The Furucombo folks recently launched their COMBO token via a Balancer Liquidity Bootstrapping Pool, and along with it the commencement of their Transaction Mining Program.
Today marked the end of the 1st week so here are my observations as a program participant.
TL;DR
- The transaction mining program goes for two months until 11-Mar-2021.
- It’s a stake-trading competition with wash trading prevention mechanisms.
- The way they prevent wash trading is by ranking and normalizing each wallet’s volume to facilitate a more even playing field.
- Rewards calculation is based on trading rank, staking amount and staking duration.
- Unlike typical liquidity mining programs, where you simply stake your LP token to earn rewards, Furucombo’s tx mining requires you to execute eligible transactions. Then they calculate the volume together with your staking area (amount*duration).
- Exceptions: only certain cubes are eligible for the volume. (see the list)
Week 1 observations
Given the ‘stake trading’ incentive model of this program it was hard to forecast anticipated returns ahead of time since it’s relative to the rest of the competition and their respective tokens staked.
As a test I staked about 1500–2000 COMBO tokens into the plain staking pool and after about a day or so I moved things around into the LP UniV2 pool. In terms of volume, I generated around $30k on the first day, and then in the final 2 days of the week I did a few things and added a cumulative total volume of roughly $2-3M.
Based on the week 1 results, my initial reaction was that the last minute ‘miscellaneous’ trades made very little impact to my week 1 yields, which was less than 1k COMBO tokens in total plain staking rewards. It was only marginally higher than another user who staked 2000 COMBO tokens, generated $46k in volume and received 440 tokens. In reality, the timing of my big trades vs that user played a part, because the price of the COMBO token varied greatly between the two executions, which factored into the reward calculations.
I also get the feeling the staking amount far outweighs the transaction volume generated in the context of rewards calculation. I don’t have the stats to prove it yet, just my gut feel.
In any case my combined plain staking + LP staking approach in week 1 works out to an APY of 3,300%, which is pretty decent compared to other liquidity mining programs out there, but keep in mind this would vary depending on how much you staked, for how long and volume derived rank.
You can also browse through twitter posts with the hashtag #combomining to see what results other community members have been getting. This should give you a broad idea of what to expect across a wider range of stake trading scenarios.
Strategies for week 2 and beyond
There are many ways to boost your transaction mining yields. Some are more obvious than others.
- Have the longest and biggest staking in the pool
This obviously goes without saying. Since the rewards calculation uses staking area as a weight factor for the rewards, it doesn’t matter if you trade before or after you stake. Volume and staking area are calculated separately, hence you should stake as early as you can to give you a bigger area.
There are two pools that you can stake:
- Swap token to COMBO and Stake to COMBO pool
- Swap token to COMBO, add liquidity to Uniswap pool, and then stake the LP tokens on Furucombo
If you don’t have any COMBO tokens to begin with, you can grab some on Uniswap, then stake them straight to Furucombo. These buy-and-stake actions can be done in one transaction using Furucombo and of course, the Uniswap Swap volume will also count towards your eligible transactions.
2. Plain Staking VS COMBO-ETH Uniswap LP
By way of definition, transaction rewards from the plain staking COMBO pool gets shared between all users who trade on Furucombo, regardless of whether they staked COMBO tokens or not. The transaction rewards from the ETH-COMBO Liquidity Pool on Uniswap V2 on the other hand would only be shared between people who staked in this specific pool. This plays a sizable part in the ensuing APY %’s.
If you’ve been hanging around in the Furucombo discord you would have seen @Deepcryptodive sharing his astute observation on the differences between these two staking options.
At one point in week 1, there was $687k worth of COMBO tokens in plain staking vs $177k staked in the ETH-COMBO Uni pool. If you compare week 1 yields between similar stake areas across these pools, you’ll notice the ETH-COMBO LP pools were generating four times as much yield as the plain staking pools. However, you’ll need to factor in the risk of Impermanent Loss when weighing up whether to switch between pools so it certainly isn’t a risk free option.
To save you time, @Deepcryptodive has created a preset combo you can use to switch over from plain staking to the ETH/COMBO uniswap pool.
3. Use Uniswap V2 DAI-ETH LP token to create a Maker vault
This is a strategy that came to mind when I looked at the list of eligible cubes. According to the list, Uniswap swap and Maker Generate cubes are both eligible for volume calculation.
In order to use Uniswap V2 DAI-ETH LP tokens as collateral to create a Maker new vault, the combo would involve the following steps:
- Swap ETH to DAI
- Add DAI/ETH to pool, get LP token
- Create a new vault using LP token
- Generate DAI from the vault
You can use this to boost the trading volume, but remember you’ll need to pay some stability fees to Maker once you close this position. The Furu team already have this setup as a pre-set combo for ease of use.
Note: as at 22nd Jan coingecko have yet to price for DAI-ETH LP token so its maker deposit won’t be counted.
4. Zero slippage combos
I get the feeling a lot of beginners on day 1 went straight to flash loaning a million DAI to swap on Uniswap, before realizing anything above $20k would run into some serious slippage.
Using Curve cubes is better in this regard as their StableSwap algorithm minimizes slippages for stablecoin trades, but it still adds up when you’re trading at scale (e.g. this $500k USDC-DAI-GUSD combo would still slip over $1k).
To get around this, I encourage you to look at the eligible combo blocks which involve minimal to no slippages.
This includes:
- Compound Supply/Repay
- Maker Generate/Payback/Deposit
- Yearn Deposit
and then formulate a high-volume strategy around these eligible cubes.
5. sigh… flash wash trading
This has been asked quite a few times in discord so just to clarify:
The flash loan cubes themselves do not count towards your transaction volume. However, what you do with the flash liquidity before you repay the flash loan may count if you use it in eligible cubes.
Do with that information however you want.
It’d be very interesting to monitor what other players are doing to optimize their returns. If you’re not already doing this I would suggest monitoring Furucombo’s proxy contract as well as their discord channel discussions.
Please Note:
Furucombo’s transaction mining program is highly experimental as the incentive model (staking + trading competition) is unprecedented in DeFi. Everything in this article is NOT financial advice.
Please DYOR before apeing into anything. Happy Mining!
