Hi @0x_wgmi, glad that my somehow theoretical comment encouraged you to chime in!
I’d also like to thank @li-jiang for his kind and detailed response.
Let me clarify that my post was a direct response to @StockTricks posting the gas price screenshots. My whole point was that comparisons like that are superfluous and fail to bring substantive arguments to the conversation. In my opinion, this ARC needs to be rather assessed by the merits of the Harmony tech and ecosystem on their own (which are many), and by its suitability for hosting AAVE. No need for unconvincing comparisons!
Let there be no mistake on this: I’m not opposing the deployment of AAVE on Harmony, Matic or anywhere else. I do like Harmony. I’m down for it. I’m just try to convey the message that gas prices alone are not compelling enough of a reason for supporting the decision of deploying AAVE on a different network.
Going back to the proposal itself, I need to do more DD on some aspects of Harmony before providing more accurate feedback on its technical and economic suitability.
In this discussion, I’m sort of missing some comment on what is the demand for having AAVE launched on additional networks. At the end of the day, beyond the soundness of the proposal, you can’t separate it from its context — whether this is the right time for it. Namely, how would this integration sit in the context of AAVE also being available on an L2 like Matic’s? Does being on several chains work in favor or against capturing more liquidity? These are type of questions I would love to read people here to reflect on.
@ASDPC, I think you brought up some great points, so let me address them.
Q)
“Gas price is not a compelling enough reason to deploy AAVE on a different network”
“How does this integration sit with AAVE also being on another L2”
A)
I completely agree that gas fees is not a compelling enough reason! However I can point out to some other reasons why harmony could be a great fit
Harmony is the only EVM compatible L1 which is working towards true decentralization
How does this help AAVE -
a) From a pure economic perspective, fractionalized distribution of AAVE tokens would increase liquidity and in turn the price
b) From a user adoption perspective, users priced out of ethereum but don’t want to give up decentralization will use harmony and hence AAVE. More users will recognize AAVE as a brand and use other AAVE products in the future (like AAVE social media platform)
Q)
“Going back to the proposal itself, I need to do more DD on some aspects of Harmony before providing more accurate feedback on its technical and economic suitability.”
A)
Technical sustainability - Harmony brings the best research to production before anyone else (eg- sharding, PoS). That said, I’m no technical expert so can’t comment on this so i’ll move on. Would love to hear what others have to say on this.
Economic sustainability - In my opinion, harmony has the most sustainable economic model in crypto today [ don’t hate me :) ]
a) Network activity high - No new ONE issued, validators get paid in fees.
b) Network activity not so high - New ONE + Fees paid to validators =441mil ONE per year
TLDR - 0 to 3% inflation based on network activity.
From a pure economic perspective, fractionalized distribution of AAVE tokens would increase liquidity and in turn the price
Can you elaborate on this? I’m a bit lost on how the segmentation of the supply of a fungible asset across multiple networks can increase its liquidity or its price.
Let me argue that for any given token supply, the more segmented it is across networks, the lesser its liquidity on any of them. This is not only due of the evident fact that one AAVE token cannot be pooled nor exist at the same time on Ethereum and Harmony or Polygon. The complexity and cost of moving the tokens from one network to another necessarily has an impact on how quickly you can move them, and therefore it prevents liquidity to free-flow. Due to those barriers to movement, we can’t simply assume that the overall liquidity equals the sum of the liquidity on several networks, imho.
Economic sustainability - In my opinion, harmony has the most sustainable economic model in crypto today [ don’t hate me :) ]
a) Network activity high - No new ONE issued, validators get paid in fees.
b) Network activity not so high - New ONE + Fees paid to validators =441mil ONE per year
TLDR - 0 to 3% inflation based on network activity.
That’s actually an interesting issuance model. From your comment, I understand that there’s a fixed “target reward” per block and that ONE is only minted in an amount that offsets the difference between the actual transaction fees and the target. For as long as there’s competition for block space, inflation should remain close to 0%. In theory, validators don’t have an incentive either to censor transactions and mint new ONE on purpose, because they’d increase the supply and dilute themselves in comparison to just doing their job, include the transactions, and take the fees. I guess it makes sense
I did some comparative L1 tokenomics a while back.
Harmony burns fees without cap, so it becomes deflationary during overly high usage periods. IIRC it doesn’t have the escalating mechanism eip1159 has to disincentivize large block burns, but I may be misremembering. That said, the TPS needed to become problematically disinflationary was maybe 50k/s or something.
At $400/coin transaction fees were still retail reasonable and Mcap was quite high which would theoretically put a cap on any additional coin value around that level.
Will need to go back and find old notes to give the hard numbers.
It’s really a shame, because Eth could have planned it’s tokenomics for fees and coin price to stabilise at a reasonable $ level during a high TPC and a high per eth $ value sort of like this.
Crypto in general needs more economists to partner with the devs and get these equilibria correct
We issue a fixed block reward of 441 mil ONEs annually.
So when the transaction volume is high and the fees is large. The real annual token issuance will be less than 441 mil ONE or even potentially goes deflationary.
Currently, with a circulating supply of 1.3B ONE, the annual issuance rate is around 3.4% and it will keep decreasing year by year.
Once posted on the governance forum, all questions and comments should be replied to and taken into consideration, to further improve the ARC.
A snapshot vote is recommended to gather community feedback and the preferred path. This snapshot allows to reach a rought consensus to maximize the chances of positive outcome of the AIP submission.
hi @Neal - as @ASDPC mentioned, we posted this topic about 2.5 weeks ago. we are happy to answer all questions from the Aave community and we’ll work with the community to move this to a snapshot vote.
in the meantime, we treat this as an AMA - ask me anything. truly we are invested for the long term and want to make sure we are aligned so that this is a great launch for Aave.
our goal is to get Aave into the hands of harmony’s community who may not have used Aave on ethereum mainnet before and in general expand blockchain technology to millions (and then billions) of people.
As an “average joe” defi user, and someone who’s been using/interacting with Harmony for a while now, I think you’re just seeing the strength of the Harmony community lol, this has been typical in my interactions/observations. With that being said, I’m sure it’d be a good move for Aave, and further, I will say as someone who is not super adept at interacting with defi apps, nft marketplaces, blockchain ecosystems in general, I’ve personally had a Very user-friendly experience on Harmony. jst my two cents.
Greetings all,
In my experience as an “average user”, I’ve always found Harmony to be very easy to navigate and user friendly. Ethereum prices me and a lot of people I know out, maybe that’ll change in the future, but it’s not practical as of now and it’s prompted me to use/explore other ecosystems, and Harmony has been solid. I haven’t really used Polygon much, but again, I think it’s because Harmony ecosystem has sort of turned into my “hub” so it’s just easier for me to interact with everything from there. I imagine this is the case for a lot of “everyday users” who come across Harmony ecosystem and find it accessible and efficient. Hope this opinion provides some food for thought.
@ASDPC So, I’m an everyday, average user who does not have a lot of technical expertise when it comes to navigating defi apps and blockchain ecosystems in general. I have never used Aave, and honestly, it’s because I discovered Harmony ecosystem, found it very user friendly and efficient, and now I’m sort of too lazy to go mess around on other ecosystems, lol. Having said that, I’d bet there are quite a few people like me in the “Harmony community”, so as long as the tech/economics make sense, I think as far as adoption it would be a win — I’d def start using Aave… just sayin’
This a great idea. However, isn’t the 2 million dollars, what’s more, for a year, too low?
When I am comparing with Polygon & Avalanche liquidity mining, this is way too low
@li-jiang If you want to bring more TVL, dapps and users to Harmony - you will have to increase reward emission. Take a look at Polygon and Avalanche - its great success comes from awesome initiatives.
Some comparisons…
Polygon offered 40mil$ just for Aave at the beginning … Then they gave even more rewards with additional 85mil$ which is 125mil$ in total. 2mil$ from Harmony is 1.6% of what Polygon offered just for Aave initiatives… there is a huge abyss in terms of rewards between Harmony and other chains, which is not really encouraging for farmers and new users, because rewards won’t be that much rewarding and there are other, better places where people can make money, so they won’t jump in Harmony - simple as that.
Polygon offered additional 30mil$ for Sushi farming which makes Polygon total initiatives to be 155mil$. Harmony offered… just 1mil$ for Sushi rewards… it’s 3.33% of what Polygon offered.
Polygon offered additional 30mil$ for Kyber farming which makes Polygon total initiatives to be 185mil$.
Avalanche offers 180mil$ of initiatives. I’m sure that the amount of initiatives assigned to Aave will be very similar to Polygon as the total amount of initiatives is also similar to Polygon (~120mil$ in total which makes 2mil$ of Harmony to be 1.66%). Guess where people will go for better APY? I already know where my farms will land if Harmony won’t decide to bump up the rewards. it’s really simple - I will go where I’m going to earn more money. It’s all about money, but also money helps ecosystem to grow.
Polygon is going to offer additional 100mil$ for initiatives in future (for additional details, take a look at sources at the end of the post).
So… at the end, for the summary:
Polygon offered 185mil$ of initiatives up to date. Additional 100mil$ is coming, which will end on 285mil$.
Avalanche is going to offer 180mil$ of initiatives.
Harmony is offering 3mil$ of initiatives up to date. This is only 1.62% of what Polygon offered and 1.05% of what Polygon is going to offer. It’s also only 1.66% of what Avalanche is going to offer. Not really encouraging, isn’t it?
My advice is to just follow the path of predecessors as you can simply see that it worked (there is no need to ‘reinvent the wheel’) - in both cases - and in all terms of network growth:
distributing more tokens will make Harmony more decentralised in terms of governance
it will attract more people to come and farm on Harmony as rewards will be finally competitive while comparing it to other blockchains, they will have a chance to try Harmony out and see how great it is in terms of fees, speed, etc - without good rewards there is simply no reason to try it out
TVL will obviously increase, not only because new people will come, but also farmers will be finally able to put more capital to work on Harmony without bringing APY% so low that it’s not profitable anymore - remember that money is also bootstrapping the protocol
it will attract devs to build on Harmony as they usually get rewards from people farming in their dapps (+ their personal token growth), currently there are no initiatives, so devs have no reason to build on Harmony (it’s all about money, again)
ONE will increase in price as the whole ecosystem is based on it, people will need ONE for farming on dapps, there is no reason to dump ONE if there are great initiatives on dapps for ONE token
… and probably many more things that I have forgotten about…
Distributing tokens is not always a bad thing. In my honest opinion, you should really reconsider your approach to initiatives as this is the main thing that is holding Harmony back from growth. Your approach is not great in terms of attracting new users to your blockchain comparing it to predecessors and their approach.
Thanks for reading!
P.S.
Obviously, I totally agree that Aave should be rolled out on Harmony blockchain, but it won’t change that much in terms of Harmony ecosystem growth if rewards are going to be that low.
I’m Giv, one of the core engineers from the Harmony team. I wanted to summarize and answer some of the main technical topics that have been discussed here.
On the topic of security, our mainnet has been launched since June 2019 and running for more than 2 years with no security issues of any kind even after processing over 104 million transactions. Our proof of stake network is secured by 122 independent validators staking 4,741,848,186 ONEs ($475m in today’s value). And our bridge to Ethereum has been launched for almost a year with a full audit and no security issues. You can read a bit more about the bridge and network security from our bridge engineer who posted before on this thread:
On the infrastructure side, since earlier this year we have been putting all of our efforts into ensuring that Harmony is fully EVM and Ethereum tooling compatible.
“Developers should face zero-friction while deploying apps on Harmony” was our mantra.
Harmony is working with partners to provide dedicated infrastructure support for application developers so that they don’t have to worry about running their own infrastructure.
We would make a dedicated and authenticated endpoint that would only be used by Aave (should they choose to use a hosted solution) which would have its own isolated infrastructure resources - separate from public endpoints and would not be affected by congestion from public usage.
As an example, you may read from our co-founder’s recent blog post about the experience Sushi had when they deployed on Harmony:
“Recently when SushiSwap deployed on Harmony, we battle-tested deployment and support tooling for web3 developers. They were easily able to i) deploy the original SushiSwap contracts as is, ii) deploy the swap frontend, iii) deploy the subgraph on Harmony to support analytics, iv) use the Gnosis multisig for rewarder contract, v) use the horizon bridge to bring initial liquidity (SUSHI/xSHUSHI ERC20) to kick start farming, and vi) leverage our upgraded etherscan-like explorer to track transactions and draw insights.”
Our chain is solid and our team is going to ensure everything works great with aave.
Thank you for the questions and feel free to ask us anything else!
hey aave community, we took all of your feedback as well are our own community’s feedback.
we are putting our proposal on aave’s snapshot and we’ll be joining the next aave community call.
below is a section of our updated proposal and rationale on incentivizing new users via a longer and more sustainable campaign focusing on educating new users:
–
"Our goal is to accelerate Aave’s expansion in the multi-chain world. Harmony is an open and fast blockchain that is fully Ethereum compatible with 2-second transaction finality and near-zero fees.
Harmony invites the Aave community to support this launch by participating in the Aave contracts deployment, enabling the Aave v2 front-end for Harmony markets, and adding Harmony in its recently announced cross-chain governance module roadmap.
Harmony will start by providing $5M USD in ONE tokens in incentives to bootstrap initial usage of Aave on Harmony.
We specifically planned for a one year incentive campaign so that net new users have the opportunity to come into Aave and decentralized finance. We know that many protocols are giving out even higher incentives over a short period of time. We chose an attractive incentive over a longer period so that new users who may not be experienced power users can also benefit from the launch.
In addition to token incentives, we will be investing heavily in co-marketing and educating users through tutorials, videos, and community-led support.
Our overall goal is to use Harmony’s $300 million ecosystem fund for growing a deep base of 10,000 builders and 10 million users."
jst my two cents.