Thoughts on airdrops and liquidity mining

The purpose of this thread is to generate discussions and identify the best way to drive usage to Jet Protocol (as it stands). Shout out to @ezio for bringing this up almost a year ago here. Seems like now is a great time to revisit.

Let’s kick off a discussion about a reward system that amounts to a retroactive airdrop (or a form of liquidity mining) with activity milestones throughout the remaining releases of Jet V2’s roadmap.

A few top-level parameters for what I have in mind to propose are:

  • The program should incentivize existing and future users of Jet Protocol to add liquidity to the protocol over time and throughout the remaining development of V2.
  • The program should also incentivize borrowers, as this, matched with sufficient liquidity, is the behavior that drives fees and value back to the protocol.
  • The program should have sufficient safeguards against opportunistic participation (gaming) and directly reward the most people who’ve added the most long-term value to the protocol.
  • Whatever the program, the rewards should be locked for a period of time.

The fact is that liquidity mining and airdrops in most forms are controversial to at least some segment of participants - there’s no truly perfect model. Acknowledging this - what options can the DAO explore? What could have done better in the last airdrop?

What do you think?

As more product features are released within the Jet V2 roadmap, we as a community must work to ensure Jet’s success and adoption in both bear market and bull market conditions. Leveraging the treasury’s funds to subsidize the use of the protocol must be a community and JET token holder decision.

Who wants to start chartering the next destination for Jet?

Please note: this forum proposal is a suggestion on what I think is the best path forward to increase the usage and utility of Jet Protocol - total numbers, parameters, timelines, and pretty much everything else is open for suggestion here.

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Great to see we are revisiting the need for liquidity mining and airdrop rewards

I think we can pickup some good points from OP airdrops.

Aside from that my some of the ideas that are on top of my head regarding further incentivization of airdrop

-People who did not sell their airdrops
-People who staked their airdrops
-People who participated in more than 2/3 of on-chain governance votes
-People who participated in on-chain governance with 2/3 of their staked airdrop
-People who supplied collateral onto JET above a certain threshold [$100,1k]
-People who have been trying out Solana DeFi be it on any other platform SLND, PORT [maybe even those who staked their native tokens on to their platforms, I think we can use this strategy to rope in more users through the wider SOL eco, a bit controversial but I encourage platform discussion on this]

Additionally might be a good idea to prolong the ongoing JET staking program by a few more months as we wait out turbulent macro times ahead. In context of liquidity mining, I say we start it, because we NEED to make more liquidity available on JET. We have less than 0.5mn in liquidity here. We simply can’t achieve our goals unless we attract liquidity on to our platform.

10 Likes

Agree with these ideas. Something else to add for post-airdrop/incentives is making the tokens vesting so that they aren’t immediately dumped onto the market.

A couple ideas from existing projects:

  • Radiant Capital on Arbitrum: Vest tokens for 1-month (could be any arbitrary period) and give users the option to vest earlier if they choose but with a penalty - 50% of their tokens are rewarded to users who are staking JET
  • Aurigami on Aurora: Vest the tokens over a year with the percentage of vested tokens increasing weekly. Users can choose to receive tokens earlier, but will only receive a % of their tokens with the rest locked up an ever later date (e.g. 1.5 years)
  • Solend on Solana: Tokens vest for 1 month (could be any arbitrary period) as an option to purchase them at a 90% discount to the price.

As for the airdrop, I agree with the OP methodology of incorporating a wide net to get more users. Could even do something interesting like the Arbitrum Odyssey event

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Airdrop eligibility

I agree with @ezio in using some metrics that reward/attract users who are active participants in the Jet and Solana DeFi ecosystem. In the current market, there are fewer DeFi participants, so casting a wider net will help us attract a different range of users.

Giving an airdrop to select users on the Solana DeFi ecosystem is a good idea, but we have to discuss a few rules.

Would it be any DeFi protocol on Solana or specific DeFi protocols (i.e. larger DeFi protocols)?
Minimum amount in using other protocols? A reduced weighting in using other protocols too, as we want to prioritize the JET community.

Token vesting

  1. If tokens are vested, we should enable those locked tokens to be still used in governance. They can have the same voting power as liquid tokens or have reduced voting power.
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I encourage everyone to consider @ezio’s points about stakers. They are the most loyal participants of the protocol to date and the community could make a strong argument they should be disproportionately incentivized. The protocol could apply a multiple to a user’s staking duration when emitting the tokens.

What time frame should we consider? For example, we could do one, or a series, of shorter term yield farming programs ranging from 2 weeks to 1 month. These smaller scale programs would be focused on bringing a baseline level of liquidity in order to attract users who need to borrow more than the protocol offers right now. These types of programs would give us actionable data we could use to fine tune subsequent programs.

One more idea is we could experiment with some longer time period lockups for stakers with a long term vision of the protocol that could increase voting power and proportion of incentives. We don’t need to start with anything more than 6 months, a commitment that long isn’t necessary as we’re just now exploring how to revamp JET tokenomics with the community.

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Agree with @ezio 's take.

Is it worthwhile to engage other projects (Lido, Marinade) to see if they’d like to add liquidity incentives as well? This could be in addition to any JET token rewards.

Lido offers or has offered (LDO). token on Orca, Solend, Mercurial & others. to further juice rewards. Marinade does as well on Solend.

Should the DAO consider something similar for JET?

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Hello,

Is there a 2nd airdrop confirmed? Or are you just suggesting this?

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Also, what do posters have in mind for “liquidity mining” possibilities?

I don’t disagree - so far I’d say the main limitation of doing this is technical. There’s actual smart contract (program) work that needs to be done in order to disburse rewards to participants. It’s not off the table imho, but the question is about limited dev resources and priorities (currently finishing V2/fixed-rate, fixed-term).

Weighing all options, curious what the community thinks about prioritizing finishing V2 vs. offshoot dev work like this.

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Great question and an opportunity to be super clear about a few things!

  1. The first airdrop was initiated by the core team and proceeds to support the airdrop (as well as staking rewards for JetGovern) came from the tranche of discretionary tokens earmarked for growth.
  2. The liquidity mining incentives could take multiple shapes - need to suggest more detail however we’d really like the community to propose what makes most sense to them as well. It’s all on the table.
  3. Staking rewards will not be renewed in October unless the community proposes they be and determine the parameters - we need to get some discussion going around this!
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liquidity mining would almost assure liquidity on DEXs. Need to incentive people to LP JET-SOL and or JET-USDC. Would also vote on extending staking rewards.

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coming on LM, I need to emphasize on one point. We have terrible liquidity of JET in the liquid markets. CEX liquidity is vaporware.

We should try launching a JET-USDC pool with atleast $500k in liquidity, incentivize it with LM rewards [Orca, JET] to further deepen the liquidity.

low liquidity is a serious roadblock for JET token holder growth.

For LM rewards on other assets, I think we can incentivize the growth with for deposit of assets on JET app, with time based multipliers.

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I appreciate the thorough and considerate discussion on this topic.

I think there are a number of potential initiatives here and I would like to take a moment to parse them out.

  • @jrmoreau’s initial post:
    • incentivizing protocol usage by rewarding borrowers and lenders with $JET tokens
  • @ezio’s post:
    • reward $JET airdrop recipients/holders - to attract loyal token holders
    • reward $JET token voters - to attract future gov participants
    • reward users of other DeFi protocols - to attract other DeFi customers
  • @soze’s post:
    • partnering with other protocols to incentivize lenders
  • @doger and @ezio’s comments:
    • funding a liquidity pool for the $JET token - to establish more $JET liquidity

I apologize in advance if you feel my bullet point doesn’t adequately express your initiative. Please feel free to correct me. I’m maximizing for brevity.

I’ve taken the time to pull this apart so we can be sure what we would like to address. I think all of these are valid concerns or initiatives that are worth considering.

I’m going to try to further refine this by making a short list of items to address and then I would encourage everyone to choose which item should be the priority and to make a case for it in this discussion.

  • reward borrowers
  • reward lenders
  • reward borrowers and lenders
  • reward airdrop loyalists/holders
  • reward stakers
  • reward voters
  • attract users of other Solana DeFi protocols w/ token airdrops
  • partner with other protools to incentivize collateral providers
  • initiate, fund and incentivize a $JET liquidity pool

If you could only choose one, which one would you choose and why?

There’s some follow on decisions around vesting, locking and such, but I think answering the above question will help us move forward.

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MOST IMPORTANT THING FOR JET IS LIQUIDITY DEPTH.

We need to establish Liquidty mining mechanisms for borrowers & lenders. LM is an established paradigm. Can’t go against the current. Unless there is some other way to source in liquidity that is the most important thing we need.

Everything else is secondary.

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I’m not an expert on bonds, but I recall a decent amount of action for bond products on Penguin Finance.

Perhaps either do something similar or reach out to Parrot. I know they’re a bit difficult to reach sometimes, but they are another Sino company (at least they were in the beginning) so I’m assuming there could be networking done. Parrot is basically a family of products like Penguin Finance, Parrot, BunnyDucky, $PAI, etc…

I just like the idea of people getting a deal on $JET bonds since people would feel they are getting a deal (they would), but it would drive much needed attention and I’ve always believed the JET team is more interested in organic long-term growth vs. over speculative endeavors. Let me know if you guys have any thoughts on this.