PolkaBridge’s Hybrid Deflationary Farming Approaches — A Little Recap
PolkaBridge is expected to launch the revolutionary new hybrid deflationary farming on March 25, after complete audit by CertiK. It completes an important milestone in the history of the project. From that point onwards, users will be rewarded for providing support and assistance in running the PolkaBridge network.
The deflationary farming will be initially available on the PBR-ETH, DAI-ETH and XIV-ETH pairs with rewards in the PBR token. However, what is delationary farming and how does it differ from the traditional farming method, used by other DeFi protocols? Continue reading to find out!
What Is Farming?
Farming is a new node of liquidity mining which incentivizes token holders to contribute their tokens into a pool. They are rewarded by additional tokens in lieu of liquidity support and efficient price discovery. However, they have an issue.
The conventional farming is inflationary in nature and simply keeps increasing the total supply via rewards, essentially diluting the value of the existing tokens and actively penalizing passive holders.
PolkaBridge Deflationary Farming Solution
So, we devised a clever plan. To run the farming enterprise, we wouldn’t issue tokens or unlock existing ones. Instead, we are going to charge a tinny 0.5% fee on all PBR transactions. This small fee gets distributed to our esteemed holders farming on the platform. No rise in circulating supply necessary!
Apart from the farmers receiving a 90% cut, the remaining 10% gets burned forever and removed from circulation. It reduces the available supply over time through burns and via scarcity raises the PBR tokens value continuously.
Let’s say that a user is processing a 10,000 PBR exchange on a decentralized exchange, they would receive only 9,950 PBR. The remaining 50 PBR tokens are divided into two parts. 45 PBR are sent to the farming pool to be distributed among stakers. 5 PBR tokens are burned forever.
As the usage of the platform rises, the more tokens are distributed as rewards and burned forever. What it does is create a positive feedback loop and accrue value to the PBR token over the long term!
The formula that we use to calculate rewards is as follows: 𝑛𝑢𝑚𝑏𝑒𝑟𝑠ℎ𝑎𝑟𝑒 ∗ 𝑓𝑒𝑒𝑠/𝑡𝑟𝑎𝑛𝑠 𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑜𝑙. It ensures that a user is rewarded according to their pool share. The higher the stake, the higher the rewards. Over the course of the next few days, we are going to release more information. So stay tuned and ready your PBR tokens!