Posts

Why Taking Quick Profits May Be a Bad Strategy for PolyCUB?

avatar of @gadrian
25
Adrian
@gadrian
·
·
0 views
·
3 min read

PolyCUB is almost here. Soon, very soon, now, who knows? But it's almost here and we can feel the excitement in the air for this launch and the airdrop.

People are getting ready for it. Think of strategies and make plans.

What we need to be very aware of is that CubFinance and PolyCUB are different so much so that they can almost be considered opposites.

The strategies that would have worked on CubFinance at launch and during the first few days in hindsight may prove to be completely wrong on PolyCUB.

CUB is an inflationist token, being printed at a rate of 1 CUB per block since early after launch. If I remember well, at launch it had a print rate of 3 or 4 CUB per block and soon after dropped to 2 CUB per block for another short while and then it dropped and remained at 1 CUB per block since. So, CUB was deflationist in the first month or so, but after that the print rate remained constant, and the circulating supply is kept under control through burns.

pCUB is deflationist. I'm not sure what will be the starting print rate, but Khal said the print rate halves every month until it goes to zero. When that happens, rewards will be distributed from the Protocol-Owned-Liquidity (POV) alone, which is expected to grow exponentially during the first few months after launch.

Up to this point, one could say there's still nothing that would limit quick profit taking in the early days of PolyCub.

But there's more.

On CubFinance there is a mechanism to distribute back to CUB holders in the kingdom a share of the 3% fee on rewards generated in the kingdoms, as BNB. To be honest, I haven't seen much from this mechanism, so I'm glad it's something else on PolyCub.

I don't remember the exact details, but on PolyCub instead of a small fee on rewards generated, there will be a huge penalty (50%) on early withdrawing (I believe it's about withdrawing from some bonded contracts, Khal will need to make another huge post explaining the full details, instead of hints in the AMAs - I already forgot the hints from earlier AMAs, apparently).

The fees collected from these penalties will go to those who prefer the long-term approach. There is a mechanism for that which involves something like staking.

I know my details are rather sketchy, but I draw these conclusions:

  • early adopters will still earn the top rewards
  • giving up 50% of the gains will make taking quick profits out less appealing
  • if POV grows exponentially early on, it may reach the critical mass to allow the platform to keep rewarding perpetually while the fund keeps growing (and thus the rewards)

We need full details on PolyCub refreshed to be able to take the best decisions early on. At the same time, there are other factors. Will LeoBrige 3.0 be available at PolyCub launch or not? If not, other bridges need to be used, and most of them have a limited number of tokens supported (usually stablecoins). Certainly bLEO won't be one of them. Which means bLEO would need to be swapped for a supported token, if one wants to move LEO over to PolyCub.

While the APRs in the LPs depend on the liquidity and they will be higher before everyone storms in, it's still a matter of hours or days before things start to stabilize. So, it's not A LOT to gain, if one has the long-term perspective in mind.

Compared to CubFinance, on PolyCub there will be more time at the highest print rate. That is likely to coincide with many yield farmers joining to take advantage of the high yield on a new platform. They will be the ones to generate the most 50% penalties for early withdrawals, most likely. Which will go to long-term holders on PolyCUB (the exact mechanism how this happens will be known).

We've been in the block-start for a while waiting for the lights to turn on and then off for PolyCUB. After a few false starts, it looks we may have a real one very soon.

UPDATE: I'm adding a link to an older official post which Zoltan (@ph1102) shared in the comments. It contains lots of useful information, explained in a more precise manner than I did in my post:

Posted Using LeoFinance Beta