Introducing the XDB Liquidity Reward Program on Uniswap
There is no doubt that DEX trading has increased in popularity in 2020. In support of this, the XDB Foundation is excited to announce the XDB Liquidity Reward Program exclusively on Uniswap.
XDB Liquidity Reward Program Details
Start: Wednesday, December 30, 2020, with Ethereum block #11556353
Expiration: No expiration date has been set. However we do reserve the right to terminate the program at any time.
Reward Size: Initially the reward size will be seven (7) XDB tokens per one (1) Ethereum block, with the XDB Foundation maintaining the right to change the reward size with seven (7) days notice as the program matures. It is expected that the reward size will be decreased to less than 7 tokens within 30 days. This medium post will be updated with notices from the Foundation with any changes from time to time.
Reward Distribution: Rewards will be distributed every seven (7) days so long as the program is operational. Rewards will be distributed based on a Liquidity Providers (LP) proportional contribution to the Uniswap XDB-ETH liquidity pool. There is no minimum or maximum contribution amount required to participate in this program.
Due to gas prices, there is a set threshold to receive your rewards distribution. XDB token rewards will only be sent to you after your reward balance reaches a minimum of 2,000 XDB tokens. Smaller balances will be carried forward into the next period’s rewards until it meets this minimum threshold requirement.
How does it work?
There are approximately 6,700 Ethereum blocks in one day, which effectively means that Liquidity Providers will divide approx. 46,900 XDB tokens between themselves based on how much everyone contributes.
This program is automated! LPs can add and remove liquidity freely from Uniswap and this will be tracked at all times, and every time there is a change, the proportionate reward distribution readjusts for that period.
Example of Reward Calculation:
- You contribute $10,000 worth of liquidity for a week with the total XDB-ETH Uniswap liquidity pool is $200,000.
- Your share is 5%, therefore you are eligible for 5% of the total rewards for the week.
- Total reward amount for the week is 7 (days) times 46,900 XDB tokens (approximate daily reward) which equals 328,300 XDB tokens.
- In this example, your share of reward after 7 days is 16,415 XDB tokens.
In future, this program may establish a KYC requirement at the discretion of the XDB Foundation based on certain factors, including but not limited to the reward distribution size to certain accounts exceeding a certain size. This medium post will be updated from time to time with any program changes.
What is Uniswap?
Uniswap is a highly successful Automated Market Maker (AMM), where users can trade directly from their own wallets in a completely trustless environment. Uniswap has broken down many barriers within the tokenized landscape, forcing us to rethink the way exchanges operate within the blockchain space.
Uniswap also provides an opportunity for community participation, rewarding contributors with 0.3% of trading fees. We recommended reviewing the Uniswap Documentation in order to familiarize yourself with the protocol prior to using it or participating in this XDB Liquidity Reward Program.
How to provide liquidity on Uniswap?
1. Find the XDB/ETH pool on Uniswap by searching for the XDB token contract address on the Uniswap website:
0xb9eefc4b0d472a44be93970254df4f4016569d27
You can also find the XDB trading page on uniswap by clicking this link directly: https://info.uniswap.org/token/0xb9eefc4b0d472a44be93970254df4f4016569d27
2. Make sure that you are connected to Uniswap using your wallet (e.g. Metamask)
3. Click the +Add Liquidity button in the top right corner of the graph.
Alternatively, if you are already signed into your wallet on Uniswap you can go directly to the +Add Liquidity page with this link:
https://app.uniswap.org/#/add/0xb9eefc4b0d472a44be93970254df4f4016569d27/ETH
4. Choose the amount of ETH and XDB you want to provide to the pool
5. Click Supply and perform the transaction
Quick Links
XDB/ETH Liquidity pool on Uniswap
Risk Warning
While Uniswap is generally safe to use, you must understand how it works. You should familiarize yourself with Uniswap before performing any actions on it.
Transactions Fees
Given congestion on the Ethereum network, high transaction fees are not uncommon, and can be disproportionate when operating with small amounts. Please take the time to consider fees before conducting any operations on Uniswap.
Impermanent Loss
Impermanent loss refers to a disparity in the price of your deposited assets compared to when you deposited them. The larger the divergence, the larger the potential impermanent loss.
This is because of the way that AMMs operate — they always maintain an equal value ratio of both assets in a given trading pair (in this case XDB/ETH). So if ETH has an increase in value it will readjust your position in XDB to maintain the same ratio, and if you withdraw your position, you’ll end up with a higher number of XDB tokens and a lower amount of ETH.
You might also offset the possibility of impermanent loss with the trading fees that accrue for participating in this program by Uniswap, the additional incentives being added by the XDB Foundation and the involvement in the XDB Army program itself.
A more detailed overview of impermanent loss can be found here.
Have any questions?
Always do your own research before participating in anything like this. Our community management team and XDB Foundation team members can help to answer any questions in our Telegram group for that.
Disclaimer
XDB Foundation has the right in its sole and absolute discretion to cancel this program at any time and for any reason. Reward distribution to certain accounts will be halted if there has been a determination of any unlawful activity, including but not limited to the determination that the residency of the account holder to be that of a restricted country. This program is governed by the laws of the Cayman Islands.
Acknowledgements: Special thanks to the NOIA community for recommending this program.
