Freeliquid rewards distribution
UPDATE 18.01.2021: Four more liquidity pairs have been added to the 2nd FL reward program, please read below.
After the launch of the Freeliquid Protocol on 21.12.2020, a total value of more than $400,000 in liquidity pool tokens has been deposited in Freeliquid Borrow, issuing around 150,000 of USDFL stablecoins during the first few days only. The developer team of Freeliquid is thankful to all new users for trusting our platform and being the early supporters of the Freeliquid Protocol.
We would like to announce the next two reward programs that will start on 31.12.2020, 00:00 UTC. The 2nd and the 3rd programs will both have 850,000 FL tokens distributed over a course of months, which amounts to 85% of the future total supply. They are by far the largest and most impactful reward programs of Freeliquid. Thus, we would like to encourage users to take this opportunity and support our platform by participating in the next distribution programs!
This article begins with a general information about Freeliquid, since we assume that many readers are new to the project. A detailed description of the 2nd and the 3rd reward programs will be given in the second part of the text.
What is Freeliquid?
The Freeliquid Protocol is a new decentralized lending platform that has been launched on 21.12.2020. The main advantage of the Freeliquid Protocol is that it allows to lock liquidity pools from platforms like Uniswap as collateral.
For more information about Freeliquid Borrow, please read our recent Medium article and watch our video about opening a Vault. At the moment, Freeliquid supports only Uniswap liquidity pool tokens that consist of following pairs: USDT-USDC, USDT-DAI, USDC-DAI, USDT-USDN. The developer team is currently working on adding the support for further collaterals and platforms, for example, for locked pools from Curve Finance.
What are the USDFL and FL tokens?
USDFL is the native stablecoin of Freeliquid, which is soft-pegged to one US dollar. Similar to DAI, all loans on Freeliquid Borrow are priced and issued in USDFL. The Freeliquid Protocol generates one USDFL for every $1 of value locked in Freeliquid Borrow. Since users can take a loan only up to 90% of the pool total value, USDFL is always backed by a larger amount of USD stablecoins.
FL is the governance token of Freeliquid. The total supply of FL tokens is limited to 1,000,000 (one million). The governance token can serve several functions, including:
- Creating and voting on community proposals in the governance portal
- A source of additional income in USDFL through buybacks and burning of FL tokens on Auctions (see Chapter 2.4 in white paper)
- An instrument to earn additional FL rewards through providing liquidity for USDFL-FL pair (see FL distribution program #2 described below)
The FL token will play an important role in the ecosystem of Freeliquid. As our platform grows, the developer team of Freeliquid further plans to add more utility to FL, increasing its demand and use cases.
How are FL tokens distributed?
The distribution model of FL tokens reflects the team’s view of a decentralized community that takes an active part in the project life. We have rejected the idea of performing an ICO or doing a private sale, which might have lead to an unfair distribution of the governance tokens.
The developer team of Freeliquid has also decided not to perform a flashy marketing campaign or give our future users empty promises. Instead, we would like to show to everyone the usefulness of our product and incentivize our users to participate in its governance, while rewarding them for their effort.
Following this philosophy, the whole supply of FL tokens will be distributed along the next two years as rewards to users that support Freeliquid in one or another way. All four reward programs are explained in details in the Section 3.3 of our white paper. We will now describe the two upcoming distribution programs in more details.
Announcing FL reward programs for liquidity providers
The 2nd and the 3rd distribution programs will both start from 31.12.2020, 00:00 UTC. They are designed to support the liquidity of USDFL and FL pairs on Uniswap, so Freeliquid users could efficiently exchange and trade our native tokens. A certain amount of FL tokens will be constantly distributed to all users that added to the respective liquidity pairs on Uniswap and locked the received liquidity tokens in Freeliquid Reward tab.
The issuance rate of FL tokens is adjusted once in several days and represents a non-linear function, shown in Appendix 1 at the end of this article. The average hourly rates given below are a rough estimation calculated simply by dividing the amount of distributed token by the program’s duration. In fact, the rates will be much higher in the beginning of the programs and drop substantially when nearing its end, since the volatility of pairs should be higher in the early days of the project. Users can always see the exact reward rate in the web interface of Freeliquid Reward.
Overview of the reward programs
FL distribution program #2
Users that add Uniswap liquidity to pairs consiting of FL and stablecoins will be eligible to the rewards. The 2nd program will distribute 400,000 FL tokens during 90 days (day 11 to day 100). The hourly rate is approx. 185.19 FL tokens on average.
After the 1st community vote, four more pairs with other stablecoins (USDT, USDC, DAI, USDN) have been added to the FL reward program. Together with USDFL-FL, all five pairs are counted as one large pool.
Moreover, the added pairs (but not the USDFL-FL pair) received an x2 boost advantage when their value is counted in Freeliquid Reward. This measure has been proposed to remove the selling pressure from USDFL-FL pair, which in turn affected USDFL’s $1 peg.
For example, LP tokens that represent $1000 of liquidity in the DAI-FL or USDN-FL pair will be valued as $2000 by the Reward module, thus, effictively doubling the user’s share in the common pool. The $1000 worth of USDFL-FL LP tokens will be still counted as $1000. Put simply, liquidity providers for USDFL-FL receive an x2 disadvantage over all other FL pairs. Note that this does not affect the FL issuance rate — it remains the same and as described in our issuance schedules earlier!
Please add liquidity using only the following FL pair addresses:
- USDFL-FL: 0xf03756e7a2b088a8c5d042c764184e8748dfa10d
- USDT-FL: 0x6e35996ae06c45e9de2736c44df9c3f1aab781af
- USDC-FL: 0xec314d972fc771eae56ec5063a5282a554fd54a2
- DAI-FL: 0xc869935efe9264874baf7940449925318f193322
- USDN-FL: 0x3c63d86453f6491948c2c33065c441a507f2f32c
All other addresses are invalid!
Note that the FL token is not a stablecoin — its price is totally dependent on the supply and demand on the market. Liquidity providers for the FL pairs might thus undergo an impermanent loss. To compensate this risk, the daily FL rewards for the 2nd program are substantially higher than in the 3rd program.
FL distribution program #3
Users that provide liquidity for pairs consisting of USDFL and one of the stablecoins, supported on Freeliquid, are eligible to the rewards. The 3rd program will distribute 450,000 FL tokens during 371 days (day 11 to day 381). The hourly rate for all users will be approx. 50.54 FL tokens on average.
Please add liquidity using only the following USDFL pair addresses:
- USDT-USDFL: 0xedf7a6fb0d750dd807375530096ebf2e756eaee0
- USDC-USDFL: 0x481c830edc1710e06e65c32bd7c05add5516985b
- DAI-USDFL: 0xa8216f6eb1f36e1de04d39c3bc7376d2385f3455
- USDN-USDFL: 0x85790c03400b7f6d35895dbb7198c41ecde4a7f7
All other addresses are invalid!
Note that the whole list of USDFL pairs, including the USDFL-FL, is conveniently accessible in the Freeliquid Reward tab or by simply pasting the USDFL contract address in Uniswap token explorer at the following link.
How to participate in Freeliquid reward programs?
In our example, we will explain the participation process for the 2nd reward program, adding liquidity for the USDFL-FL pair. The process is identical for any other pair from the 3rd program as well.
Adding liquidity on Uniswap
Despite users of Freeliquid should be already familiar with adding liquidity to Uniswap pairs, we describe the whole process one more time to avoid any mistakes.
Go to the USDFL-FL on Uniswap pair explorer by using the contract address given above. Always check that you are adding liquidity to a genuine pair by carefully comparing the addresses!
Next, connect your wallet where FL and USDFL tokens are stored. Make sure you have enough ETH on your wallet to cover the gas fees. If you are sending USDFL and/or FL tokens for the first time, you have to approve the address by sending a transaction.
After all tokens are approved, enter the desired amount for one of the tokens. The other pair should be adjusted automatically by Uniswap based on the current prices of both tokens. If everything is correct, press “Supply” and confirm the transaction in your wallet.
You should now be able to see and manage your USDFL-FL liquidity through the “Pool” tab on Uniswap. Probably you will have to import the token pair manually, since the liquidity tokens of the USDFL-FL pair are not automatically recognized by Uniswap.
Locking liquidity tokens in Freeliquid Reward
After receiving your liquidity provider tokens (for example, for the USDFL-FL pair), you have to lock them in Freeliquid Reward to be eligible for the FL distribution.
First, set the allowance for the USDFL-FL pair for your proxy address. As in Freeliquid Borrow, it has to be done only once for each pair. Then, press “Lock” and enter the amount in USD equivalent to lock. After the transaction is confirmed, you should see your rewards starting to being constantly accrued to your account. You can lock or unlock additional tokens later, as well as add other pairs, participating in both of the rewards programs at the same time.
If you want to have FL rewards transferred to your wallet, generate a respective transaction by pressing “Get Reward.” As always, please note that all transactions described in out tutorial cost a considerable amount of gas fees and are irreversible. Users are encouraged to thoroughly plan the exact amount of tokens that they want to add to liquidity and later lock in Freeliquid Reward to avoid additional transactions.