[Governance Poll] Give an extra bonus to (DONUT) liquidity providers

After carefully discussing the best solution, we decided to change the latest [Poll Proposal] Give a bonus to users who keep DONUTs in their wallets. We believe this proposal is the most fair, and that it rewards all active users more broadly.

#Current situation

Liquidity providers play a critical role in our community, by supplying liquidity to decentralized exchanges (in this case Honeyswap &/or Uniswap) and other DeFi protocols. They enable traders to easily buy and sell DONUTs, while earning transaction fees and other incentives. However, this comes with a lot of risks, as it involves exposing a person's capital to price volatility and impermanent loss.

LP's are responsible for offering the necessary DONUTs for trades to take place and for maintaining an orderly market.

The total amount of DONUTs distributed every month, corresponds to 2,300,000.

Current distribution formula:

• 51.74% Karma earned from posts and comments | 1,190,000 DONUTs;

• 7.39% - Earned from tips given / received | 170,000 DONUTs;

• 3.70% - For the Moderation team | 85,000 DONUTs;

• 11.09% - For the Community Fund for future competitions, burning DONUTs, paying bounties, etc | 255,000 DONUTs;

• 26.09% - For the liquidity providers. Uniswap pool: 17.39%, Honeyswap pool: 8.70% | 600,000 DONUTs - 400,000 for Uniswap, 200,000 for Honeyswap.

#Problem

Without liquidity providers, trading volume can be very low and the prices of our sweet DONUTs can be very volatile, making it difficult for traders to buy or sell assets at reasonable prices.

When there are not enough LP'S, several problems can happen. First, the bid-ask spread (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept) can become very wide. This can make it expensive for traders to execute trades and can discourage them from getting DONUTs. Second, the price of DONUTs can become very volatile. With fewer trades taking place, the price may fluctuate significantly in response to even small amounts of buying or selling.

It is very important to incentivize liquidity providers, and create an ecosystem where they feel comfortable providing liquidity to DEXs!

#Solution

To encourage more people to deliver liquidity and to reward the current ones who do, I suggest giving an extra bonus to those who stake their DONUTs. This would utterly change the distribution's formula.

The total amount of DONUTs distributed every month, would be to 2,000,000.

I recommend formulating the next distributions as follows:

• 44% - Karma earned from posts and comments | 880,000 DONUTs;

• 5% - Earned from tips given / received | 100,000 DONUTs;

• 5% - For the Moderation team | 100,000 DONUTs;

• 4.75% - For the Community Fund for future competitions, burning DONUTs, paying bounties, etc | 95,000 DONUTs;

• 40% - For the liquidity providers. Equal split of 50-50. Therefore: Uniswap pool: 20%, Honeyswap pool: 20% | 400,000 DONUTs (each pool);

• 1.25% - For the distribution organizer(s) | 25,000 DONUTs.

#Pros

On the positive side, changing the distribution formula could help increase the overall utility and adoption of DONUTs, and might lead to more liquidity and trading volume. This small deflation has the potential to have a positive impact on the price!

This modification can also help to address any imbalances that may exist in the current distribution. It is important that DONUTs are being used fairly and equitably across the community.

#Cons

On the negative side, it could create dissatisfaction among the members of the sub. DONUT holders may have different opinions on the new formula and this could lead to conflicts or disagreements among the community.

#Conclusion

Overall, dispensing bonuses to liquidity providers is a great way to incentivize more people to supply and stake their DONUTs, which helps to increase the circulating capital and stability of the token. These incentives are critical for DONUTs growth and sustainability.

Changing the distribution formula can potentially increase sub participation, adoption and improve fairness!

The choices are:

[YES] Give an extra bonus to liquidity providers & change the distribution formula

[NO] No nothing changes