SWPR Token and Swapr Guild

With the recent launch of Swapr Beta, which features a do-it-yourself farming platform, Swapr is now live on mainnet and xDai and regularly doing $225k in daily trading volume.

Over the last month, the community has been discussing ways to accelerate Swapr growth and increase community participation in Swapr’s governance, which has resulted in reaching soft consensus on launching a SWPR token to attract and develop an engaged community to govern Swapr into the future.

The post below is meant to gather feedback in preparation for a on-chain signal proposal and covers the following areas:

  • Swapr Governance Rights
  • SWPR Token Distribution
  • Initial Liquidity Mining Campaigns

SWPR Governance

The Swapr protocol will be governed by SWPR token holders through the ERC20 Guild Structure, where tokens are locked for voting. Voting weight is determined by the number of tokens locked in the governance contract. SWPR token holders can use their voting power to:

  • Adjust and govern the protocol fee
  • Manage Swapr Guild treasury
  • Allocate liquidity mining rewards to targeted pools
  • Deploy the Swapr Guild and the Swapr protocol to additional networks
  • Adjust the base pairs that trades are routed through
  • Improve Swapr protocol and Swapr dApp

Swapr was developed and currently governed by DXdao. The SWPR token is the first step toward making Swapr into a more sovereign project. This will take time and also relies on a wider distribution of SWPR token during a liquidity bootstrapping phase. Over the next few months, the aforementioned governance rights will be phased in, with Snapshot serving as an intermediary governance solution for SWPR token holders until the on-chain Swapr Guild is implemented.

Fees and token value accrual

Swapr Guild Members, by owning and locking SWPR tokens in the governance contract, will vote on Swapr’s fee structure. This doesn’t just include raising or lowering the protocol fee, but also how those proceeds are allocated to stakeholders. In the initial proposed model, all protocol fees will be sent to a smart contract where it will be divided:

  • 70% to the Swapr Treasury;
  • 30% to the SWPR Fee Share.

The SWPR Fee Share portion designates fees to ALL SWPR holders. The DXdao treasury will hold 50% of tokens at launch, resulting in 50% of the SWPR token fee share being delegated to the DXdao treasury. These allocations are subject to change and will ultimately be governed by the Swapr Guild.

Proposed Token Distribution

SWPR token will be a mainnet ERC20 token with a max supply of 100,000,000. These tokens will be minted to the DXdao treasury, and subsequent proposals will release the tokens to the specified allocations. It is worth noting that this thread should serve as a discussion of the tokenomics and that these percentages are suggestions from the Swapr Squad. Ultimately the initial distribution will be determined by the proposals following the minting.

The initial distribution is intended to:

  • Increase visibility and bring more stakeholders into the Swapr ecosystem
  • Bootstrap liquidity on Swapr
  • Further engage those that have contributed to Swapr development

DXdao Treasury: 50%

The DXdao Treasury allocation is a large portion of tokens that distribute Swapr fees to DXD holders. Swapr is a product of DXdao. Its operations and development are supported through DXD holder funds, which make up the DXdao treasury. If both the Swapr Guild and DXdao identify a mutual benefit, these funds could be used in the future for new farming campaigns, partnership opportunities, Fast-exit liquidity, and more.

Swapr Treasury: 18%

The treasury allocation is designed to provide initial funds to the Swapr Guild to utilize as they see fit to operate. This includes any allocation of liquidity mining rewards, deployment to additional networks, and improvements to Swapr through bounties and contribution rewards.

Liquidity Incentives: 14%

Liquidity is the absolute most important facet to Swapr’s success. The liquidity incentives allocation will focus on distributing SWPR token fairly between several chains, prioritizing relevant pairs. You can read more on the initial liquidity mining campaign below.

DXD Holders: 8%

The DXD allocation will integrate an initial group of community members that already care for the success of Swapr through their commitment to DXdao. It also goes hand in hand with the above point: “Swapr is a product of DXdao. Its operations and development are supported through DXD holder funds, which make up the DXdao treasury”. The snapshot date for the DXD holders allocation is the 1st of July, 2021.

  • Locked (4% vested over 2 years).
  • Unlocked (4% unvested).

Swapr Builders 6%

The Swapr Builders allocation distributes SWPR token to those who were instrumental in Swapr’s development and future growth. This is accomplished through vesting that unlocks as milestones are achieved rather than a static timeframe, ensuring retention of important Swapr contributors.

  • Swapr Builders (4% Vested and unlocked at milestones).
  • DXdao Contributors (1% vested over 1 year).
  • Active REP Holders (1% vested over 1 year).

Community Airdrops 4%

Community engagement is arguably of equal importance to liquidity, they go hand in hand. The Friendly Airdrop aims to attract users from relevant projects and spaces to integrate them in Swapr’s growing community. The included Airdrop Reserve is an undetermined allocation up for further discussion within the community.

The snapshot for the established Airdrops was taken on the 1st of July, 2021. The reserve will be up for discussion, and could have a separate snapshot date.

Initial Liquidity Mining Campaign

In this initial proposed configuration, each two-week Epoch will have a base issuance of 140,000 SWPR. These values are boosted up to 8x for the first 13 Epoch’s in order to kickstart liquidity and secure an initial distribution to individuals with an early commitment to Swapr.

SWPR token will have a multi-chain distribution targeting the upcoming Arbitrum launch. More specifically, the initial configuration points 50% of the issuance to the Arbitrum network, 30% to Mainnet Ethereum, and 20% to xDaichain. The allocation and distribution is subject to change and is ultimately decided by DXdao governance and eventually Swapr Guild governance.

The SWPR liquidity mining campaign targets distinct pairs with varying weights on each chain. This decision was made in an effort to distribute additional rewards to DXdao ecosystem pairs and incentivise a wide variety of chain-relevant pools:

  • Blue - DXdao Ecosystem pairs
  • Red - High volume competitive pairs
  • Green - DeFi Ecosystem pairs
  • Yellow - Awaiting further announcements/Not yet determined

The gradual reduction in issuance will facilitate SWPR token price discovery during its inception phase. Looking to the future, additional liquidity mining campaigns will be considered from the Swapr treasury or Community Reserve.

The above post has been prepared by the Swapr Squad and relevant Swapr community members. All aspects of this post are open to further discussion before moving to an on-chain vote; this is not an announcement. This process is expected to begin with an initial SWPR token minting proposal, and follow with distribution proposals dependent on the outcome of the discussion on DAOtalk.

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Hi,

Looks great overall, very excited for SWPR!

I am concerned about the fees and token value accrual section. First of all, it seems that it is double dipping for DXDao to both take a significant share of SWPR tokens as well as a significant share of protocol fees. I may also be misunderstanding some aspect of the governance here, but it seems there may be a significant conflict of interest if the majority token holder DXDao Treasury can vote to keep all the protocol fees for themselves – please let me know if I’m off base here and this is not possible. Even if it is not possible for the DXDao itself to do this, I would worry significantly as a minority SWPR token holder that I was in danger of not having my interests fully represented. I believe it is in everyone’s interest to make sure that the SWPR token is attractive to investors who may not be involved with DXDao. If we do not intend to rug unaffiliated holders, it would make sense to preclude that possibility in the design of the tokenomics as much as possible.

In my view it would be both simpler to understand and present less of a conflict of interest if protocol fees went exclusively to SWPR Token Holders and Swapr Guild Members. If the resulting outcome would not divert enough value to DXDao, I would recommend changing the token distribution percentages to allocate more SWPR tokens to the treasury/DXD holders.

1 Like

Thanks for the input spreek, you are right that this diagram/token dist model is slightly outdated.

Going to fix it to the intended effect now. Basically the indication of DXdao treasury represents the tokens it holds in the diagram. Will think on how to visualize this better this weekend.

1 Like

Great post, and great initiative!
I am excited to see SWPR coming to life!!!

2 Likes

Correct me if I’m wrong, but Swapr Beta only came out June 17th and barely any marketing had been done up to that point to pull real users in.
For example: could you give some color on how many liquidity providers would be eligible for this drop? Is it more than a handful?

The point of a community airdrop should be to decentralize voting power of your decentralized protocol to your users and the ecosystem at large. This however seems to heavily favor insiders.

I would suggest moving the community airdrop snapshot to a post beta launch date that includes real new users and stakeholders such as the Daohaus community members who are taking a risk providing liquidity on the beta today.

4 Likes

We chose 1 June when I publicly came out with the list of potential airdrops in a public call. I chose to do that so no one can game/bot the airdrop. We saw that happen with Omen if i recall it correctly.

I do agree we could make the Swapr Specific airdrop be at a later date and try monitor if we see any unusual botting/gaming.

We only estimated the percentages when we created this draft. As an example, there is only 80 people that provided liquidity to Swapr before 1 june. @luzzifoss has been busy working weekends getting us the exact number on each airdrop. I ran the numbers today and we are doing some major changes to the percentages of the community airdrop. There will be new numbers up on the forum asap

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what happened with Omen?

I think @corkus or @hexyls can shime in how Omen did it and if there was any botting.

There was 1000+ ~0.1 DAI trades, obviously trying to game the airdrop so we had to set a minimum trade amount to filter them out.

6 Likes

We have updated the post with the new airdrop numbers. For details, here is how we got the numbers:

Updated whitelist after the cutoff date has been moved to Jul 1st:

  • number of 1inch voters that voted 3 or more times: 2080
  • number of single non-zero xsdt holders: 1001
  • number of DXdao poap holders : 174
  • number of addresses from cache that traded more than twice on dex.guru: 290
  • number of omen users from cache that spent more than 25usd: 1197
  • number of addresses from cache that voted yes to uniswap on arbitrum: 856
  • number of bankless dao voters from cache that voted more than once: 896
  • number of addresses from cache with more than 2 Swapr swap: 768
  • number of addresses from cache that provided liquidity on Swapr: 113
8 Likes

It is about time to put this on table. I thought there would be a swapr much earlier

Will there be a SWPR minting function controlled by SWPR governance, for the purpose of continuing LP rewards after the initial LP funds run out? I think this is an important function for longevity, because otherwise it will force a token migration in the future when LP funds run out but SWPR LP incentives are still desired.

LP rewards increase the SWPR pie for everyone, and create a virtuous cycle of value accumulation that goes like:

  1. SWPR LP rewards cause users to add liquidity to Swapr, increasing TVL
  2. As TVL increases, Swapr as a whole is now worth more, so SWPR price goes up
  3. SWPR price being higher means that the LP rewards, which are demoninated in SWPR, are also higher, so users add more liquidity, increasing TVL. Repeat steps 2 and 3 indefinitely.

Because of these benefits of increasing the pie for everyone, I suggest that SWPR LP rewards go on indefinitely, until the benefits are no longer being realized. I also suggest that instead of decreasing, SWPR LP incentives should go up or remain steady, and should come from newly minted SWPR tokens instead of from the treasury as was proposed. I wrote a research paper, Tokenized Equity Minting, that covers this topic more broadly that’s publicly shared in the DXdao Keybase team folder if anyone wants to read it.

TL;DR:
SWPR printer go Brrrr!

1 Like

re: community airdrop > DXdao POAP holders

Interested to know if those 174 users comprise solely those who claimed their DXD one year anniversary POAPs (as this number seems low)? And whether eligibility matters whether a user holds that on xdai or has migrated to mainnet?

re: Swapr Builders 6% & milestones
I suggest that where the achievement is based on a figure being reached e.g. TVL, that that minumum value needs to be maintained for a time period e.g. 3months in order to satisfy eligibility. What this achieves is a focus on sustained momentum and adds a variable difficult to game and reach through coincidence (of other factors at play e.g. a marketing hype).

re: Community Airdrops 4%
I wonder if these airdrops could be stagnated or each category split into two drops. This may result in ongoing marketing, attention and participation. I appreciate this might come at a higher/extra airdrop gas & resources cost, and create two possible events of selling pressure.

2 Likes

I see the issue with xSDT airdrop.
This are
xSDT holders

More than 50% of xSDT locked in staking Palace contract with X amount of holders. More than 400 pure xSDT holders hold less than 100 USD value of xSDT and can be bots. Maybe the better way is gift SWPR to Stake DAO itself to future fair distribution between staked in Palace and pure xSDT holders?

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I would like to propose a few changes to the liquidity mining plan. Below is a sample different set of weights, but obviously feel free to take any/all of my suggestions as you see fit.

Here are my comments/thoughts:

  1. We ought to commit more aggressively to Arbitrum, IMO something like an 80/10/10 split would be appropriate. Why? ETH is already dominated by other players and we have next to no chance of being competitive on pairs like ETH/WBTC or UNI/ETH or whatever any time soon. xDAI has only achieved modest product market fit in defi thus far, and will likely be dwarfed in TVL by Arbitrum. We should also consider that we will be competing not only with massive marketcap multichain AMMs with liquidity mining like Bancor, Sushi, and Balancer – but also with Arbitrum native and 100% focused AMMs. We therefore can’t afford half measures if we want to be a significant player in the Arbitrum ecosystem.

  2. In my view we should only incentivize SWPR and DXD on mainnet at the start. (Obviously leave the door open for future partnerships via DIY liquidity mining though!). Those pairs, we will of course be very competitive on and it definitely makes sense to have our tokens have at least some liquidity on mainnet. I would suggest 80% to SWPR and 20% to DXD out of a total of 10% of the LM rewards.

  3. USDC/DAI should not be incentivized on any chain. It is extremely inefficient to have stable-stable pairs on a xy=k exchange when there are likely to be stableswaps and other concentrated liquidity available elsewhere. We get terrible bang for our buck, especially when you consider that we also are incentivizing ETH/USDC and ETH/DAI! So it’s not like people will be unable to route into their stablecoin of choice without this incentive. Ditch it.

  4. DXD pairs should have its % reduced on arbitrum and xdai. Simply put, there is no justification for having it be 1.5-3x the rewards of significantly larger marketcap and higher volume tokens, besides a giveaway to DXD holders/pumping our bags. But frankly, given our large share in SWPR and the potential value it could have if SWPR reaches even a fraction of the marketcap of other successful AMMs/uniswap forks, it seems short sighted. I recommend 5% share on arbitrum and 10% on xdai.

  5. I also think we should be a bit more intentional with which tokens we target on each chain and try to avoid tokens that won’t have a lot of trading interest on that chain or that will be dominated by another player in the ecosystem. For example, imo UNI/ETH on xdai makes no sense, since there is very little UNI on xdai and very little reason for someone to want to trade or hold UNI on xdai. I would also think that competing with uniswap over volume on their own token on arbitrum/mainnet is a bit of a losing game. I recommend removing UNI/ETH.

  6. With the freed up space on arbitrum, I recommend targeting Arbitrum focused projects that are not primarily in the spot DEX space. I suggest PERP, MCB, CREAM to start with 2.5-5% allocations, and focusing heavily on getting new arbitrum exclusive projects to launch with us as primary DEX. I also recommend bumping up SWPR/ETH to 30% as historically having a robust native token APY has been important for maintaining price and traction in the early going and making farm + dump less attractive. Also slightly increasing ETH/stable and LINK/ETH as those are valuable pairs for most dexes.

  7. As for xDAI, I recommend increasing SWPR/xDAI, increasing WETH/xDAI (and removing USDC/xDAI), increasing STAKE/xDAI, removing UNI/xDAI. I also recommend removing DXD/xDAI and replacing it with DXD/WETH at a lower rate. Given the high correlation between DXD and ETH, it is a substantially more attractive LP if it is paired against WETH. We also have a WETH/xDAI pair so it is will still be possible to route into or out of xDAI as needed.

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So far, this thread has a lot of focus around the airdrop numbers, liquidity mining and splits.

I am interested in diving in deeper around how SWPR token will govern across multiple chains.
This question was raised by @Luigy on today’s DXdao Community Call.

If Swapr exists on multiple chains (Mainnet/Arbitrum/xDai/others) and SWPR token governs Swapr, where will this governance take place?

Will it happen on each chain for the Swapr on that chain?
How will this work?

As an example, if there are 2% of all SWPR tokens on xDai Chain, is that the total governance voice for Swapr on xDai?

Currently, DXdao governs with non-transferrable voting power (REP) and we see the benefits of this in a multichain world. DXdao is able to map/mirror governance power on each chain.

How does this dynamic change if we turn over product/guild governance to a single liquid token system?

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Thanks for the heads up. We are going re calculating the airdrop with some new numbers. We set the xSDT amount to be 100USD worth or 80 xSDT.

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