Lodge Letter #50

On the menu this week: Community AMA with the Elk Team — the final batch of answers. Farming review details. UI Release notes.

The markets continue down the path of volatility, with the lending crisis continuing to rumble on in the background. Who will get liquidated? Who will buy whom? And, in the global political world, which government will collapse in a cascade of resignations?

Firstly, let’s finish off the questions from our AMA. It lasted a few hours so there were lots of talking points along the way. Impermanent loss (IL) is part of the conversation when the markets are moving, so to start with a question on that subject seems appropriate.

Question: Comparing Elk to Bancor, with both offering Impermanent Loss Protection (ILP) as a feature, how does Elk plan on mitigating the disastrous effects Bancor suffered recently?

• First of all, our ILP works differently than Bancor’s. All our farms are paired with ELK and we have a hard cap on the ILP amount per farm (equal to the emissions of that farm over the same period).
• In other words, unlike Bancor, we do not print an unlimited amount of ELK to cover IL, we just cover it from pre-allocated ELK up to the maximum that we have allocated. This can still cause additional sell pressure, but that pressure is limited. With Bancor “pausing” their ILP we are not planning to pause Elk ILP ever. It would completely defeat the purpose!
• Our founder commented, “I think people are generally too worried about IL. You need to remember that if you have two tokens worth $100 and the price of those two tokens drops to $1, there is no IL (and no ILP). In a bear market, IL is the least of your worries. Basically, having the ILP is a nice little bonus but you should probably look into options or futures if you want to be protected against big drops.”
• The fact remains that LP mining is an earning opportunity, especially if you find the “right” protocols to support. The Elk team is not too shy to admit that they use the Elk they earn and buy to provide liquidity for ElkDEX.

Question: Say one of the ElkNet supported chains goes down or bankrupt etc., and we have ELK staked on that chain, would our ELK be refunded on another chain?

• Please rest assured that we will not leave users stranded if a chain “dies”.
• The most likely scenario would be that the chain stops building (naming no names). In that case, we would simply deprecate the chain and let people “escape the sinking ship” through ElkNet.

Question: Will Elk ever create an Avalanche subnet? I know the early narrative was that Avax is special and unique for Elk, was it because of subnets?

• It is entirely possible that the ElkNet will use subnets and we do plan to support subnet at some point as this is interesting for the future.

Question: What would be if somebody has the majority of Elk tokens? Would he have the ability to hurt the Elk system long term?

• This is unlikely but, as for any decentralized token-governed protocols, there is the possibility of an attack by a majority token-holder.
• Main concern: the majority holder can run the majority of ElkNet nodes, which defeats the purpose of decentralization.
• We mitigate this risk by progressively decentralizing; this is where and why we (and trusted others) run the ElkNet nodes initially.
• Finally, spreading ELK token liquidity between 19 individual market makers (AMMs), and CEXs, makes it difficult to buy large quantities of tokens without high price impact, thereby making it tricky for a nefarious buyer to gain majority ownership of the token supply.

Question: Since Gnosis and Ethereum will be running basically the same beacon chain, which makes Gnosis a canary network for ETH, will ELK develop or look into more secure permissionless bridging between Ethereum and Gnosis Chain once the merge is successful on both chains

• ElkNet’s assumption is that of completely independent chains (we designed for the common case).
• If we can do it under the strictest assumptions, we can do it in more relaxed conditions.
• We may look into optimizing special cases (L2s) in the future if it makes sense to do so.

Upcoming AMA with Elastos: The road to Web3 begins here

Elk UI Release notes

Updates and improvements to the UX continue and the website content and design is also always being monitored and improvements drawn up.

Improved:

• Added USD price for ETHEREUM swaps
• Added cookies for Google Analytics
• Added Bidali logo
• “Swap” refactoring for the new cross-chain swap

Fixed:

• Reward modal positioning
• Farm information markup on the mobile version
• ELK breakdown modal markup, fixed on the mobile version
• Fixed Swap expert modal style

Finally, the emissions review was completed recently and the source table for adjusted farming rewards can be seen here. With 19 chains on the ElkNet we thought a tabular form was more appropriate!