Disclaimer: The annual percentage yield (APY) mentioned in this post is an estimate and will fluctuate over time based on external factors, such as the SPDR token market price and percentage of tokens locked for liquidity mining purposes. The SpiderDAO team has no control over these factors.
Liquidity mining is relatively new in crypto and is a community-focused token distribution strategy. The basic idea here is that token holders provide capital to a project, by becoming Liquidity Providers (LPs), in return for its native token. Liquidity mining allows a fair and wide distribution of tokens instead of concentrating ownership in the hands of early investors. Token ownership tends to encourage high community participation and engagement, which is crucial to building a successful DAO. From a project’s perspective, liquidity mining provides deep and stable liquidity for a token while facilitating lower slippage and a better trading experience.
The SpiderDAO Distribution
The SpiderDAO Distribution Program is designed to facilitate a long-term transfer of ownership in the DAO to users providing value to the project by becoming LPs. The program will last for approximately five years. This will allow new community members to join over time, instead of front-loading the rewards and attracting mercenary capital with no interest in the project. To facilitate decentralization of the SpiderDAO, 60% of the SPDR supply will be distributed to the community through the SpiderDAO Distribution while only 10% of the supply has been sold to investors. This means that over time, ownership of the DAO will pass to participants in the program who by definition have been long term holders of the token and maintained constant exposure to it as liquidity providers.
To qualify for the program, participants will have to provide liquidity to the SPDR/ETH or SPDR/USDT liquidity mining pools on Uniswap and then stake their LP tokens through the https://mine.spiderdao.io.
APY Scaling Mechanism
The APY Scaling Mechanism will be introduced to redirect a portion of the emissions from the liquidity mining program into Nest Rewards to facilitate the Spider Nests.
To do this, we will gradually reduce token emissions generated from liquidity mining from 50 SPDR per block to 25 SPDR per block over the course of 5 weeks and reduce the length of the liquidity program from 5 to 4 years.
This will help cater to a wider variety of SPDR token holders, enabling them to choose how they wish to deploy their SPDR:
Liquidity Mining: Benefit from free VPN access via LAU and earn high APY by staking an SPDR/X pair.
Spider Nest: De-risk their holding, generate a guaranteed APY, and enjoy the product benefits of SpiderVPN
Overall, the introduction of this new mechanism will bring several benefits to the SpiderDAO ecosystem, including:
Incentivise committed, long term supporters of SPDR with product-based rewards and guaranteed APY.
Enable smoother scaling of token utility with product adoption.
Help convert a more significant market share of SPDR holders into SpiderVPN users and enable them to leverage LAU’s benefits even with staked tokens in the Vault.