DR.OPIUM — a revolutionary way of liquidity mining rewards
Introducing a fair token distribution mechanism based on economic game theory.
The problem of today’s liquidity mining schemes
The idea of liquidity mining is a new and revolutionary concept for allocating rewards for those who actively use, build, or actively participate in the decentralised protocol that lives on the blockchain.
A well-executed liquidity mining campaign will result in a fair distribution of protocol ownership and governance over the project’s core community, which is essential to the long-term success of any DeFi protocol.
In reality, almost half of Uniswap’s users immediately sold their UNI after they made a claim. It also shows that the distribution was done rather to speculator than developers and participants; it also bring volatility and may cause problems to investors under the vesting. Above all, the governance tokens exchanged hands on the open market and ended up being used for price speculation.
Opium’s philosophy is to allocate the governance to active users of the protocol, who bring value to the community and participate in the protocol for the long term. But how to distinguish speculators from true-believers and fair participants?
In reality… About half of Uniswap’s users immediately sold their UNI after they did a claim.
Introducing DR.OPIUM as our solution
Opium liquidity mining tokens will be allocated to a Vault from which users can always withdraw their earned tokens. If they quit immediately, they sacrifice part of their potential tokens to everybody who left in the Safe. That’s it!
Early withdrawers will receive less tokens compared to participants who withdraw their tokens later. Long-term oriented participants can expect to receive exponentially more tokens as a bonus.
This mechanism will allocate much more tokens to people who stay relatively long or quit last. The sacrifice rate may decrease with time to give a fair distribution for the pool where everybody is good actors.
Let’s consider an example step by step:
- Let’s say at the beginning Safe receives 1'000'000 $OPIUM tokens, suppose there are 10'000 people are eligible to get rewards, 100 tokens each.
- If I quit this pool first, I can get my 34 tokens and sacrifice another 66 tokens to everybody who stayed. If I quit second, I will get more than 34 tokens because of 66 tokens sacrificed to everyone from the first user.
- The strongest Hodler gets the most significant stake! Depend on the conditions; it can be 30'000x larger than those of the first user.
Where to check your allocation of $OPIUM?
You can see if you are eligible for DR.OPIUM on opium.finance.
Connect your wallet and you will see it on the “Rewards” page.
Importance of the game theory
At Opium Team we believe in decentralized protocols and decentralized governance, but we also believe that the best incentives are well-balanced; good actors should be rewarded at the expense of bad actors. Such a system will manage itself and may become a new paradigm in people’s behaviour, making the economy more efficient.
We believe that the best incentives are well-balanced; good actors should naturally get rewards at bad actors’ expense
Game theory (and mechanism design) is “a theoretical framework to conceive social situations among competing players and produce optimal decision-making of independent and competing actors in a strategic setting.”
There has been a lot of research into this field, however mostly theoretical and not applicable to the real world, due to the absence of trustless agents that could execute “the game”. Thanks to blockchains like Ethereum, we now have a perfect execution agent, and it may give a tremendous number of applications to the game theory. In addition, DeFi created a significant economic activity on the blockchain where game-theoretical mechanisms can be applied!
Thanks to blockchains like Ethereum, we now have a perfect execution agent, and it may give a tremendous number of applications to the game theory.
About Opium
Opium is a universal and robust DeFi protocol that allows for creating, settling, and trading decentralized derivatives. Use our products today to speculate on opportunities inside and outside of DeFi, or hedge yourself against trading risks.
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