will be.
Lastly xUSD and goUSD aren’t currently available in Folks so can’t be used in fPOOLS which is where a chunk of liquidity sits and where a chunk of the LP’s currently prefer.
Tinyman is focusing on ALGO pairings and not stable coin pairings (volatile assets paired with stable coins) hence the focus on the ALGO pairing there which I do think has proven a valid move considering the volume to TVL ratio and I do think we should increase this figure.
Which ties in to the next component, there could certainly be a change to rewards focusing on goUSD but we would likely loose a chunk of liquidity currently deployed in the xUSD pairing. But are you aware of any LP’s that would come in to replace this liquidity if the rewards were shifted as you described? That would be my main concern is a certain substantial nett drop in Gold and Silver liquidity. But if you have any LP’s who would come in to fill that gap with the rewards shift I am certainly happy to work with them to help anyway I can. What extra liquidity would you expect to see from the change? As a nett total DEX liquidity?
goUSD does have caps to composition so it isn’t an easy shift for xUSD to goUSD as mentioned.
Thanks again for the time and effort mate.

Hey @lobo sorry mate I am travelling at the minute so might be a little spotty on replying.
Ah sorry I should have added the extra information (which I will add to the Medium article soon) that Meld Gold pairings receive a chunk of X-NFT rewards that outweigh the input from the Meld Gold side so a nett positive transaction. Then adding on the additional value of having RWA ‘infused’ NFT’s and the value they bring that I mentioned before.

For GOLD/SILVER, yes aggregators do allow for easy swapping between the assets but doesn’t link their liquidity without the GOLD/SILVER pairing. If you are doing a trade of USD > GOLD for example, dipping in to the USD > SILVER > GOLD becomes possible with the linking pool. I wouldn’t except a single direct trade to go via that pool solely but does deepen liquidity and reduces slippage for larger single trades or a large amount of trades in a single period. Does that make sense?

I definitely agree that USDC / USDT would be better in general, I don’t disagree here. I think the difference comes in what current LP’s are deploying and are happy to deploy. Metal holders can leverage their metal to create an LP position via xUSD but only by a very small amount with FOLKS to access USDC and USDT due to borrow limits. We are working on getting this up and would look to potentially do more of a change then. In saying that if you think it would result in a nett higher amount of liquidity per $$$ of rewards spent by moving some to USDC or USDT I am certainly happy to move some liquidity to test that and see the result. Thoughts on if it should be fUSDC / fGOLD or straight USDC / GOLD?

Appreciate the time replying, thanks mate.

Hey @ROAM how are you mate?
We are actually chatting with Tinyman at the moment about a joint increase, it was a mad rush to get reports out so there wasn’t a lot of time for collaboration sadly.
But I will confirm here when updates are made.
Thanks as always.

It doesn’t make sense that lending pools don’t count towards the DEXes because the DEXes make the lending pool possible. There are always exceptions to the rule, and in this case, it makes sense for lending pool TVL to be counted towards the DEXes. This is an issue that needs to be raised with the Algorand Foundation.

Regarding issues related to routing through fPools, I believe those issues have been mostly resolved. At the very least lending pools are integrated into Vestige and Deflex. I don’t think Pact’s swap router does yet, and I don’t know if TinyMan’s swap router does. Regardless, there’s no technical reason not to. It’s a matter of integrating the lending pools.

The main objective is to generate enough trade volume to make the DEXes and LPs attractive profits. Thus, ultimately we must attract traders (and trading bots) by supporting bigger trades, which requires high liquidity. This is why I propose incentivizing LPs to concentrate liquidity into higher-value assets with broader market appeal. I understand that Meld Gold is part of the same product family, including AlgoMint and xBacked. I like the concept of AlgoMint’s goUSD product, but it does make it more confusing and complex for the end user. Thus, let’s take goUSD out of the picture and simplify by pairing GOLD$ and SILVER$ with USDC.

I would go all in on lending pools, with this new proposal:

NOTE: The above lending pools currently do not exist, but there’s no reason why they can’t be created.

Sorry @lobo I just realised I didn’t answer your last question, when I say stable pairing I was referring to Stable coin assets paired with volatile assets. So essentially USD paired with other non USD assets, which Pact are focusing on and Tinyman are not. Gold / Silver paired with USD is the key pairing.

In terms of the risk, we are certainly monitoring this and one of the key issues we faced (outside of the pairings needing to be with USD) was major LP’s asking about historical hacks. I have complete confidence in the Tinyman team and work hard to bring confidence to investors and I think we will get there but still a hurdle we are navigating currently.

Thanks.

Hey @oysterpack
Tinyman doesn’t have an aggregator sadly, the Pact aggregator doesn’t currently - I don’t believe it was a small amount of work as it involved a reasonable change having to deal with a new transaction type (deposits and withdrawals from Folks), DeFlex were having some gas estimation issues which I am chasing as well. I think the idea that they just need to integrate the pools is relying on the idea of swapping the fASSET not wrapping and unwrapping it. Which doesn’t achieve the end goal of doing something like USDC > GOLD.

I have certainly brought this up multiple times for fPOOLS to be included, but I haven’t had success with this. Though I continue to push but as it currently stands they will not be included.

The change proposed would loose a very large chunk of GOLD$ and SILVER$ liquidity and would mean Pact wouldn’t likely co-incentivise as much in future (with fPOOLS not being TVL counted). But you are confident this would result in new LP’s to replace those leaving and to your point bring in more liquidity? What would you expect to see the growth being from the strategy you are proposing?

Thanks mate.

Tinyman has had an internal swap router (like Pact) for quite a while. I don’t know if it integrates Tinyman lending pools.

Deflex has also integrated Pact lending pools since July.

Vestige also supports Pact lending pools.

Regarding fPools not being counted towards TVL, there needs to be a hard pushback on this - especially since lending pools are now also supported on TinyMan. There needs to be a sit down with Daniel Oon and team. Lending pools are the most capital-efficient Algorand DeFi product and absolutely should qualify for incentives.

Yes sorry you are right @oysterpack I thought it hadn’t gone live yet as I never see the routes showing but that is because it isn’t displayed.
I just asked the Tinyman team about the fPOOLs and the router doesn’t currently work with wrapping / unwrapping via Folks.
DeFlex has had some issues but I believe it should be all resolved shortly.
Pact isn’t going to have fPOOLS integrated in to the Router yet, but plenty of coverage from the others.
I will continue to push on fPOOLS being included in TVL but no luck yet.

But the asset you earn for supplying liquidity matters a lot. Getting X-NFT rewards where X-NFT is a new and highly speculative asset that could loose all its value in a second or ALGO is very different. I personally don’t consider pools that get mainly X-NFT rewards because I am subject to X-NFT price action then on top of ALGOs price action

So the question is how much of that liquidity is by VCs, your team or your MMs? For those entities it doesn’t matter and they would deploy liquidity anyways. For the others they can supply liquidity in a generally trusted stablecoin that can also potentially attract liquidity from other chains more easily because they dont have to do DD on your metal assets and the stablecoin its paired with. Using lending pools makes it definitely more attractive for the people supplying liquidity and shows the strengths of Algorand as lending pools are not possible everywhere. Thing is we have to consider again what is easier to market to people outside the ecosystem imo and then it depends on how easy it is to supply/remove liquidity in those fAssets which is still a bit confusing on pact as they show that liquidity as fAsset liquidity instead of Asset liquidity with an indicator that this pool is a lending pool

Hey @lobo
I hear you on X-NFT and I certainly don’t think committing a large amount would make sense but I do believe it is adding value for the small amount Meld Gold does use to create the series (that has long term value separate from X-NFT) plus the X-NFT rewards we receive. I appreciate X-NFT isn’t for you, there is mixed results from those receiving the rewards currently. Some holding, some LPing with what they receive and others immediately selling either manually or compounding with Compx. I will keep an eye on it though in case that changes.

I am not aware of any VC’s funds currently deployed (Meld Gold hasn’t taken any investment from VC Funds to date, though looking to change that soon), it is possible there is some I am not aware of but if there is it isn’t substantial. Nothing on the market maker side, it is maintaining the price in market not LPing. Most of the team I do not believe have anything deployed and for those that I am aware of it certainly isn’t a large portion by any stretch. One of the success stories for TDR that I have spoken about previously was the work Meld Gold did to bring a liquidity fund to Algorand, the incentives were key in doing this and we are working on trying to increase this. This is the liquidity that would be lost, liquid fund mandates have set returns VS risk mandates. These kind of funds are crucial in DeFi which is why I have been asking about what liquidity you were thinking would replace these funds? This is where we do need more stickiness in the ecosystem, once users are here they need more options in the ecosystem to keep them here without requiring a constant stream of rewards. The outlook for new innovate platforms to fill this void is something that really needs to be addressed.

Thanks.

Sorry @lobo I meant to ask, the comment about fASSETS showing up on Pact oddly can you clarify for me? Going to look at a adding some tester GOLD & SILVER paired with USDC lending pools and want to ensure we maximise their success if we do.

Thanks mate.

its just about it showing as this (see image below) which is technically right but confuses people to a degree. I see people coming in chats and asking where to get those fAssets to deploy liquidity in those pools and the answer is you dont you just supply the normal assets which is not intuitive imo. I wonder if it would be better to show these as ALGO-GOLD pools with a “lending pool” information right next to it similar to the fee tier 0.3% here.

Hey @lobo
Ah got you, thanks mate.
There is a warning when you are LPing, so I think you are right it would be ok to then have a different element distinguishing the lending pools instead of the fASSET piece.
I will chase this up and see if the Pact team could make a change.

Hey everyone,
Thanks again for all the feedback, I have implemented a range of changes.
The major changes are the inclusion of USDC paired with GOLD$ and SILVER$ as lending pools, an increase and consolidation of the Tinyman rewards in to ALGO paired with GOLD$ and SILVER$.
This has mostly been funded through the reduction in the xUSD pairings.
Note also the report has been updated to show ALGO amounts in place of % with figures now finalised.
I will also push for lending pools to be included in the TDR calculations @oysterpack and ideally change how those pools appear to be more user friendly @lobo both would be great changes.