We are excited to share our proposal for utilizing the TDR in the upcoming GP13.
The recent launch of the $TINY token has brought additional attention and positive recognition to both Tinyman and the Algorand ecosystem. We remain committed to building and enhancing our platform to attract more users and liquidity from other chains, making trading and farming on Algorand increasingly attractive.
Over the past 90 days, approximately 65M in swap volume has been generated on Tinyman pools. The ALGO/USDC pool accounted for 30M of the total volume, while the TINY/ALGO pool itself generated 1.4M in just one week.
While these numbers represent a promising start, we are not stopping here! With the upcoming listing of $TINY on MEXC, we anticipate further increases in overall trading volumes on Tinyman. Therefore, we propose using a portion of the TDR to incentivize the TINY/ALGO pool.
Since its launch, $TINY has emerged as a compelling ASA, with notable achievements in Market Cap, TVL, and Trading Volume. To enhance the liquidity of the TINY/ALGO pool and better reflect the asset’s true value, we plan to offer enticing farming rewards. This initiative aims to solidify $TINY’s position as a top choice for traders and investors by providing deeper liquidity and further incentivizing LPs.
We plan to distribute the TDR for GP13 as follows:
Weights assigned to each pool based on these metrics (consistent with the previous period):
Total Value Locked (TVL) - 40% (as of August 8th)
Volume - 50% (over 90 days)
LP Count - 10% (as of August 8th)
Pool Allocations:
89% — 39 ALGO/ASA Pools
5% — 10 Wrapped Asset Pools
6% — Lending Pools
For a comprehensive overview, please refer to the detailed spreadsheet provided here:
Please note that the figures in the spreadsheet are subject to finalization based on TDR allocations and community feedback.
As I did with Pact, I will continue to voice my opinion that it is a poor use of funds to use TDR for LPs besides certain core assets (eg stables, gold/silver, wrapped assets like BTC, ETH, Avax, etc).
The problem is that unless AF either acts to stop this or empowers us to vote on this issue specifically, each platform will continue to offer these rewards.
Tinyman’s plan to use over 12% of TDR to incentivize the pools for its own $TINY token is, IMO a perfect demonstration of why this TDR program needs to a complete overhaul. It is unconscionable that Tinyman plans to allocate over 2.5x more to its own token from TDR than for pools of all wrapped assets combined.
We’ve become flexible with cross-chain assets over the years but it’s starting to feel like overkill.
I’ll also add that I have little confidence that these pools are being utilized by enough unique wallets and/or with a decent enough spread. Essentially enriching a number of wallets that aren’t meaningful—simply for giving us the time of day.
At the very least, the list of pools should be condensed and the amount requested should be more frugal with respect to the recent transparency report. But, TDR feedback has been mostly white noise with little action in the past from respective platforms.
I’d also like to know if these platforms are able to vote for themselves in any capacity through governance, and if this is being enforced in anyway.
It’s not unlikely they have a heavy voting weight with disregard for community sentiment in some aspects, as we’ve witnessed with one of the largest grant receivers in xGov Periods 1 to 4.
A separate argument perhaps, but I feel any holdings exceeding the average community member by 20 fold and affiliated with platforms that are consistently injected with funds should not be eligible for voting and carefully tracked. Otherwise Algorand becomes the platforms’ chain, and not the community’s chain. ~~
Chips/algo has 3x more LP than Tiny/Algo, and yet is being allocated 75% less algo. There’s a clear need for you to reassess allocations by pool as this significant disparity can’t be explained currently.
Favouring TINY via LP rewards with the current website functionality prevents individuals providing LP from participating in Tiny Governance - therefore distracting from what the token’s claimed utility is for.
Please can you justify why such a large amount has been allocated to LP farming, explain why LP is supported over your loyal locked governors, or reassess your allocation so the allocation isn’t abnormally large.
The parochial focus on ensuring your particular token is taken care of is part of the problem. There is no sensible reason to incentivize Chips LP with AF funds at all. It is the network collectively paying people to provide LP for a particular community. It may be nice for them, but it is of questionable value to the ecosystem as a whole. Platforms rely on doling out enough rewards to placate these communities so that you vote for their proposal. I hope you can take a step back and assess the system as a whole.
@GhostOfMcAfee I used Chips as I am not a LP provider for them so have no personal gain or bias. My point was the disparity needs more explanation and justification from Tinyman.
On their wider plan, they’ve adopted a strategic led approach rather than add tactical nuance. Their allocation towards Tiny breaks this.
If they are going to be tactical for Tiny as they can rationalise the benefits to the ecosystem, they are signalling they believe a tactical approach does improve the benefits seen from allocation.
They should justify Tiny and then reassess everywhere, or bring Tiny in line with their strategic response and ask us to vote strategically without nuance.
I believe your argument is well-placed and logically sound. What solutions do you propose? I’d like to learn more about your views on approaching it fairly and honestly while maintaining integrity.
I would end TDR as we know it and start over. We need a clear set of objectives for what we are trying to achieve, ground rules for how money is to be used to meet those objectives, and measurable standards to see if they are being met. Platforms should not be allowed to propose things outside of those parameters.
To bolster liquidity and reward our dedicated liquidity providers, we’re allocating a substantial amount of TINY as farming rewards. This move is pivotal as we prepare for the upcoming listing of TINY on MEXC and additional CEXs, which will significantly enhance recognition and liquidity for both TINYMAN and the broader Algorand ecosystem.
A robust and deep TINY-ALGO pool is essential to manage high trading volumes and prevent excessive price fluctuations. By focusing on strengthening this pool through TINY farming rewards, we can ensure that market orders are handled efficiently and without major price impact.
We will distribute 2.7 million TINY as farming rewards for the first year. Based on current prices, this is equivalent to 1.5 times the value of TDRs. The distribution is fully permissionless and will be determined by community voting.
The farming rewards program will last for 4 years, with the sustainability of the program dependent on maintaining adequate liquidity depth for the ALGO/TINY pool. If we successfully maintain TINY liquidity and price stability, we will continue the TINY farming rewards for the full 4 years. In contrast, ALGO rewards (TDR) will conclude at the end of this year.
How can you be certain that TDR will conclude at the end of the year? I’ve heard this stated several times now from people related to DeFi platforms, yet I have not seen anything publicly stated by anyone at AF regarding this. Did I miss such a public announcement? Or, was this discussed privately but not disclosed publicly? Or, alternatively, is this mere supposition on Tinyman’s part?
@GhostOfMcAfee Although an official release date for the new consensus mechanism on the mainnet has not yet been set, it was announced at Decipher that it is expected to launch by the end of this year. This means that TDR distribution will cease. We need to base our planning on the information currently available. Should there be any updates or extensions to the TDR program, we will adapt as needed and allocate any additional TDR based on community feedback.
I’m perfectly fine with Tinyman incentivizing the new TINY token. TDR Rewards will reach more of the community this way than spending them on things like “marketing”. I’ll be voting for this allocation.
First, thank you for your comments, feedback, and criticism regarding the token distribution. Any of these are more than welcome, and we’re pleased the community cares about Tinyman and is willing to contribute.
I wouldn’t write anything to respond to you “personally”, but I feel it’s important because your arguments affect others, as we don’t think alike about many of them.
Let me start with TDR — As Tinyman, we have utilized TDRs in a very transparent, fair, and efficient manner since they first came out. If you want to see objective and metric, here you go:
Insight: According to the measures, the number of ALGOs reported by Tinyman has increased steadily (average 16.95%) in each period, thanks to the TDR rewards and Tinyman’s rewards distribution strategy.
Tinyman’s Share in TDR Reporting
Gov P07 (Q1 2023): Tinyman’s Share: 5.22% (46.10M ALGO out of 882.1M ALGO)
Gov P10 (Q4 2023): Tinyman’s Share: 8.35% (73.75M ALGO out of 883.2M ALGO)
Gov P12 (Q2 2024): Tinyman’s Share: 10.17% (92.76M ALGO out of 912.2M ALGO)
Insight: Tinyman’s share of TVL in TDR Calculations has increased gradually over time. It almost doubled during 6 governance periods. This metric also verifies that Tinyman’s TDR reward distribution strategy is accurate.
Active Users and LPs
Active LPs in Q2 2023: 6700 LPs
Active LPs in Q3 2023: 7500 LPs (11.94% growth compared to Q2)
Active LPs in Q4 2023: 8280 LPs (10.40% growth compared to Q3)
Active LPs in Q1 2024: 10200 LPs (23.19% growth compared to Q4)
Active LPs in Q2 2024: 12100 LPs (18.63% growth compared to Q1)
Insight: Thanks to TDR Farms, Active LPs on Tinyman Pools increased regularly (average 16.12%). Increasing the number of LPs on DEXs provides better/stable prices, security of the protocol, and decentralization. Tinyman also has a 42% Active User share in the Algorand DeFi Ecosystem during GP11 and GP12.
GP11: 12700 Tinyman Active Users out of 29860 users in the entire DeFi ecosystem.
GP12: 8745 Tinyman Active Users out of 20233 users in the entire DeFi ecosystem.
If you have any concerns about these, we can talk about whatever you want. Hopefully, this describes how we’ve used and benefited TDR so far.
So, here are the answers and arguments against your asking:
Q- “a poor use of funds to use TDR for LPs besides certain core assets (eg stables, gold/silver, wrapped assets like BTC, ETH, Avax, etc).”
A- We have been persistent in supporting ALGO-ASA pools since day one. You may or may not like it, but we based our strategy on it and all TVL and Volume comes from ALGO pairs. We are also happy to support ASAs such as Chips, Vestige, Gora, Deply, and Coop, as most of these are not listed on any CEXs. It’s crucial to have liquidity depth in these pools, and as the largest AMM in the ecosystem, we see this as a responsibility.
Q - “There is no sensible reason to incentivize Chips LP with AF funds at all. It is the network collectively paying people to provide LP for a particular community. It may be nice for them, but it is of questionable value to the ecosystem as a whole.”
A - I think you are angry and just trying to protest the TDR concept, rather than criticizing to contribute. Let me remind you what is TDR actually. “The goals of the program are to attract new DeFi users and increase flexibility in the governance rewards system. While at times the governance structure may feel rigid, the implementation of targeted DeFi rewards aims to counter that. It gives DeFi projects more flexibility to structure and distribute these rewards to their user base, target rapid growth, deepen DEX liquidity, and provide incentives for DeFi users who are not participating in governance.” Ref. So, it’s all about targeting a larger user base in Algorand DeFi, deepen DEX liquidity, increasing Volume and provide incentives for DeFi users. But you are coming, you are directly objecting to one of the the native ASA which has the most stable liquidity in the ecosystem. Thanks for the feedback, but it would be unfair to the Algorand DeFi community if we incentivize wrapped assets more than ASAs. This is all about our TDR goals and we believe that it works.
Q - “We need a clear set of objectives for what we are trying to achieve, ground rules for how money is to be used to meet those objectives, and measurable standards to see if they are being met.”
A - We already do this, so the objectives are defined, so we measure the metrics and report them at certain periods to the AF. I don’t understand what else exactly you want else to see from us. These are all issues related to strategies and each project has some corners it holds. And we always talk about these and evaluate all together, instead of competing.
Tinyman - ALGO/ASA Pairs
Pact - Stable Pools and Wrapped Tokens
Folks - Lending Pools with Wrapped Assets
etc.
Q - “The problem is that unless AF either acts to stop this or empowers us to vote on this issue specifically, each platform will continue to offer these rewards”
A - If such a design were to be in question, we as Tinyman, would support it before anyone else. Where did you get the idea that we were against this? Let me give you some extra context, there is a section called Farming in Tinyman Governance, you can check it out. Each month there will be a ($TINY) farming proposal that allows users to decide which pool will incentivize how much TINY tokens per month. We designed our own governance system in this way and aimed to give the ownership of the such decisions to the community. And one more, I don’t think it’s right to blame “only” Protocols for this TDR design, I think you’re looking for a solution in the wrong address.
RE: TINY Token Allocation
We are working to make Tinyman the first and main fully permissionless and decentralized protocol in the ecosystem. There is currently a team behind this, but we want to hand over the decision-making mechanism to the Community over time. All of the following were designed in this direction:
Instead of targeting a few users with a large allocation in Airdrop, all users was targeted starting from Tinyman day 1, around 180K users.
The locking mechanism is designed to attract people to stay longer, earn more rewards, but it also gives them more voting rights on the proposals.
Thanks to TINY farms, token distribution will be more distributed way, TVL in the protocol will increase, and other projects in the ecosystem can incentivize their own assets and make a market for their tokens. And as I mentioned above, this will be determined by users’ votes, not by one or a few people.
Instead of just staying on the DEX side, we also want to target CEXs so that TINY tokens can be bought and sold by more users and Algorand DeFi can attract people’s attention in the global market. I don’t know if you have experience with this, but it is quite difficult to get approval from most CEXs as there are currently only a limited number of ASA listed on CEXs. Liquidity depth and active users are important factors here and we want to increase this depth and have a stronger base by incentivizing TINY pools with ALGO.
We have allocated 170K ALGO in this direction (I think it should be much more than this, but anyway), and you are even very opposed to this. If you really think that’s fair, I have nothing to say to that. I’m not sure if you are aware, but we are one of the two most important critical protocols in the ecosystem and have allocated only 170K. We argue that it’ll be beneficial for the ecosystem, as a stable price of the TINY token will be helpful for all Liquidy Providers in the ecosystem. We allocated 2.7M TINYs for each month for the first year. According to the current price, it is 1.5x the TDR and will expire in 4 years, the distribution mechanism is left entirely to the community.
Keeping the price stable is essential to create a long-term plan, ensure a positive feedback loop, and have a sustainable governance system. It’s really sad for me that someone conscious and active in the ecosystem criticizes this allocation instead of supporting what Tinyman aims for.
Note: This not the official response from the Tinyman team, all is my personal opinion.
Thank you again for your support and interest.
Best.
Thank you for the detailed thoughtful response. I will endeavor to do the same.
You are correct that I dislike TDR as a whole (not just as it relates to Tinyman). I think that it has been and remains a poor use of AF treasury funds that could have been better spent in other manners (or not spent at all). I also have an additional concerns specifically regarding the very large percentage allocation to the $TINY pool.
At the outset, I think it is important to highlight that at its core TDR is effectively a tax on all holders and a redistribution of that wealth to certain other holders. As such, its use must be viewed from the perspective of whether this particular allocation meets the needs of and/or benefits the ecosystem as a whole, and not whether it is good for a particular platform or particular subset of holders.
With that in mind, I’ll first reiterate some of my general concerns about TDR before moving on to your specific points.
—It’s narrowly focused on TVL growth while not addressing the underlying issue of actual usage. TVL growth for the sake of TVL growth is nothing but an empty metric unless it serves some other end. Protocols don’t make their money on LP growth, they make it on trade volume and associated fees. Trade volume increases APR on LPs which makes them more attractive for people to add LP. Basically, it is a bassackwards way of doing things.
—It prioritizes TVL growth indiscriminately. By this, I mean it encourages incentivizing LPs without regard to whether they need them or not. The LPs that need liquidity incentives are those that are either consistently hotly traded (but lack depth) or those that we would like to have hotly traded (but lack depth to meet the levels we want). But that’s not what we do. TDR just throws money without a plan. TVL growth seems to be the ends, rather than the means to an ends. But what good is an LP with tons of liquidity if nobody is actually trading in it? IMO, not much.
—It power protects. The whole system favors projects with an existing high TVL. It does not matter if something new comes along. Unless and until your TVL gets high, you will not be rewarded with (checks notes) LP assistance to help your TVL. Wow, such innovation and community support. To be clear, I don’t think community coins should get TDR, but if we are going to go down that path then its insane that our focus is most on floating those that have high TVL instead of helping those that don’t.
—It allows platforms to favor coins where their investors or team are most heavily invested while giving the community little real method for pushing back given the way voting on this has worked. I have a long list of examples for this before the high $TINY incentives. I’m happy to argue this all day long.
—Because it lacks a clear structure on what can and cannot be incentivized, what success looks like, how we will judge it, etc. etc., it has not been reevaluated but rather continued without much critical thought as to whether we should.
—It makes rewards themselves an end rather than a means to an end. In other words, it incentivizes intra-protocol competition for future rewards so they can vampire more users from other protocols to get more TDR and so forth.
One to your points…
In this section you list the growth in Tinyman’s TVL in Algo terms over time, which you credit to TDR. The devil is in the details though.
Firstly, I don’t see how overall growth can be attributed to TDR when not all LPs receive TDR. You would need to examine growth in pools that received TDR from period to period.
Secondly, I think you would need to factor out the gALGO/ALGO pool, which has now become the single largest LP in the entire ecosystem. That’s not growth from TDR, it’s growth attributable to new ALGO being being injected via Governance rewards and users opting for an essentially risk free way of using gALGO to capture a tiny bit more yield. It’s a pool that never should have TDR in the first place.
Thirdly, just looking at total TVL in Algo terms does not necessarily indicate actual growth. For example, if Algo loses USD value compared to goBTC, goETH, or some other asset, there would be “more Algo” in the LP even if nobody added new liquidity to the LP. So, you would need to cross-check this with USD value or actually look at how much new Algo was added via LP commits.
All of this is to say that these metrics (without a lot of refining and checking) do not demonstrate that TDR caused appreciable TVL growth.
In this section you argue that because Tinyman’s share of total TDR allocation has increased, this shows “that Tinyman’s TDR reward distribution strategy is accurate.”
I am not sure what exactly you mean by “accurate”.
If you mean that you think that because Tinyman TDR share increased, it must mean that whatever they did in the past was beneficial overall to the ecosystem, then I disagree with you that the conclusion logically flows from the antecedent.
People will naturally favor an incentive with the highest risk adjusted reward. In the context of crypto LPs, this could mean different things to different people. It could be that people who don’t dabble in meme coins at all want to risk nothing and do a gALGO/ALGO pool. It could mean that people who are already heavily invested in COOP, CHIPS, [insert sh*tcoin here], view their coin’s LPs as the lowest risk adjusted reward for them. However, that does not mean that the lowest risk adjusted reward is the use that is most beneficial to the ecosystem as whole. It means you found the thing that a critical nucleus of people believe that they can extract the most rewards from.
On the other hand, if you mean that you think that because Tinyman TDR share increased, it must mean that whatever they are currently doing in their current plan is beneficial overall to the ecosystem, then I doubly disagree.
In this section you argue that LPs increased and that this is “thanks to TDR farms.” This is nonsensical. There are barely 60 LPs receiving TDR rewards. So, how can you possibly suggest that TDR rewards are responsible for the creation of thousands of LPs for which precisely zero TDR is being provided? If anything, it suggests active LPs are growing considerably even without such rewards.
Replies to your Q&A responses
Is it though? I mean, let’s take CHIPS as an example. It has the most TVL of any single non-wrapped, non-stable ASA. It has held that position for as long as I can remember. It has also consistently been one of the highest rewarded pools in TDR. In the current plan, it sits behind only USDC, gALGO, and your very own TINY token.
But, it also has had only $1,100 in 24hr trade volume. So, why exactly does an ASA with $790k in TVL, but barely $1,100 in 24 hour trade volume warrant a consistently high reward of TDR? It isn’t activity. It isn’t because slippage is intolerable without it. I can identify a ton of coins who have higher trade volume and lower TVL that get less (or more often, zero) rewards. So what exactly is the crucial need you are filling by continuing to throw rewards at CHIPS?
This is not isolated to CHIPS however. I can extend this argument on down the line. TDR is completely divorced from what LPs need incentives, and instead has become a way of placating existing communities who already have a large LP. This is, frankly, a lazy and terrible way of doing things.
This is also not isolated to Tinyman. All platforms seem to do one of two things. Either they preference tokens and pairs that benefit those connected to their platform, and/or their decisions largely just acknowledge there are lots of people in particular LPs, that they want to keep that LP (because keeping it helps next quarter’s TDR allocation), and so they continue to reward it out of fear that if they don’t it will go to another platform that will.
Bingo
First and foremost, my complaint was not about ASA’s getting more TDR than wrapped/stable assets. It was about a single ASA, specifically your ASA ($TINY) getting 2.5x more than all wrapped assets combined.
Secondly . . . why? Personally I think it is more important that people be able to swap between Algo and USDC, EURS, GOLD, BTC, ETH, or other wrapped assets without undue slippage than it is for people to be able to buy a big 'ol stack of $BUTTS that is subsidized by AF treasury funds we all pay for.
It is not you that I want clear objectives from. It is AF. I want a system that says we have goals X, Y, and Z (where those goals are clear). To do that, we will prioritize A, B, and C (where it includes limitations on what types of things will be funded and what won’t). To assess impact, we will measure 1, 2, and 3 (where such metrics are actually measured and where plans and allocations are regularly reevaluated and adjusted).
Your proposals have generally been a continuation of the status quo. And, we see what happens when someone like me chimes in to vigorously challenge that status quo.
I’m quite aware. I’m locked in for 4 years. That’s a fantastic system for allocating where rewards should go when it comes to certain coins (such as $TINY). TDR is not appropriate for that.
I don’t. I blame AF too. They never should have delegated this to protocols without a very clear plan in place.
All my prior concerns apply. Tiny LPs already have set $TINY reward drops. Those in $TINY governance can also reward those LPs with even more $TINY. I still don’t understand why the network as a whole should subsidize anything other than core pairs. Even if we did decide to do so (because, admittedly, TINY is a pretty substantial token when it comes to Algorand as a whole), I still don’t know why it would be incentivized at such an incredibly differential rate.
A skeptical person might say that Borderless Capital and insiders will enjoy all the LP providers incentivized to come in from TDR who will provide exit liquidity when their VC tokens unlock. A less skeptical person would just simply say, why so much? Never in Tinyman’s history of TDR has any asset gotten such a generous share.
Why now? Why does it just so happen that it is Tinyman’s token? Why is it that nobody else incentivizes that token in such a fashion? Are they bad actors who don’t have the networks’ best interest at heart? Or, is it that TDR is fundamentally corrupted by letting the protocols have so much control over what they will or will not incentivize?
TDR is definitely useful. I’d argue to keep it going even after the end of this year (the amount of rewards can be allocated differently but keep TDR going). TDR will create a positive loop for the entire ecosystem. How? It’s simple:
Before I answer how, let me say that we don’t need 10 dexes on Algorand. This fragments liquidity and is overall net negative for the entire ecosystem. We need max 2 solid dexes - tinyman and pact (tho pact seems to be attached to humble, which means they are attached to voi so I can’t say much about pacts future goals and vision with Algorand).
So tinyman it is. We should make tinyman be the go to Dex on Algorand which in the end with TDR, will create a positive loop.
Now how does TDR create a positive loop? It’s simple:
1). We need more liquidity on Tinyman.
2). More liquidity means higher chance of attracting richer people/traders/funds to use the Dex.
3). More rich people using the Dex creates more activity and ultimately more fees for LPs.
4). More fees for LPs from Dex will most likely lead to LPs reinvesting those fees or some of those fees into the pool.
5). More fees being added to the pool increases liquidity on tinyman.
6. (Go Back to point number 2): More liquidity means higher chance of attracting richer people/traders/funds to use the Dex.
I would like to add: Not all pools require TDR. Focus on the pools with most usage and important pools like stablecoins, wbtc, weth etc/
(No hate to voi but voi basically fragmented the entire algo ecosystem even more. Mark my words, write it in stone - voi did not launch for the people and by the people. It launched so their investors/founders can make PROFIT and inflate their egos. There is no other reason to ditch Algorand and start VOI otherwise - Algorand has the best tech and voi copied them.)
I fully agree with this point. Furthermore, I recommend prioritizing incentives for Folks Finance lending pools as they simultaneously support lending and DEX protocols.
However, I disagree with the stance on $TINY TDR allocation. This is an ideal use case for TDR. TinyMan’s strategic use of TDR to support its $TINY token fosters growth for the TinyMan platform and positively impacts the entire Algorand DeFi ecosystem.
I strongly agree here. I also think TDR needs to be sunset ASAP. It is not only hurting Algo token price but holding back innovative Dex solutions like a CLAMM that is designed to improve liquidity.
Dex have no incentive to innovate because they’ll get free money to attract users.