XDB Liquidity Reward Program on Uniswap Update
The DigitalBits Foundation has been very pleased to observe the growth of the DigitalBits ecosystem over the past year. Much of this growth can be credited to our incredible community, evidenced by the overwhelming participation in programs such as the XDB Liquidity Reward Program. This program has now operated successfully for over 7 months, originally launched in December of 2020.
Within the current framework, approximately 46,900 XDB tokens per day are distributed across the XDB-ETH and XDB-ZUSD pools on Uniswap (23,450 each). Moving forward, total rewards will be reduced by 50%, meaning approximately 23,450 XDB will be distributed per day (11,725 per pool). More details can be found below.
Updated XDB Liquidity Reward Program Details
Start: Wednesday, August 18, 2021 with the Block mined at approximately 4:00pm UTC.
Expiration: No expiration date has been set. However we maintain the right to terminate the program at any time.
Reward Size: The reward size will be 1.75 XDB tokens per one (1) Ethereum block, with the DigitalBits Foundation maintaining the right to change the reward size with seven (7) days notice as the program matures. This medium post will be updated with notices from the Foundation with any further changes in the program.
Reward Distribution: Rewards will be distributed every seven (7) days so long as the program is operational. Rewards will be distributed based on a Liquidity Providers (LP) proportional contribution to the Uniswap XDB-ETH liquidity pool. There is no minimum or maximum contribution amount required to participate in this program.
Due to gas prices, there is a set threshold to receive your rewards distribution. XDB token rewards will only be sent to you after your reward balance reaches a minimum of 2,000 XDB tokens. Smaller balances will be carried forward into the next period’s rewards until it meets this minimum threshold requirement.
How does it work?
There are approximately 6,700 Ethereum blocks in one day, which effectively means that Liquidity Providers will divide approx. 11,725 XDB tokens between themselves per pool based on how much everyone contributes.
This program is automated! LPs can add and remove liquidity freely from Uniswap and this will be tracked at all times, and every time there is a change, the proportionate reward distribution readjusts for that period.
Example of Reward Calculation:
- You contribute $10,000 worth of liquidity for a week with the total XDB-ETH Uniswap liquidity pool is $200,000.
- Your share is 5%, therefore you are eligible for 5% of the total rewards for the week.
- Total reward amount for the week is 7 (days) times 11,725 XDB tokens (approximate daily reward) which equals 82,075 XDB tokens.
- In this example, your share of reward after 7 days is 4,103.75 XDB tokens.
In future, this program may establish a KYC requirement at the discretion of the DigitalBits Foundation based on certain factors, including but not limited to the reward distribution size to certain accounts exceeding a certain size. This medium post will be updated from time to time with any program changes.
What is Uniswap?
Uniswap is a highly successful Automated Market Maker (AMM), where users can trade directly from their own wallets in a completely trustless environment. Uniswap has broken down many barriers within the tokenized landscape, forcing us to rethink the way exchanges operate within the blockchain space.
Uniswap also provides an opportunity for community participation, rewarding contributors with 0.3% of trading fees. We recommended reviewing the Uniswap Documentation in order to familiarize yourself with the protocol prior to using it or participating in this XDB Liquidity Reward Program.
How To Provide Liquidity on Uniswap
For instructions for the XDB-ETH pool, click here.
For instructions for the XDB-ZUSD pool, click here.
Risk Warning
While Uniswap is generally safe to use, you must understand how it works. You should familiarize yourself with Uniswap before performing any actions on it.
Transactions fees
Given congestion on the Ethereum network, high transaction fees are not uncommon, and can be disproportionate when operating with small amounts. Please take the time to consider fees before conducting any operations on Uniswap.
Impermanent loss
Impermanent loss refers to a disparity in the price of your deposited assets compared to when you deposited them. The larger the divergence, the larger the potential impermanent loss.
This is because of the way that AMMs operate — they always maintain an equal value ratio of both assets in a given trading pair (in this case XDB/ETH). So if ETH has an increase in value it will readjust your position in XDB to maintain the same ratio, and if you withdraw your position, you’ll end up with a higher number of XDB tokens and a lower amount of ETH.
You might also offset the possibility of impermanent loss with the trading fees that accrue for participating in this program by Uniswap, the additional incentives being added by the DigitalBits Foundation and the involvement in the XDB Army program itself.
A more detailed overview of impermanent loss can be found here.
Have any questions?
Always do your own research before participating in anything like this. Our community management team and DigitalBits Foundation team members can help to answer any questions in our Telegram group for that.
Disclaimer
DigitalBits Foundation has the right in its sole and absolute discretion to cancel this program at any time and for any reason. Reward distribution to certain accounts will be halted if there has been a determination of any unlawful activity, including but not limited to the determination that the residency of the account holder to be that of a restricted country. This program is governed by the laws of the Cayman Islands.
