The time has come for Phuture to announce its very first liquidity mining programme. Our first LM programme will focus on the SushiSwap USDC/PHTR pool. Phuture’s token, PHTR, serves many purposes including:
- Governance — Staked PHTR holders can exercise their right to vote on, or propose new ideas to improve the Phuture protocol.
- Staking — Users who stake PHTR receive Enhanced PHTR (ePHTR), a yield generating, governance enabled variant of PHTR.
- Solver Rewards — PHTR is earned by solvers on non-Ethereum chains and rollups, for performing critical platform functions.
- Solver Bond — A minimum PHTR bond is required in order for solvers to get whitelisted to execute platform functions.
- Liquidity Incentives — Distributed to liquidity providers of PHTR and other Phuture products.
Given the importance of acquiring PHTR for utility within the platform, it is paramount that we have a liquid on-chain trading venue. Our decision to incentivise the USDC/PHTR pool was a deliberate one. Firstly, it provides us with a robust dollar denominated price feed that only requires one call. This allows us to accurately value solver bonds. Secondly, it gives us a zero hop conversion of fees from USDC to PHTR, improving gas efficiency.
When designing our liquidity mining structure we took inspiration from this Mechanism Capital article, which describes how a quantitative approach can be used to estimate the token budget of a liquidity mining programme. Our goal was to obtain less than or equal to 0.5% price impact for a 25000 USDC trade on the USDC/PHTR pool.
Using our liquidity mining budget calculator, which you can find here, we estimate that the USDC/PHTR pool will need to have a total USD value of approximately $10mm (at current prices) to satisfy our price impact criterion. With this information, we can now begin to calculate the amount of PHTR we should allocate.
Firstly, we project out the price of PHTR given the impact the liquidity mining programme, as well as other factors, will have on it. Using this new price we estimate that we will have to distribute approximately 2.2mm PHTR or 2.2% of the total supply. Since we are splitting this programme into two 6 month periods, we are going to distribute 1% in the first period and then based on the prevailing data amend the distribution for the second period.
How does it work?
There are three factors that influence the APR that you receive in this liquidity mining programme:
- Liquidity Tier
- Lock-Up Duration
- Referral Scheme
The boost you receive from each factor sums to your total boost. Importantly, your total boost does not equal your APR. Your APR is improved by having a higher total boost, but is also dependent on the PHTR USD price and the amount of existing liquidity staked in the programme.
A liquidity tier is assigned based on your percentage ownership of the liquidity pool. The higher your share of the pool the higher your boost.
Tier 1 requires at least a 0.1% pool ownership, Tier 2 requires at least 0.5%, Tier 3 requires at least 2%, Tier 4 requires at least 6% and Tier 5 requires at least 10%. Pool ownership is defined as your liquidity shares divided by total liquidity shares.
Your liquidity tier is based on the liquidity tokens you have staked across all lock-up durations.
You will have the choice of locking up your liquidity tokens for different lengths of time. The longer your lock-up the higher your boost will be.
Note that you can unstake your liquidity tokens at any time, however, unstaking before your lockup has ended will result in forfeiting all accrued rewards for those liquidity tokens.
The goal of the referral scheme is to introduce a mechanic that increases the reach of this programme.The scheme is mutually beneficial for both the referee and the referrer. If you stake your liquidity tokens using a referral address you will receive an additional 1% boost to your APR. The referrer will receive a boost equal to 5% of the referee’s total boost, which is made up of their liquidity, lock-up and referral boosts.
We are excited to launch liquidity mining for our native token PHTR. It provides a much needed boost in on-chain liquidity, which is key to the smooth operation of our ecosystem. In addition, it acts as a channel for us to grow the number of PHTR token holders, bringing more depth to our community. Please join the liquidity mining programme here.