USDL Launch & Staking Updates
Thanks to all of the community support, LRB launch was wildly successful by any metric. At the time of writing, we have already reached:
- 350+ unique wallets holding or staking LRB
- 700k+ LRB staked on Lyrebird
- $1M+ liquidity provided on FRP-FLM-LRB.
The next step will be launching the USDL pool on Flamingo. Like before, we’ll present the important information in bullet points:
- Date/Time: 2022/05/09 Monday, 09:00:00–10:00:00 UTC
- Initial Price: $1.00 per USDL
- Initial Liquidity: $50,0000 in FLM and 50,000 USDL
- Reverse Pool Distribution: 1M LRB per year
50k USDL will be committed to the FRP-FLM-USDL pool from the genesis 10M supply. These are non-retrievable and will be permanently locked into the liquidity pool.
The number of FLM tokens in the pool will be based on the market price of FLM at the time.
Because USDL is a stablecoin, there is no value in purchasing large quantities from the pool early. You will encounter high price impact and the arbitrage bots will bring the price back down to its peg.
Providing Liquidity for FRP-FLM-USDL
In order for USDL to be successful, there needs to be adequate liquidity in the FRP-FLM-USDL pool. We have committed 10M LRB from the Community Distribution allocation to be distributed as rewards for liquidity providers in this pool over the next 10 years.
There are multiple steps required to provide liquidity on FRP-FLM-USDL.
- Acquire FLM on any supported exchange
- Acquire LRB on Flamingo
- Swap LRB for USDL (follow the Swap Guide — swaps under $6k should incur the 0.25% minimum spread unless there was a preceding swap)
- Add liquidity for FRP-FLM-USDL on Flamingo
- Stake your FRP-FLM-USDL tokens on Flamingo
You may be wondering why there are so many steps involved. Our understanding of the fates of similar algorithmic stablecoin protocols is that the ones that de-pegged had overstated or artificially inflated demand in one way or another, whereas the ones that maintained their pegs appear to have encouraged natural growth in demand.
Our primary objective is to ensure that USDL supply will only grow due to natural increases in USDL demand. We have chosen to leave it to LRB holders to burn their LRB and mint USDL by providing appropriate incentives for doing so. The incentive provided here is the Reverse Pool distributions of LRB for providing liquidity on FRP-FLM-USDL.
We will release v1.0.0 of arby shortly after FRP-FLM-USDL has been deployed. There will not be any code changes, only the correct contract hashes set in the production configuration file.
We encourage everyone who is interested to run arby. We unfortunately can’t provide guidelines on what parameters will be the most profitable since they depend on the actions of other market participants, but we’re always happy to assist you if you have any questions on Discord. Having a large number of independent arbitrageurs is crucial for the health of the Lyrebird protocol.
By default, arby will try to ensure that the market values of a wallet’s LRB and USDL are roughly similar, rebalancing on Lyrebird if either drops below a user-specified threshold. For this reason, we recommend that the arbitrage wallet be prepared by swapping some LRB for USDL before arby starts running.
As we mentioned in the beginning, we have been blown away by 700k+ LRB locked up in Lyrebird through staking. Many of you have (rightfully) since asked the question: Why am I doing this? What are the rewards for staking?
Staking rewards primarily come from transaction fees. Lyrebird sets aside a minimum of 0.25% of every swap transaction and keeps it in the LyrebirdAviary contract until it is ready to be distributed.
As of now, we have a whopping 15.57 LRB and 187.46 USDL in fees collected. That’s not very much when divided among the 700k staked LRB, so we haven’t distributed any of these rewards yet. We do expect this number to pick up significantly as arbitrageurs continuously perform swaps to keep USDL at its peg after the USDL pool is launched.
Unfortunately, the current model requires the contract owner to distribute fees manually by invoking transfers from the contract to each staking wallet. Because the fees involved scale linearly with the number of staking addresses, we have decided that we need to change the distribution model going forward.
We will be making a contract update shortly so that staked balances simply increase whenever fees are distributed. This will allow us to distribute fees as frequently as daily. Let’s take a look at an example:
Alice stakes 100 LRB and Bob stakes 100 LRB. We distribute 100 LRB to the stakers, which is divided in half to yield a new staking balance of 150 LRB for both Alice and Bob.
If Alice now stakes another 200 LRB, then the staked balances of Alice and Bob are 350 LRB and 150 LRB, respectively. Proportionately distributing another 100 LRB in fees yields 70 for Alice and 30 for Bob, for total staking balances of 420 and 180, respectively.
It will take some time to make these changes to the LyrebirdToken contract, which means that staking fees will unfortunately not be distributed until then. We apologize for this inconvenience, but these changes will allow us to distribute fees frequently and display approximate APR on the Stake page.
In order to compensate those who have locked up their LRB prior to this announcement, we have decided to airdrop each staking wallet 20% of their staked quantities, or ~150k LRB in total. These will be the “full” airdrops that are locked for one year. These airdrops have already been conducted and are not subject to change. If you are eligible, please check the status of your airdrop on the Claim page
The most important step for Lyrebird is to “prove” that it can keep the peg on USDL. This won’t happen overnight, but we’ll be keeping an eye on the price of USDL and the performance of our arbitrage bots over the coming weeks and months.
In terms of development, the primary focus will be on staking improvements. We will release these changes with an estimate of staking APR to ensure that LRB holders can be well-informed when deciding to stake their tokens.
Other features that we have heard requested are the following:
- Dark mode for the front-end application.
- Re-staking unstaking quantities.
Supporting dark mode is on our list but as a “nice to have” item since it does not impact functionality.
We believe we have a solution for re-staking. We will share more details once we are ready to work on this feature.