Farm emission logic
Hey, Riders!
To understand farm token emissions, let’s revisit why yield farming or liquidity mining exists in the first place. One of the core functions of an AMM DEX like WingRiders is to provide a platform for traders to swap tokens. To do this, binary pools with liquidity are created, and the deeper the liquidity, the less slippage traders experience when carrying out a swap, which in turn attracts more trading volume in a pool. The more trading volume there is in a pool, the more fees a liquidity provider (LP) receives for providing liquidity to that pool. To incentivize LPs to maintain their liquidity, farming initiatives reward depositors with project tokens, and in the case of double yield farms, with other project tokens as well. Also Yield farms attempt to balance the minting of new tokens with incentives for individuals to acquire and keep the token, limiting price declines due to supply increases. WingRiders allocated a portion of its total $WRT supply to incentivize LPs as part of its tokenomics, which you can see here.
Now that we understand the overall logic behind token emissions for farming, let’s look at the strategies used. Many DEXes use a fixed token emission schedule that is static and periodically halved. These schedules are typically in place for several years and do not deviate from the planned emission levels. This type of schedule does not take market conditions into consideration and can affect a project’s financial standing adversely in bear markets. When we are in a bull market, buy pressure is high, and a supply of new tokens does not affect its price negatively, as the appetite to buy is greater than the appetite to sell, and prices generally go higher. But in a bear market where there is low buying pressure, any extra supply of a token will place downward pressure on the price.
As markets go in cycles and may fluctuate radically within each phase, such as what we are currently experiencing with the crypto winter, it makes sense to have a more fluid logic to farm token emissions. This means that all farms are strategically reviewed on a regular basis to balance WRT supply with market conditions, liquidity on the platform, generated volumes and LP incentivization. The logic is to reduce farm emissions of $WRT to limit the supply so as not to damage the value of the token, while at the same time maintaining attractive incentives across all farms.
WingRiders kicked off the farms with a more aggressive $WRT farming incentive program to increase liquidity in the pools and provide a smoother swapping experience with less slippage. Now more and more of the financial strain is carried by the double yield farm protocols, reducing the need for intense $WRT incentivization. The double yield farm partners see the financial benefits of incentivizing more liquidity to be kept from the open market, creating new utility for their token, and creating deeper liquidity for their token to be more effectively traded in the market.
In this way, the WingRiders’ overall farm emission strategy can be achieved, so as not to be the long-term provider of farm incentives and at the same time steadily keep decreasing token emissions. The tokenomics of the project reserved 40% of the overall token count for farm incentivization, and this needs to last for 5–6 years, which is between 2027 and 2028, as part of the current DAO long-term strategy.
Also, when market conditions are right, WingRiders will suggest to a DAO vote a model to be strategically buying back $WRT tokens using the platform’s portion of swap fees to replenish the farming incentivization treasury, so farms will always have an attractive supply of $WRTs as gains.
We hope this clarifies the current state of WingRiders’ farming token emission strategy. Feel free to propose improvements and ideas in the DAO governance portal as you as a community are shaping these types of decisions.
WingRiders
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