Introducing BSCswap Proof-of-Stake Genesis Mining, a risk reduced Yield Farming implementation

Abstract

Inspired by SUN’s Genesis Mining with TRX, we introduce a new implementation of IPO style Yield Farming with the greatly reduced risks compared with any other existing Yield Farming methods ( staking LP tokens from DEX or lend , borrow your tokens to lending platforms, etc. ). Like supplying the liquidity to the Balancer’s 98/2 Pool, your exposure for the risk of funds will less than 2% or 2% maximum if the value of staked tokens go to zero. With the 7 days lock-period and the only accept of price volatility-free USDT stable coins, you will enjoy the risk reduced yield farming experience during the period of the upcoming BSCswap (BSWAP) Proof-of-Stake Genesis Mining.

Background

There were many food tokens and the defi governance tokens offering good yields to the liquidity providers or stakers of the specific tokens. They required to deposit the specific tokens on their swaps and create the bond of liquidity provided in form of LP tokens and they offered their governance tokens in form of Proof-of-Stake like Airdropps with the total ratio of liquidity deposited on their platform.

As a result, it becomes one of the successful methods to promote the use of platforms even if you don’t need them and the volume of locked tokens ( aka Total Locked Value — TVL ) increased rapidly as many people joined for the liquidity mining. However, there was no proper token economics made and some whales dumped their free earned governance tokens to the people who deposited their liquidity on the dex.

The bright side of those Food Tokens is that they increase the performance of the Decentralized Finance products they made however the risks of pooling liquidity was high and the fact that no food tokens were considering to reduce those risks led to the flash crash of the price of food tokens as well as the permanent losses created.

Therefore, as we are going to create the new governance token by the community’s request, the problem was that how we could reduce those risks and build the token and the product as a long-lasting DeFi that people could use without the exposure of high token volatility as well as those irrational network fees coming from Ethereum network?

The answer was simple. Thanks to the Binance Smart Chain, we were able to build a new DeFi product with no exposure to the high transaction fee and the congested network. The barrier has been removed. And, we were able to borrow some token economy from YFI and SUN.

Hedging the risk

DeFi degens are no longer valid term as everyone doesn’t want to expose their risk from their DeFi investments from those food tokens and the decreasing amount of on-chain liquidity due to the decrease in profit staking LP tokens turns out the losses of liquidity providers from impermanent loss to permanent losses. Before they could recover the dropped price of the governance tokens named after food, there will be no way to recover the loss generated from staking liquidities.

Also, the big matter comes from the security flaw and those anonymous developers, even if those developers behind the generation of the food tokens weren’t anonymous, they were encouraged enough to sell their shares from the thin air. The on-chain liquidity provided for AMM ( Automated Market Making) Dexes makes the situation even worse for those get-rich-quick schemes. If you have enough liquidity supplied for the generated coin, it will be the same meaning for you to gather enough buy wall for the dump which makes a better deal more than a centralized exchange.

However, due to the design of Uniswap, unlike single-sided AMM forcing losses for the liquidity provider, it also credits the exact amount of tokens swapped on the exchange. So, your losses will be limited for the amount of token you hold, and you will have a short term of the chance to hedge the risks before the liquidity drops. Even those ratios can be changed on the Balancer for 98:2, which the stable coins can be 98% and the tokens with high price-volatility can be only supplied with a ratio of 2%.

Therefore, we are following the basic protocol of Uniswap without the opportunity of providing deep liquidity by using a smart contract lending protocol like Compound Finance. However, if the on-chain liquidity is sufficient we could expand the platform to be compatible with deep liquidities too.

Also, we are benchmarking the strategies of the loss management of Balancer. To create a token economy some risks must follow otherwise the generated tokens will go to zero as the incident happened from many food tokens, however, we also need to ensure the safer, longer-lasting future for our community we are building upon the platform and the token. Therefore, Like a traditional IPO style of fundraising, a small amount of given stable coins will be used to buy the governance token automatically with the initial vesting period of 7 days. about 98% of the stable coins supplied will be refunded to your wallet. About 2% of the stable coins will be automatically used to stake for the new governance tokens we are building and if the received value of the governance token exceeds the value of 2% of your supplied stable coins, you wouldn’t have a loss eventually.

Despite the feature, however, we could not estimate how much the token will value or how many TVL there will be supplied for the genesis mining. Therefore, you must hold your own risks or any kind of responsibility. You can’t blame the team or the community for losing those chances or having some losses due to the choices you made. However, if those risks and responsibilities are properly dealt with yourself, the opportunity is also yours.

Securing the protocol

It is our greatest matter to secure smart contracts and providing a safe environment to yield farm your tokens. We will borrow the staking contract code from stakecow.com https://github.com/milk-protocol/stakecow-contracts-bsc/blob/master/contracts/FomoCow.sol that they had more than 100K$ TVL on their contract. There were no known flaws or any kind of incident from the team as they have operated the farm for several days since August.

We also use the verified contract code for our main BSCswap DEX platform derivated from Uniswap ( uniswap.org ). You can track the changes from the contract here https://github.com/Uniswap/uniswap-v2-core/compare/master...bscswap:master and since there were no flaws the contract used for BSCswap should be also considered as safe enough. Most of the updates made on the BSCswap contract are borrowed from SushiSwap to upgrade the contract code for updated solidity compilers.

However, we are planning to have a dedicated smart contract audited from the trusted party if possible. We are currently seeking opportunities from it and we will let you know when we have them.

Not having the team shares

In a spirit of YFI ( Not Bitcoin or Litecoin ), there will be no team shares or any kind of pre-allocation for a supply like Team, Investors, Advisors, VC shares to benefit anyone outside of the BSCswap community. Eventually, the pre-allocated shares will cause the problem to the ecosystem like the mentioned above, even if it causes the minimum slippage of 5%, it will still damage the community and the effort of all we built for.

Like the title of the famous Japanese animation Re:Zero, everything should be rebuilt in a fair manner. The community and the governance take time to formulate and can’t be built in a short term. The effort to build a devoted community will be harmed if someone decides to make a short-term of taking the get-rich-quick opportunity and dump the token against everyone’s effort to build something that really works.

The initial developer of the BSCswap wouldn’t have a token, issue a token for own shares, or buy the token at the present and the future. We will not interfere with the token price being made and the only fund we will have and use for development is the mining fees collected from the genesis mining stage. We think it will be enough to build a community and build some new features for BSCswap.

Join the force of changing trend of DeFi

Since we have decided to build some true changes and the movement among those food tokens, we hope that everyone could fork or follow the way of low-risk yield farming strategy and make the defi lasting longer. Many say that DeFi will be a short time opportunity to make a big amount of money just like ICO did, but some survived projects and community will keep building on changes, innovate the future of blockchain, and next-generation financing.

We can’t estimate or make an assumption for the result of BSCswap, but our community is growing fast and the on-chain TVL is rising even without the support from liquidity incentives given for liquidity providers. We have already surpassed many crypto exchanges as a volume or a staked liquidity. And we think this will be just a beginning journey for Binance Smart Chain ecosystem to open the new possibilities for the future.

Details will follow with the upcoming announcements on our channels. Build on changes and Join the forces of future finance. 加油 Binance Smart Chain and BSCswap!

Live App: https://bscswap.com

Analytics Platform: https://bscswap.info

Twitter: https://twitter.com/BSCswapProtocol

Telegram: https://t.me/bscswap

Discord: https://discord.gg/mCZSA3w

Github: https://github.com/bscswap

CoinMarketCap: https://coinmarketcap.com/exchanges/bscswap

Please, don’t hesitate to join!