Introducing the Liquid Liquidity Pool (LLP): how to earn in the Flokiverse
We are TerraFloki Labs, you may know us from creating the first truly deflationary token on Terra ($TFLOKI ❤) or maybe from developing our proprietary model of NFT distribution (NFT-as-a-Subscription). If you do, you would know that we are here to constantly experiment, innovate and deliver revolutionary solutions. Our track record has also been consistent so far, with every solution we have shipped working exactly as intended having been meticulously tested before launch. Another thing that brings us here is our unconditional love for Terra and blockchain technology. This is the love we want to share with the masses beyond the Terra ecosystem to bring them here and show them its greatness.
Maybe you’ve also heard about the Flokiverse, our emerging play-to-earn metaverse experience. If you look through our previous accomplishments you would know that we would never make a statement just because it sounds catchy. Rather, we only make statements because we mean it, for real.
What’s about the -verse in Flokiverse you may ask. We gotta keep most of our cards face down for now, but let us tell you one thing. The Flokiverse as one of the many metaverse in the infinite Terraverse will always be cognisant of the outer realms. There will be multiple connections with other Terra protocols that will have their in-game representation. One of these connections will be with the almighty Anchor Protocol. Yes, you got it right, Anchor Protocol is one part of the answer on how we are gonna implement play-to-earn mechanisms in Flokiverse to reward players with stablecoins (UST) so one could earn real money just by playing Flokiverse without any potential sell pressure on $TFLOKI price.
The TerraFloki DEX
There are multiple reasons why we have decided to develop a decentralized exchange just for $TFLOKI. To name a couple:
- User Safety: We wanted to keep our community safe while trading Tickets ($TFTIC). The $TFTIC pool had a shallow initial LP, so it could be an easy target for front-running by bots and we wanted to keep our user’s funds safer by implementing our own DEX.
- Providing convenience with lowered cost: We wanted an independent DEX to make it easier for people to trade Flokiverian resources (e.g. FlokiGold, FlokiCoal and FlokiWood). With our own DEX, it will be more convenient and cheaper for end-users.
What’s mentioned above is just the tip of the iceberg when we think about the future use cases for the TerraFloki DEX. One thing is for certain, having a built-in DEX gives us a lot of freedom and flexibility to constantly improve our ecosystem. One of them will be creating something we call a Liquid Liquidity Pool (LLP). Say what?!
Liquid Liquidity Pool
We will keep it short and simplified here. If the details shared here are not enough to satisfy the geek in you, not to worry. We will provide an over-geeked version of this article later on as we dive deeper into the juicy technicalities.
To us, what’s possibly the greatest asset of Anchor Protocol is the ability to perform Stablecoin Yield Farming with a fixed ~19.5% return. Just imagine what could potentially happen if you could deposit a huge part of UST from liquidity pool (we’re talking about millions of dollars here) into Anchor? One could generate rather decent passive income for the holders by doing it. Henceforth, TerraFloki Labs officially removes the word ‘potentially’ out of the first sentence. We will be going ahead to implement this for the TerraFloki — UST LP. Rewards collected this way will be distributed fairly among Flokiverse players.
So, will the LP become shallow and the price of $TFLOKI become more volatile? No, nothing of that sort, sers. The price will be calculated on an ongoing basis, taking into account both $TFLOKI LP and UST deposited on Anchor Protocol which we term the LLP.It’s inseparable from the mechanism that automatically that validates the calculations every transaction and draws funds from Anchor when necessary. The price of $TFLOKI will stay unaffected by this mechanism. The contract queries the ratio of both the size of TFLOKI LP and funds deposited in Anchor Protocol.
Now, let’s take a look at a different scenario. Say the ratio changes in favor of the $TFLOKI liquidity pool, which means that the amount of UST in our LP is greater than the amount of UST deposited on Anchor Protocol, because we had much more buy orders than sells. What happens then? The Rebalancer comes into play. It takes a calculated amount of UST from the TFLOKI LP and deposits it on Anchor Protocol Yield Farm to keep the $200k UST in TFLOKI LP. As a consequence of that action, the yield to be redistributed amongst Flokiverse players grows bigger. And, the validator is doing its thing once more. An analogical situation occurs if the ratio changes in favor of funds deposited on Anchor Protocol. The Rebalancer will then withdraw the amount of UST that is needed and puts it to the LP.
What about the edge cases? When someone wants to hypothetically sell an amount of $TFLOKI which value exceeds the amount of UST in TFLOKI’s share of LLP? Well, in truth while a situation like this is very unlikely to happen, the team has also taken it into account. In such situations, a rebase method is automatically run to rebalance the ratio between both shares of LLP to provide the UST required for such transaction. An upside of our mechanism in the provided situation is yet another safeguard for $TFLOKI holders and liquidity providers that will prevent their allocation from suffering a sudden drop in value.
A deeper Liquidity Pool means Greater Rewards for players
At TerraFloki Labs, we will do our best to constantly increase the size of $TFLOKI’s LLP. As observed above, a larger and deeper LLP will lead to more valuable rewards for Flokiverse players. This is the first thing we are going to implement with the launch of a second ticket farm, so in just a few days from now. According to the TerraFloki DAO’s decision, we will open a third staking pool for LP, but with rewards in fractions of NFT tickets (which can be swapped for Floki NFTs, playable characters that can be used to play Flokiverse). In accordance with the decision of TerraFloki DAO, 30% of the ticket supply will be reserved only for LP providers who will decide to join the new pool.
For example, if $TFLOKI liquidity pool has $8 million in value locked, there’s 4M UST there. 3.8M UST would be deposited in Anchor Protocol. This would provide an income of ~1.85k UST daily that would be distributed among all the players. Let’s make a simulation of how the mechanism will work when the Liquidity Pool grows deeper.
Is Flokiverse going to revolutionize blockchain gaming?
We strongly believe so. Flokiverse connects DeFi, P2E and NFT models all into 1. Just think how this mechanism could be improved in the future, if we used yield optimizers for V2, for instance — the rewards would only grow bigger. Imagine that explained mechanism is just one of the ways in which the Flokiverse generates income for its citizens. Think of collecting and trading resources, carrying out missions, participation in Flokiverse Arena tournaments and NFT rental to name a few. Not to mention the passive income of the great Planet Landlords, their income stream is almost assured because every single income generated within the borders of the Flokiverse will be mandatorily shared with them.
One more piece of alpha before we go. We love you all, but the early supporters will always have a special place in our hearts. You’ve heard by now about the Landlord Planetary Auctions. This event will start shortly before the end of the second farm (exact date will be revealed). Every Genesis Collection NFT holder will be qualified to mint a planet a while before the auction goes public. Does this mean TFLOKI is doing whitelists now? Nah, we just want to do this one-off action to show our early supporters some love.
If you’re reading this Master, please tell us, is this direction a good one that we have chosen for you? Is Tfloki a good boi? Is he gonna make it?