Crucible Update: Alpha Takeaways and Next Steps
Ferrum dives into the results of Crucible Alpha testing as they construct a path toward the DeFi 2.0 product’s official release!
Dear Ferrum community,
We have recently concluded the 3rd phase of alpha testing for our latest DeFi 2.0 product Crucible. The iterative rollout plan for releasing this first of its kind product has gone quite smoothly. We’d like to give a huge shoutout everyone who has taken part in any or all of the 3 Alpha rounds that have been conducted to date. Their feedback has proven to be invaluable in constructing what is called a “build-measure-feedback loop.” In this update, we will be discussing the original goals of Crucible, what our findings were from Alpha, and how we plan to move forward as we get closer to pushing the product to production.
Before we can fairly compare the value that Crucible has shown thus far with expectations, it’s important to ‘start with why’ we dreamt this product up in the first place. Let’s dive into the initial problems that Crucible has intended to solve since conception.
Reducing Circulating Supply
One of the best things a project can do for their token is reduce the circulating supply. This is arguably the number one value proposition of our Staking pools from the past. However, for reasons outlined below, we needed to improve the mechanism for reducing the circulating supply. By taking your FRM and minting cFRM, you are effectively taking FRM out of circulation.
Ability to Stake and Get Access to Presales
One of the biggest areas of improvement that community members have contested for over a year now was the fact that their staked FRM did not count toward their presale allocations. This deterred many folks from staking which would remove FRM from circulation and in some cases, it deterred people from buying FRM and FRMx altogether.
Prevent Predictable Dumps
One of the major pitfalls with our original Staking products was the fact that every time a staking pool would unlock, the staked principles along with rewards created a massive supply of uncirculated tokens would hit the open market all at once. Like clockwork, the price of FRM and FRMx would drastically reduce every time one of these unlock events would occur.
The other form of predictable dumps took place after either snapshots were taken for FAS presales or folks received their first distribution. The only way the team had to track this was manually. Even still, returning people’s allocations minus the fee, wasn’t clear or enforceable enough to prevent them from selling.
Sustainable Rewards by Reducing Inflation of FRMx
FRMx has served the community well for over a year now as a rewards and governance token. As we move toward, not only Ferrum mainnet, but the Ferrum X Network as well, we’re realizing that FRMx is so much more than an inflationary rewards token and it’s about time we stopped treating it as such. FRM Staking Pools and Monthly Holder Rewards have been the catalysts behind the inflationary nature of FRMx. Crucible has always intended to serve as a replacement for Monthly Holder Rewards by creating an interface that creates a way for users to generate sustainable rewards.
The Evolution of Crucible
As with any great product, there is often more to it than meets the eye. As it pertains to Crucible, we had no idea of the size of the goldmine we were sitting on top of. While everything mentioned above was more than enough to make the development of this product worthwhile, there were bi-products that resulted from the alchemy that is Crucible.
Volume Generated from Arbitrage
If you’re catching up on how exactly Crucible works, we’d encourage you to check out this article! For those of you who are up to speed, you’re aware that the rewards are distributed based on the transaction fees resulting from cFRM and cFRMx trading volume.
We found that due to the natural price fluctuations of FRM and FRMx, arbitrage was created. These opportunities led to increased APRs for those staking cFRM and cFRMx. Of course, we then asked ourselves how we could artificially generate arbitrage opportunities. We came up with 2 ways.
Trading Competitions and Buybacks
Some low-hanging fruit as it pertains to generating volume is using the Leaderboard to conduct trading competitions for things like allocations into presales or the rewards generated by Ferrum’s stake in Crucible.
Removing Liquidity and Pumping Price
Before we got too excited, this tactic proved to be futile compared to our expectations. We tried to manually pump the price of cFRM or cFRMx by removing liquidity and adding it back after resetting the price. This would’ve encouraged a consistent flow of arbitrage opportunities that would’ve generated APRs as high as quadruple digits. However, we found that arbitrage bots made this impossible as they had already balanced the price before we were able to add liquidity back to reduce slippage.
Setting Realistic Expectations
As stated previously, we had high hopes that we would be able to have a greater impact on arbitrage opportunities. While sustainable quadruple-digit APRs would’ve been an added bonus to the original goals of Crucible, it's not realistic due to limitations that bots put on our ability to control price fluctuations.
Crucible’s Future Powered by InfinityLayer Mainnet
While the notion of manually creating arbitrage is not something that is possible with the current state of Crucible, something of the sort may be possible with the Ferrum mainnet. There is a high likelihood that Crucible will be one of the first truly multi-chain dApps to ever exist. While Crucible may embody DeFi 2.0… we have yet to see Crucible 2.0!
What did we find during Alpha?
First of all, the Ferrum engineering team’s technical prowess is on full display in Crucible’s UX/UI. The intuitive nature of something as complicated on the backend as Crucible is something that very few teams in the space are able to replicate. It’s one of the many factors that encapsulate what it truly means to be a DeFi 2.0 protocol… we’re also not done improving the UX/UI! Here’s a sneak peak at the improved Crucible dashboard!
Getting Back to Basics
We started this update by outlining the original goals of Crucible. Let’s revisit those.
✅ Reducing Circulating Supply — Originally, Crucible was designed with a 4% fee to unwrap your cFRM and cFRMx. During Alpha, we removed the 4% fee to encourage more arbitrage trading. However, being able to mint and unmint without fees reduced the ability to effectively reduce the circulating supply. Since arbitrage opportunities are not the main focus of Crucible, we decided to reinstate the 4% unwrap fee in order to reduce the circulating supply of FRM and FRMx.
✅ Ability to Stake and Get Access to Presales — Because of the fact that the 4% unwrap fee will be reinstated, folks will be required to hold cFRM and cFRMx in order to access presales but they won’t be required to stake. However, they will be allowed to stake and still have access to presales!
✅ Prevent Predictable Dumps — Because of the fact that Crucible deploys ‘open-ended’ staking contracts, there will not be a predetermined date in which staking ‘unlocks’. Also, the fact that there is a fee to unwrap and unstake your tokens means presale participants will be less likely to dump their tokens after snapshots or distributions of presale tokens.
✅ Sustainable Rewards by Reducing Inflation of FRMx — Finally, with Crucible we are now able to abolish Monthly Holder Rewards in exchange for something much healthier for the overall Ferrum token ecosystem. With Crucible, community members are now able to earn rewards in derivatives of not only FRMx but also FRM. The APRs will likely prove to be greater than the current Monthly Holder Reward structure allows. Most importantly, FRMx is now deflationary along with FRM. The fact that rewards are being given in a deflationary asset means that the token has a much greater chance of appreciating as opposed to tokens whose ceilings are restricted by inflationary emission schedules. This is what we mean when we say sustainable rewards!
As we get ready to open the floodgates on Crucible, we will be adding liquidity to the cFRM/FRM and cFRMx/FRMx pairs to support more trading volume. We will be bumping the liquidity up to a level in which a $1K USD purchase of cFRM or cFRMx will have just a 2% price impact.
Collecting Final Feedback
Thanks to the incredible feedback and results from Alpha, we are proud to say that we are now in a position to move forward with Beta! We will be conducting a “Town Hall” of sorts during our weekly AMA this Friday to gather some final feedback from Alpha testers. All community members are welcome to join so make sure to be on our Discord server at 16:00 UTC this Friday, May 20th. See you there!
Access Crucible Beta
If you wish to read more on Crucible, watch our highly informative videos, listen to the Crypto at the Ferrum Roundtable podcast, and sign up to join Crucible Beta, click here. Please remember we’ll be selecting a limited number of beta testers. You don’t want to miss the opportunity to be one of the first few people to test out this most advanced and revolutionary DeFi 2.0 product yet.
Very truly yours,
The Ferrum Team
Ferrum is a pioneer in ushering in the era of Interoperability 2.0. Powered by the Quantum Portal, Ferrum Network’s mainnet nodes and related infrastructure will bring value, data, and functional interoperability to every chain in the industry. Utilizing the Ferrum Network, anyone can build and deploy solutions on one network and instantly enable multi-chain functionality without the burden or technical debt that comes with managing a multi-chain infrastructure for their dApps, and projects.
Ferrum also specializes as a multi-chain Blockchain as a Service DeFi company, adding deflationary mechanisms, token utility and advisory services to projects across the crypto space.
With the mission of breaking down barriers to mass adoption in mind, Ferrum empowers the industry by reducing friction and bringing startups and established networks closer together.