Self Boosting: SWOP pools get weightier
More than a year ago, we launched voting for pool weights, and SWOP token stakers started to govern the distribution of farming rewards among liquidity pools. To raise a pool’s SWOP APY, votes for its weight and hence staked SWOPs are required.
SWOP token holders faced a rather complicated choice: contribute liquidity to SWOP-containing pools such as SWOP-USDN and SWOP-WAVES, or stake SWOPs. The more SWOPs are staked and vote for the pools’ weight, the higher their yields are, but the fewer SWOPs remain in those pools.
To correct this unfavorable situation for Swop.fi investors, we introduce the Self Boosting rule: when summarizing the voting results, SWOP tokens in a pool are counted as if they vote for the pool’s weight.
The voting power of pooled SWOPs is equal to the current amount of SWOPs multiplied by the power factor, which is set to 1 (can be changed later). The voting power does not depend on how the amount of SWOPs in the pool changed during the week.
How will Self Boosting affect the Swop.fi ecosystem?
SWOP APY will increase in SWOP-containg pools — if the trading volume in the pool was at least $100,000 during the previous voting period.
Higher SWOP APY will attract new liquidity providers, which will lead to additional demand for the SWOP token and steady rise of its price. In turn, the profitability of all SWOP-farming pools directly depends on the SWOP price.
Liquidity providers who currently claim and sell farming rewards in SWOP may change their strategy and start investing SWOP in pools.
Some SWOP stakers will choose to unstake SWOP and invest in SWOP-containing pools. This will increase the governance APY.
We estimate that Self Boosting will improve SWOP tokenomics and give a new impulse to the project’s evolution.