Proposal for the Allocation of 1,250,000 ALGO to Incentivize Liquidity Pools and Liquid Staking on Tinyman
Objective:
The goal of this proposal is to increase liquidity and trading volume while also drive ALGO staking via Tinyman’s Liquid Staking solution and to enhance liquidity in tALGO pools. We aim to reward both liquidity providers and stakers while contributing to the security and decentralization of the Algorand network.
Proposed Allocation:
We propose allocating the 1,250,000 ALGO reward fund as follows:
- 60% for the most active ALGO liquidity pools (with the highest TVL and trading volume).
- 40% to incentivize tALGO liquidity (including tALGO-USDC, tALGO-TINY, and other emerging tALGO pools), as well as to support liquid staking and further adoption.
Why This Matters:
Tinyman is at a pivotal moment. We’ve launched Liquid Staking with tALGO, allowing users to stake ALGO while maintaining liquidity. This innovation enables users to earn staking rewards (currently 4%) without being locked into staking, giving them the flexibility to participate in DeFi while still securing the Algorand network.
- 11.5 million ALGO is already staked in our Liquid Staking pool.
- More than 25,000 ALGO has been distributed as rewards to stakers to date.
- We’ve seen strong interest, but there’s still considerable potential to further drive adoption.
By incentivizing staking and liquidity, we aim to boost both ALGO staking and the growth of tALGO liquidity pools, creating a sustainable ecosystem for Algorand.
Metrics for Success:
To ensure the success of this initiative, we will track the following key performance indicators:
- Total Value Locked (TVL): Increase in the TVL of tALGO pools and ALGO liquidity pools on Tinyman.
- Trading Volume: Growth in trading volume across incentivized liquidity pools, demonstrating increased activity.
- Staking Participation: Percentage increase in ALGO staked through the Liquid Staking solution, contributing to network security and decentralization.
By setting clear metrics, we aim to align expectations with the Algorand Foundation and community while effectively measuring the program’s impact.
How We Plan to Use the 1,250,000 ALGO:
We propose the following distribution:
1. ALGO Liquidity Pools (60% - 750,000 ALGO):
These funds will incentivize the most active ALGO liquidity pools on Tinyman. These pools, which have generated over $125 million in trading volume in the last 30 days, play a key role in Tinyman’s ecosystem.
- Objective: Boost liquidity, encourage further trading activity, and foster growth on the Tinyman DEX.
2. Liquid Staking (tALGO - 40% - 500,000 ALGO):
500,000 ALGO will be dedicated to incentivizing tALGO liquidity pools, including tALGO-USDC, tALGO-TINY, and tALGO-xALGO, as well as to support ALGO staking through the Liquid Staking solution.
- Objective: Increase tALGO usage and ensure users have the flexibility to stake ALGO and contribute to the network’s security while maintaining liquidity through tALGO.
Why Incentivize Staking?
Incentivizing staking offers dual benefits:
- Network Security & Decentralization: Staking ALGO contributes to securing the Algorand network, making it more resilient and decentralized.
- Liquidity & Flexibility: Using tALGO, users can stake ALGO and still access liquidity. Stakers receive tALGO, which can be used in tALGO liquidity pools or restaked for additional rewards.
Currently, Tinyman is already offering a 4% staking reward to users who stake ALGO in our pool until the official staking rewards from the Algorand Foundation go live. This ensures users don’t miss out on staking rewards while waiting for official implementations.
Incentivizing tALGO Pools:
In addition to staking incentives, we will use part of the allocated ALGO to increase liquidity in the tALGO liquidity pools, including tALGO-USDC, tALGO-TINY and tALGO-xALGO. These pools have already generated $2.5 million in trading volume in the past 30 days and continue to show growth potential. More liquidity in these pools will:
- Increase the demand for tALGO.
- Make tALGO a more attractive asset for stakers and liquidity providers.
- Further contribute to the growth of the DeFi ecosystem on Algorand.
Simplified Reward Structure for New tALGO Pools:
To support the growth of emerging tALGO pools, we propose a simplified rewards structure based on TVL milestones:
- 5,000 USD TVL: 1,500 ALGO
- 10,000 USD TVL: 3,000 ALGO
- 20,000 USD TVL: 5,000 ALGO
This approach ensures that rewards are distributed to pools contributing genuine liquidity while remaining easy to understand and implement. By focusing on key milestones, we aim to attract new participants and push healthy growth.
Long-Term Benefits to Algorand:
This proposal aligns closely with Algorand’s broader goals:
- Increasing Network Decentralization: By encouraging staking, we enhance the network’s resilience and security.
- Expanding the DeFi Ecosystem: Incentivizing liquidity and staking will drive more activity and innovation within Algorand’s DeFi space.
- Enhancing ALGO and tALGO Adoption: By making staking and liquidity provision more accessible and rewarding, we foster greater adoption of ALGO and tALGO across the ecosystem.
These efforts will not only support Tinyman’s growth but also strengthen Algorand as a whole, positioning it as a leading platform for decentralized finance.
Next Steps:
- Approval and Allocation of 750,000 ALGO:
- If approved, 750,000 ALGO will be distributed to qualifying ALGO liquidity pools as outlined below.
- ALGO Allocation Breakdown:
- 400,000 ALGO will incentivize tALGO pools (tALGO-USDC, tALGO-TINY, tALGO-xALGO as well as new qualifying tALGO pools)
- 100,000 ALGO will be reserved for staking rewards.
- Reward Distribution Timeline:
- Rewards will be distributed from January 14th to March 31st, 2024.
- Fixed Allocation for New Pools Based on TVL Milestones:
- Rewards will be distributed to pools reaching milestones, as detailed above.
- Monitoring and Adjustments:
- We will monitor the development of new tALGO pools closely until February 28th. If there is insufficient traction to utilize the full 100,000 ALGO reward allocation, the unspent rewards will be reallocated to high-performing tALGO pools instead. Similarly, for the rewards allocated to the Tinyman Stakepool, if the Algorand Foundation launches its staking rewards program, the Tinyman Stakepool will no longer receive TDR incentives. Instead, the allocated ALGO rewards will be redirected to high-performing tALGO pools, ensuring efficient and impactful use of the rewards.
Summary of Allocation:
| Category | Amount (ALGO) | Percentage |
|---|---|---|
| Liquidity Pools | 750,000 | 60% |
| Liquid Staking | 500,000 | 40% |
ALGO Liquidity Pools:
| Asset 1 | Asset 2 | Reward Allocation |
|---|---|---|
| goBTC | Algorand | 25,000.00 |
| goETH | Algorand | 5,000.00 |
| goETH | goBTC | 5,000.00 |
| Wrapped BTC | Algorand | 5,000.00 |
| ChainLink Token | Algorand | 5,000.00 |
| Wrapped AVAX | Algorand | 5,000.00 |
| Wrapped Ether | Algorand | 5,000.00 |
| Wrapped SOL | Algorand | 5,000.00 |
| Wrapped BNB | Algorand | 5,000.00 |
| CAT | Algorand | 2,000.00 |
| monko | Algorand | 25,000.00 |
| Pepe | Algorand | 10,000.00 |
| Dugly | Algorand | 7,000.00 |
| Meep | Algorand | 5,000.00 |
| AKITA INU | Algorand | 5,000.00 |
| Orange | Algorand | 5,000.00 |
| MoonJuiceRocketFuel | Algorand | 5,000.00 |
| Coop Coin | Algorand | 5,000.00 |
| Mewcali | Algorand | 2,000.00 |
| Marcus | Algorand | 2,000.00 |
| TINA | Algorand | 2,000.00 |
| FLOKI | Algorand | 2,000.00 |
| Folks V2 USDC | Folks V2 Algo | 50,000.00 |
| Folks V2 Governance Algo | Folks V2 Algo | 2,000.00 |
| USDC | Algorand | 450,000.00 |
| Opulous | Algorand | 10,000.00 |
| Governance Algo | Algorand | 10,000.00 |
| xUSD | Algorand | 10,000.00 |
| TINY | Algorand | 20,000.00 |
| GORA | Algorand | 10,000.00 |
| mALGO | Algorand | 10,000.00 |
| Daffi Reward | Algorand | 5,000.00 |
| Meld Gold (g) | Algorand | 5,000.00 |
| Meld Silver (g) | Algorand | 5,000.00 |
| Polkagold | Algorand | 5,000.00 |
| Defly Token | Algorand | 2,000.00 |
| Chips | Algorand | 2,000.00 |
| Vestige | Algorand | 2,000.00 |
| Infinite Potential Token | Algorand | 2,000.00 |
| BOBO | Algorand | 2,000.00 |
| EXA | Algorand | 2,000.00 |
| ALGO 200 | Algorand | 2,000.00 |
| Fry | Algorand | 2,000.00 |
| 750,000.00 |
Breakdown of the Remaining 500,000 ALGO Rewards Allocation:
Active tALGO Pools:
| tALGO Pool | Reward Allocation |
|---|---|
| tALGO - TINY | 100,000 |
| tALGO - USDC | 200,000 |
| 300,000 |
Upcoming tALGO Pools (+5K USD TVL Requirement):
| tALGO Pool | Reward Allocation |
|---|---|
| tALGO - xALGO | 1,500 |
| tALGO - ORA | 1,500 |
| tALGO - Upcoming | 97,000 |
| 100,000 |
TINYMAN Stakepool:
| TINYMAN Stakepool | Reward Allocation |
|---|---|
| 100,000 |
We are looking forward to hear your feedback!