Since the inception of Poolshark, the team and early community have worked together to come up with a token model that will drive value towards holders and enable value capture at the protocol level.
Token models at the application layer have not seen a proven model to date, although there have been some silver linings that the FIN model draws from.
Poolshark is an AMM targeted towards for both beginner and pro traders. Poolshark was started because we wanted a better way to trade on AMMs. The protocol our team and community wanted didn’t exist, so we built it.
In building Poolshark, it was not only important for the decentralized exchange to offer new features to users (i.e. range limit and stop-loss orders), but also to enable a new generation of Defensible Liquidity and Progressive Ownership.
The FIN token will be a part of our ongoing efforts to decentralize and democratize the decision-making process within the Poolshark ecosystem. By issuing this token, the aim is to incentivize active participation and contribution from our community, and to foster a sense of ownership and shared success.
Staking for Multiplier Points:
Holders can stake their FIN tokens to earn Multiplier Points, enhancing their rewards and influence within the Poolshark ecosystem.
The maximum Multiplier Points that can be earned will be 100% of the staked amount, with the maximum cap reached after 1 full year of FIN staking.
Unstaked FIN will result in a loss of multiplier points proportional in size to the amount unstaked. If 100 Multiplier Points have been earned and the user unstakes 50%, they will have 50 Multiplier Points remaining.
In this way, FIN stakers are rewarded for loyalty without making it too difficult for new participants to buy and stake FIN and build Progressive Ownership in the Poolshark ecosystem.
Each season, token holders will receive rewards, marking milestones in Poolshark's growth and success.There are 5 ways to earn points in Season 1:
Market and Limit Swaps
??? (to be revealed)
Options Liquidity Mining (Enabled by Bond Protocol):
OLM (Options Liquidity Mining) is a novel way to engage in liquidity provision, allowing users to mine liquidity options and contribute to the robustness of the Poolshark platform.
Poolshark will be partnering with Bond Protocol to provide oFIN, allowing users to purchase FIN at a discount to market price.
Revenue from oFIN sales will go towards deepening liquidity on the platform and rewarding loyal participants in the Poolshark ecosytem.
Starting December 11th, Poolshark users will be able to publicly purchase FIN bonds via Bond Protocol at a fixed price of $2. This implies an FDV (fully diluted valuation) of $40 million USD given the maximum total supply of 20 million FIN.
The first batch of purchasers will be vested for 3 months at which point the user can exchange for the underlying bond in full.
Users must supply WETH to receive FIN bonds. The liquidity received through the bond purchases will be used to bootstrap FIN/ETH liquidity upon launch of the protocol.
Only 150k FIN bonds will be available for purchase initially, so be sure to mark your calendars for December 11th to ensure you receive the best vesting terms.
Below are the set allocations for the FIN token by category:
The maximum total supply of FIN is 20 million tokens.
To date, only 3.25% out of the total 18% has been earmarked to be received by Investors over a 3-year vesting period.
It is important for Team and Investor allocations to be vested over longer periods to ensure alignment with participants engaging in receiving FIN rewards and supporting the ecosystem. Team vesting occurs over a 4-year period in order to incentivize long-term commitment.
Our team fundamentally believes that the FIN token will not only enhance our community engagement but also demonstrate our commitment to transparency and fairness.
2.4% of the total FIN supply will be issued during Season 1.
This amounts to 480,000 FIN in rewards to mark the first era of growth for Poolshark.
The token will be distributed on an ongoing Season basis with OLM, also known as Options Liquidity Mining. DAO Options allow the protocol to capture revenue by issuing oFIN, an option to buy FIN at a market discount and share token revenue with the Poolshark DAO Treasury.
When the user receives oFIN as Season Rewards, they can choose to sell the oFIN on the open market despite the limited liquidity for oFIN tokens. If the user wants to tap into a larger liquidity pool, they must trade oFIN → FIN by buying FIN at a market discount.
This is the what the Season Rewards distribution will look like for Season 1:
50% for LPs on whitelisted pairs
22.5% for LPs on non-whitelisted pairs
15% for Market and Limit Swaps
10% for FIN stakers
2.5% for ???
Whitelisted Pairs (50%):
FIN/ETH (bootstrapping pair)
Non-Whitelisted Pairs (22.5%)
Non-whitelisted pairs will require pairing with ETH, USDC, or UDST. Other Base Assets (e.g. stETH, DAI, etc.) will be added pending a governance proposal.
Non-Whitelisted Pairs allow for “permissionless incentives”, wherein LPs, protocols, etc. that boost liquidity on the platform can start receiving incentives immediately to match their commitment size and fee revenue generated.
Market and Limit Swaps (15%)
Points are rewarded to traders based on the USD value of their trade at the time at which it is executed. For Limit Swaps, this will be the time at which a Limit LP is crossed or 100% filled and claimed.
Limit LPs will be rewarded based on how much of their order was filled.
Points are rewarded exactly the same between Market (classic) and Limit (Poolshark exclusive) Swaps.
FIN Stakers (10%)
Not only will FIN stakers receive Multiplier Points the longer they stake, but also they will be granted Season 1 Rewards based on both their original stake as well as their Multiplier Points.
This means in order to maximize rewards, users must stake their max deposit size for the entire season duration.
Once Season 1 Rewards conclude, the Mystery Category will be revealed.
Defensible liquidity in DeFi refers to cash flow or revenue that passes through a DeFi protocol and is used to sustain incentives.
This concept is closely tied to FIN season rewards as well as the willingness of users to trade the revenue of today for the growth opportunity of Poolshark tomorrow.
Market forces will come and go, and deit is the responsibility of the DAO to encourage sustainable behavior in the long-run in order to operate at the highest level.
Example Defensible Liquidity Loop:
Users that drive activity to the protocol will receive oFIN, the option to buy FIN at a discount.
oFIN → FIN revenue capture
To then tap into the liquidity of FIN on-chain, users will provide assets such as ETH and USDC to the DAO. This will provide permanent value capture which can be directed in a number of ways.
Reinvest into Defensible Liquidity
Reinvesting into the right areas of the ecosystem will be key to maximizing profit streamed to the DAO Treasury. Purchasing stable liquidity (e.g. USDC-DAI) and directing swap fees to FIN stakers is one powerful way to enhance value over time.
It is easiest to think of building Poolshark as a liquidity hub for Arbitrum as similar to that of building a castle. The DAO must fortify any weak areas in order to control a sizeable market share in DeFi and drive value to DAO token holders.
The liquidity provider can extract profit from the protocol the same as Liquidity Mining 1.0, and the revenue or cashflow that the Poolshark DAO receives in return directly scales with the amount of inflation to the FIN token. Liquidity providers can still sell oFIN to the open market, although liquidity will be on a limited basis.
FIN holders win because there is value capture at the protocol level, which helps potentially increase the floor price of FIN each time the protocol is reinvested into (e.g. deepening liquidity). FIN stakers get more revenue from liquidity providers seeking to receive Season Rewards.
Beat The Mercenaries:
Mercenary liquidity providers are still incentivized to deepen liquidity, but these same mercenaries cannot extract value from FIN without providing cashflow for the protocol in return. Thus, Defensible Liquidity is achieved through token revenue sharing with the DAO.
For example, if there is 20% discount for the Season 1 FIN Rewards with the FIN token price at $10, 20% will go to the liquidity miner and 80% will go towards protocol revenue. Even if Poolshark Liquidity Miners are 100% mercenary, the Poolshark DAO has captured 80% of the value of its own token.
If the Poolshark DAO issues 500k oFIN in Season 1 and captures 80% of its token value at $10, that will mean $4,000,000 of revenue to the DAO in a 3-month period. This is a massive game-changer for building a defensible liquidity platform where the Poolshark DAO can reinvest and build a long-term strategy to retain deep liquidity and an active user base.
Now that Poolshark has a form of revenue capture, it’s important for the DAO to reinvest this cashflow into the right places into to sustain long-term growth.
A simple example for how powerful this cashflow can be is for the DAO to purchase stable liquidity such as USDC/USDC.e, which is often used to bridge in and out of native USDC on Arbitrum.
100% of the fees from this USDC/USDC.e can then be directed towards FIN stakers, increasing the floor value of FIN. A higher FIN price means more value capture during Season Rewards, thus increasing the “defensibility” of the liquidity in Poolshark for the long haul.
This is just one example of how the FIN token can create Defensible Liquidity and return increasing amounts of value to stakeholders. The challenge for the DAO long-term lies in finding the correct balance between incentivizing new participants with mercenary-style rewards vs. directing loyal participants with increasing amounts of revenue generation.
Next, the Poolshark Team will be announcing an official launch date for the protocol on Arbitrum Mainnet.
This marks the first network Poolshark will be live on, meaning the launch will serve as the first set of key insights on how the Poolshark Labs and the DAO will develop the product moving forward.
NFTs will be issued for testnet participants shortly after Beta-2 ends.
The team looks forward to sharing more details as soon as we are ready to announce them publicly. In the meantime, you can come engage with us both on Twitter and Discord and plug us with any questions.Thanks for taking the time to read and talk soon!
- The Poolshark Team 🦈