FFP-5 Farm Withdrawal Fees to Treasury-Owned Liquidity

Hi Feeders,

As we've mentioned in our recently released roadmap, a significant new community vote is coming. The proposal has to do with converting the weekly Farm Withdrawal Fees buyback to Project Treasury-Owned Liquidity.

Let us explore why the team thinks this is an excellent strategic move for us long-term:

First of all, the team is incredibly excited about the new DeFi 2.0 transition, whereby the key concept revolves around project treasuries owning their own liquidity rather than "renting" it.

Renting liquidity is essentially DeFi 1.0 strategy to solve long-term problems with short-term solutions. DeFi 2.0 is about the project's sustainability by building assets and feedback loops of value creation back to the project, its community, and users.

How does DeFi 1.0 work currently?**

By minting tokens as incentives for liquidity. Only a handful of projects can sustain their project value with this strategy, while most enter a death spiral that is very hard to stop due to inflation-induced selling.

Why is DeFi 1.0 not a long-term solution?

Liquidity only stays as long as sufficient APY is generated. Most of which, once received, are sold into the market to capitalize on the rewards. A large portion of liquidity providers are not staying long-term but stay as long as it is economical. Which is fair, and how the DeFi 1.0 was designed. In a perfect world, APY can be generated by utilizing rent liquidity to create greater value than is being paid out. In reality, that is rarely the outcome.

How will DeFi 2.0 and Feeder New Structure Solve this?

In order to ensure that there is long-term liquidity regardless of external forces or outcomes, liquidity needs to be indifferent to forces it cannot control. Its sole purpose has to be providing liquidity for the FEED-BNB LP and nothing else. We can't force anyone to lock up their liquidity for an extended period; the incentives just aren't aligned; however, there would be perfect alignment if the project provided liquidity for itself. The project and all its holders benefit from a large liquidity pool to facilitate swapping and the ease of mind to know that this liquidity will be there for the foreseeable future. As swapping fees are compounded, the project treasury-owned liquidity grows with time and becomes bigger and more liquid.

Where will the liquidity come from?

Since our Farming launch, through 22 weeks, a total of ~$388K in LPs have been collected and turned into FEED rewards to the staking pool. We have 30 weeks left until emissions end and assume all things hold constant, will be able to accumulate a total of $480K in withdrawal fees had we collected it and turn it into project treasury-owned liquidity. On the upside scenario that the FEED token value reaches its all-time highs of ~$0.55, the LP would be worth ~$961K. A relatively large pool considering other projects, such as Beefy has a $2 million liquidity pool.

The Proposed Structure

All of the Farm's withdrawal fees collected in FEED-BNB LP would be sent to a separate multi-sig wallet instead of converted to FEED to stakers.

Key Considerations:

• The staking pool APY shown on the UI excludes the buybacks, that APY will not be affected. The weekly buybacks which provide additional APY to stakers, however, would no longer be necessary.
• Project liquidity would no longer be at risk once emissions end.
• The liquidity is not locked but 'managed' by the community to keep options open. Additional use cases for the liquidity could arise, both in the forms of using the liquidity's APY to create incentives or add use cases to future products.

The Vote

The vote is an sFEED-required vote and will happen at 2 PM UTC on Saturday, November 6, and go on for 24 hours.

We look forward to your participation to decide on this strategic move with what you believe is in the best interest of the project's long-term success in mind. Thank you!