UNIC Reward Weights
Liquidity mining is just around the corner, and the community has been approving more uToken collections into the whitelist each week. This article draws out how each whitelisted pool’s reward weights will be determined before liquidity mining starts.
When we first launched the protocol, we had 3 criteria for whitelisting:
- Community engagement
- Quality of NFTs
- Amount of Liquidity
The community has taken these into account when whitelisting collections, which now includes uGOTCHI, uDOKI, uPUNK, uMASK, uAXIE, uCM, uWAIFU, and uUNICLY.
UNIC weighting formula
Based on the discussions, the community has further identified the need of an objective and quantitative formula to determine the specific weighting of UNIC rewards across the whitelisted pools.
A template proposal was presented during Wednesday’s discussions, and after further feedback, we have come up with a more solid system as follows.
Criteria / Weights
Note: All whitelisted collections must have been present at least one AMA to answer questions and get community approval
Allocation point weightings
1) 45% — floor price sum (of all NFTs within collection)
2) 31% — liquidity
3) 11% — market cap
4) 10% — volume
5) 3% — holders
We will aggregate the number for each criteria for all collections. We will assign UNIC allocation points to the whitelisted collections based on these numbers. For existing collections, 0xLeia (me) will take snapshots randomly and average the values until right before liquidity mining begins. Times of snapshots won’t be announced so that people can’t game it as easily.
We will limit whitelisting to the top 10–15 collections, but this is subject to change. The allocation points that don’t get used up (for the collections outside of the whitelist) will go into the UNIC-ETH pool’s LP rewards.
Assume that for all collections on Unicly, the current numbers are:
1) Total floor price of all uToken collections = 10M
2) Total liquidity = 5M
3) Total market cap = 30M
4) Total uToken volume = 5M
5) Total uToken holders = 1000
Let’s say a collection called uBOB comes around, and has:
Then they get:
45 * 1/10 + 31* 0.5/5 + 11* 10/30 + 10 * 0.5/5 + 3* 50/1000 = 12.42% of all UNIC allocation points
We needed a set of quantitative criteria that rewards collections based on their value-add to the Unicly ecosystem. We also rewarded more weighting to criteria that could not be easily gamed.
High floor price indicates high quality of NFTs. This attracts more attention to Unicly and therefore attracts more people to join the community. We will use a decentralized / third-party protocol to determine floor price, making it the least gameable out of all the criteria.
High liquidity drives more volume and decreases price slippage. Higher TVL attracts more investors, and advances the ecosystem forward. However, this criteria can be gamed by large holders by providing a lot of liquidity for a collection with low NAV. Therefore, liquidity got lower weighting than floor price.
Total market cap indicates how highly the Unicly community values the uToken collection. However, it can be gamed by providing very little liquidity and setting an extremely high market cap. Fortunately, such collections should be filtered out in the community approval process. Therefore, market cap comes in third in the weighting.
Fourth in line is volume. Volume helps represent how much interest and engagement there is for a uToken collection. Volume can be gamed, and we don’t want it to be gamed, but gaming volume hard actually drives value to the ecosystem. This is because 0.25% of volume goes to LPs as fees, and then 0.05% is taken to buy back UNIC on the market. If SBF decides that he wants to farm UNIC by making a whitelisted collection, and tries to max out his volume points by injecting $1B of volume, this creates a lot of buy pressure for UNIC, which helps the protocol.
Last is number of token holders. This criteria somewhat represents how big the community is for a specific uToken. This can be gamed (at the expense of gas fees), and doesn’t hold as big of a meaning compared to the other criteria, which puts it last in line.
There have been several uToken collections whitelisted already, which anyone can buy and provide liquidity for. The farm page already allows you to stake the LP tokens for whitelisted collections.
As a community, we will be doing discussions weekly up until liquidity mining (expected to start in 2 weeks) in order to approve more collections into the whitelist. Please join our community chats so that you can participate directly! We’re getting very close to the beginning of the UNIC token, and very excited to see what’s to come for the Unicly ecosystem.