Howdy High Fryers.
TL;DR We’re planning to sell 1,000,000 $FRY in exchange for ETHFRY liquidity in a 1% balancer pool. This won’t guarantee a sustained price spike but it will guarantee long term liquidity.
Here’s my latest thinking on the first liquidity experiment we’re going to conduct with $FRY. Some details are still up in the air but as it stands now, I think what I am going to describe is good enough as an experiment.
The desired outcomes of the project and the $FRY holders in the long run are very well aligned in my opinion. As the rest of the system is built, this should become abundantly clear. However in the short term it is entirely possible for these to diverge from one another. Most notably is a $FRY holder FOMOs into $FRY because they saw a green candle, only to have the green candle followed by 90% drawdowns, that of course is understandably distressing. The problem is that in the short term weather other the market will fluctuate beyond anyone’s control, during such times the critical thing is to stay the course and not feed the noise of the system back into itself.
So the desired outcome of this experiment is not to raise the price and keep it high. Ultimately the only thing that can accomplish that in the long run is profitable investment in useful products. In the medium term, as we build, only longs can buoy the price. (Longs being holders who believe more in the long term vision of viable products than just short term gains).
- A higher $ of $FRY in the hands of longs.
- Permanently and continuously increase a pool of irrevocable liquidity. This does not mean the price will remain high, only that we establish a permanent market for $FRY.
- To see what happens To my knowledge something like this hasn’t been done before and how the market responds will be interesting.
The permafrost test mechanics
1 Million $FRY is authorized for the experiment
2. A community member builds a ETHFRY pool on Balancer with a 1% fee
3. The current bucket sale contract is cloned such that:
- It accepts ETHFRY balancer liquidity tokens instead of DAI
- There are only 4 buckets of 250k $FRY each
- There is no referral code system in this clone as it doesn’t make sense with only 4 buckets
- Each bucket lasts 24 hours
What the above accomplishes is that there will always be, an ever growing pool of liquidity to buy $FRY from or sell $FRY to. This means that newcomers cannot be rug pulled, there will always be a market. This doesn’t guarantee the price.
Because this guarantees a market for $FRY, it means that the $FRY in the treasury immediately gain more utility as they can be used more reliably to pay contractors. This greatly increases the reach of the treasury.
Note on why the permafrost would grow over time
With a 1% balancer pool, every time there is a trade in or out of $FRY on the pool, the pool will grow with 1% of the trade amount. This means that in both manias and panics, the liquidity for $FRY will deepen.