Swop.fi
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Swop.fi

Swop.fi governance: voting for pool weights

Attention! The rules for calculating pool weights have been changed. If the pool’s trading volume during the voting period was from $10,000 to $100,000, its weight is not zeroed, but multiplied by a step factor from 0.1 to 0.9. The exception is the pool’s First Harvest week. The weighting factor applies as of July 25. The article has been updated to reflect this change.

Pool weights directly affect liquidity providers’ income. Farming rewards (1 million SWOPs during this year, or about 1.9 SWOPs every minute) are distributed among farming pools in proportion to their weights (see details in the SWOP is here article). Pool weights are governed by SWOP stakers.

Voting for pool weights is an essential procedure. A vote establishes which farming pools will bring more significant revenue over the following week. These pools will be the most attractive for liquidity providers. Therefore, vote results will largely determine further development of the project.

When choosing pools you will vote for, consider their worth to Swop.fi in general:

  • Pools that generate the most exchange fees are the most lucrative, as 40% of the fees go to the SWOP buyout and become the governance reward.
  • Stablecoin pools serve an infrastructure function: specifically, they reduce the entry threshold for new users who come from other blockchains with such coins as USDT and USDС.

Voting results are counted once a week and set the pool weights for the next 7 days.

How to vote

To be able to vote, first, stake your SWOP tokens in the Investments → Governance tab.

Then you can vote for pools of your choice, specifying the number of SWOPs for each of them.

Voting for pool weights is ongoing: you can vote once, and your vote is automatically taken into account in all subsequent votes until you change it.

For example, if you staked 20 SWOPs and voted for the SWOP-USDN pool with all of them, you cannot vote for other pools until you change this number or stake more SWOPs. If you vote with 10 SWOPs for this pool, you can split the remaining 10 SWOPs between other pools: say, 7 SWOPs for WAVES-USDN and 3 SWOPs for NSBT-USDN.

Please, note: you cannot unstake SWOPs that are counted in the most recent vote. Even if the pool you voted for is temporarily excluded from the farming due to insufficient trading volume, your voted SWOPs remain frozen. Decrease or zero out the number of voting tokens, wait for the end of the current voting period, and you will be able to unstake your SWOP tokens.

Vote power

When you vote for pool weights, your vote is modified by the power factor:

For votes remaining from the previous voting period, as well as votes cast in the first 1,443 blocks (~24 hours) of the current voting period, the power factor is 1. Thereafter, for newly received votes, the factor decreases evenly to 0.1 at the end of the current voting period. This rule prevents a sudden change of the estimated result in the last minutes of a voting period.

The reducing power factor is only valid for the current vote. As soon as a new vote begins, the factor becomes 1 for all previously submitted votes. With this factor, votes will be counted in the outcome of the subsequent vote (unless their owners cancel them before the end of the voting period).

If you increase your vote several times during a voting period, each new portion of SWOPs is counted with the power factor which depends on the height you voted. If you decrease your vote, the vote power decreases in proportion to the number of SWOPs.

Suppose you voted on Tuesday, April 20, with 10 SWOPs that were counted with a power factor of 1, then on Friday, April 23, with 4 SWOPs that were counted with a power factor of 0.3. Your vote power is 10 × 1 + 4 × 0.3 = 11.2. Then on Sunday, April 25, you decreased your vote to 7 SWOP, so your vote power is now 11.2 × (7 / 14) = 5.6. This value will be counted when summing up the voting results on April 26. Immediately after the end of voting, your vote power will increase to 7. This value will be counted in the next voting on May 3.

How the results are counted

How the results are counted

The weight of a farming pool is determined by the voting results and the pool’s trading volume.

At the end of a voting period, Swop.fi sums up the vote power for each pool by all SWOP stakers and multiplies by the pool’s weighting factor:

Pooled SWOP tokens are counted as if they vote for the weight of their pool. More about this in the article Self Boosting: SWOP pools get weighted.

During the First Harvest week and the week following it, the pool’s weighting factor is 1. Otherwise, the factor depends on the pools’ trading volume:

Next, the vote powers modified by the weighting factors are summed up for all pools, and finally the pool weights are calculated:

Thus, pools with a low trading volume that bring few fees generate less SWOP by farming. Liquidity providers of those pools continue to receive income from swap fees, Neutrino staking, and WAVES leasing in full.

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