Lessons and Plans from the Debut of the Tokenized Ownership System
Hey everyone! I hope you have enjoyed the debut of our new tokenized ownership system. This is your first ever Ownership Report! I am here to report on the system’s performance and our future directions as a result of the lessons and experiences we have gained.
The TLDR is that we have learned that our ownership dividend system, while incredibly successful at distributing USDC dividends to tokenized owners, did so too quickly! In response, we will be distributing all incoming USDC over a longer time period in Layer 3.
First of all, there is much to celebrate! Including the money given directly to MYFRIENDS stakers from the Layer 1 (LITHIUM) liquidity funds reclamation, we have distributed $765,000 in dividends to MYFRIENDS stakers! With 75% of the platform’s deposit fees so distributed, we believe that in the time frame our Layer 2 system has existed, this gives us the highest ratio of cash revenue distributed to project income out of any cryptocurrency in history.
I don’t know of any company that has ever distributed an amount greater than its entire raise ($750k) in cash directly after its presale, but please let me know if there was another. Something like this would be seen as an extreme aberration in almost any legal business, but yield farming is a very high-profit business. Luckily, you get to own it.
The USDC harvests from our initial $166k cash distribution event were only a small percentage of the full amount distributed, but it still left stakers with a very large cash dividend proportional to their investment. Here’s the sight Shitcoin Steve beheld while taking a piss:
Shitcoin Steve is now USDC rich off our dividends. Tests revealed that a double-digit number of dollars per MYFRIENDS constantly staked would have been possible during the initial period. This would be something like a 20%–25% cash rebate for USDC presalers, who paid $41.7 per MYFRIENDS!
The amount and percentage of USDC dividends distribution was thus incredibly high, as promised. The users were proportionally distributed their 75% share of the system’s deposit fees, and the public’s share exceeded that of creators by a 45k/20k initial ratio.
In addition, those who staked in the single MYFRIENDS dividend pool got an extra bonus from the supply squeeze generated by MYFRIENDS LP. Because only the single staking MYFRIENDS pool is eligible for USDC dividends, MYFRIENDS LP reduces the amount of MYFRIENDS that can be single staked. Therefore, those who chose the dividend pool got a USDC bonus, while the MYFRIENDS liquidity providers saw little initial dilution in their pools because of the high percentage of MYFRIENDS that was single staked.
We have maintained very high total native liquidity (over $2m as of the writing of this article) and native market cap (over $5m) even in the face of a macro market correction in major cryptocurrencies. Our huge amount of burned ARCADIUM-MATIC liquidity shows the power of our new and improved farm token AMM support system. However, we acknowledge that some selling of MYFRIENDS may have occurred after people concluded that the initial rush of deposit money was in the past.
In addition, many people expressed confusion about how the USDC dividend distribution is actually done. The source of the confusion ultimately stems from the immediate nature of the distribution (once the threshold of $25 pending in any currency is reached). Many experienced a lack of satisfaction when they deposited in the MYFRIENDS single pool and could not immediately verify that they were receiving USDC. They wondered why were they not receiving a steady “drip” of USDC, as they do with other pools. So we came to see distributing the USDC with deposits as a problem that we did not expect.
Therefore, we have decided to emit the USDC to the single token ownership pool more gradually in Layer 3. Instead of instant distribution when liquidation is triggered by a deposit, we are going to spread out the emission of each USDC over a longer period. We cannot disclose the exact details of the method yet, but we are confident that we can pull this off engineering-wise.
We believe that each USDC into the ownership token’s distribution system should be emitted over a long enough period for deposits to build up a sense of “momentum,” but not long enough so that deposit money feels difficult to get out. In addition, we will have a “kill switch” in case the community decides to swap from Layer 3 to Layer 4, and inside that “kill switch” function will be functionality to accelerate the USDC emissions to end when the layer wraps up.
We believe that this has a chance to satisfy all participants. We believe that we will emit a satisfying amount of USDC constantly, which we hope will appease instant gratification seekers who desire high returns. However, we will also have a short-term rate that has more temporal consistency and leads to aligned expectations between all participants. The sacrifice of the immediate reward dump seems more than worth it to maintain interest among new potential entrants to the system.
The one thing that gets sacrificed in this new system with time-buffered USDC dividends is the immediate impact of events like the $166k liquidity cash drop event before Layer 2 farming began. The event when I distributed $166k USDC to MYFRIENDS holders over the course of 4 hours was one of the major highlights of my life up to this point. It is not often that one has the opportunity for such a larger-than-life moment. The fact that this was combined with a “fully operational battlestation” moment regarding our cash dividend system made it even better.
Although the $166k cash drop was truly a “rock star moment” and was planned out to be a historically exceptional event, nothing like that will happen in Layer 3 now that we are implementing the gradual USDC release. So we will have to accept a loss in immediate gratification for the greater good.
We thank the community for giving us the feedback to realize that this realization is possible. We stated numerous times that Layer 2 was intended as a parameter test of the new system to see how the new features would land. Because no one has given this type of dividends previously, we knew that there would be things we had to work out. We didn’t know exactly what those realizations would be, but one thing I can say is that I certainly would not have come to this realization on my own. Even having had the basic idea, there was only so far I could take things in my own head. We had to gain this experience in order to realize the steps that were possible and optimal to gain future success.
Therefore, we are looking forward to gaining more insights as the system ages. There may be more features of the basic farm’s architecture that we don’t even know we have to develop yet. We look forward to getting that all figured out.
We are also making progress on the auxiliary contracts that will bring in the income that makes us sustainable. We have made substantial progress and have reached an internal v1 version of our lootbox contract, which we think will be an extremely fun alternative to direct buybacks. We also have ideas about specific low-hanging fruit that may be available in gambling contracts that could have a very high total addressable market.
In addition, we have set our sights on a Team B who could independently set about developing a full-scale gaming experience on our platform. We feel that gaming is such a highly lucrative market that this direction has at least a decent chance of very high returns. All profits from gambling and gaming will be distributed 50/50 between farming token AMM support and ownership token distribution.
Thanks for your attention to these updates, and enjoy the Stadium Arcadium!