How we’ll sail towards a brighter future for your favorite AMM
Earlier this week, we published our long-awaited Winter Roadmap, which gave you a peek into our recent developments across Product, Integrations, and Community. Today, we’d like to share one more update: How the Orca Treasury fits into our plan for a decentralized future. We won’t stop sailing until we steer this ship safely into the hands of our beloved pod! ⛵️
What we learned from Staking
As part of Orca’s Fall Festival, we launched an exciting experiment: $ORCA and Collectible Staking. As with any new feature, we kept a close eye on the results and came away with some important learnings:
- Collectible holders were highly engaged: We were delighted to see so much enthusiasm from our community of critter-collectors: Participation ranged from approximately 70% for STARFISH to over 90% for WHALE holders.
- Staking does not encourage trading: Though around 2.5 million (approximately 25% of circulating $ORCA) was staked, there was no corresponding increase in trading volume from stakers.
- Large stakers are HODLing: Despite the decrease in Staking rewards this week, the 5 largest $ORCA stakers are still holding over 99.5% of the amount staked. This suggests that these friendly whales believe in Orca’s long-term success, rather than focusing only on short-term gains—a sentiment we can agree with! 🐳
Based on these observations, we will be focusing our development efforts—and Orca’s Treasury—on rapid growth.
To that end, the $ORCA staking program will be coming to an end soon. As a final thank-you to our community, we extended the program by 1 week on Tuesday; rewards will continue until Nov 2nd at 20:00 UTC.
How we’ll accelerate growth
Our mission is to make Orca the go-to AMM for the entire Solana ecosystem. By doing so, we will further our goals of:
- Welcoming a wider audience into DeFi
- Proving that fair, community-focused tokenomics are the best way to build a decentralized network
- Fighting climate change through the Orca Impact Fund
For that to happen, we need to encourage trading. Trades are the hydropower for our flywheel—more trading means LPs earn more fees, which translates to more liquidity and, in turn, better rates for traders. (This is why the main metric we discuss internally is trading volume, not TVL.)
Though staking provides a short-term incentive for people to hold $ORCA, as discussed earlier, staking does not increase trading.
What does encourage trading is lower fees. To that end, our upcoming next-generation AMM, Whirlpools, will not take fees for the Orca Treasury upon launch. (A small percentage of fees will still go to the Impact Fund.) This is a reflection of Orca’s current positioning in the ecosystem, in which competitive rates can make all the difference. In the future, it will be up to governance to decide whether to charge Treasury fees.
What should I do with my $ORCA instead?
Sad to see Staking go? Consider providing liquidity to one of our $ORCA liquidity pools: ORCA/SOL, ORCA/USDC, ORCA/mSOL, or ORCA/PAI. As of October 28, the APR for these pools ranged between 77% for mSOL (not including staking earnings!) to 177% for PAI — yes, these Aquafarms are teeming with marine life!
“But what about impermanent loss?” you ask.
We encourage all enterprising farmers to read up on the risks of IL; in fact, we require LP to read our Liquidity Provision Guide in the deposit UI. However, though our user interviews have indicated that most LPs are aware of IL, they often overestimate the actual degree of loss for non-altcoin pairs. Check out our cofounder @oritheorca’s recent Tweet thread for some more color on this!
That said—regardless of whether you choose to LP, the best reason to hold a token is because you believe in the long-term success of the protocol. Speaking of which…
What’s next for the Orca Treasury?
In the future, governance will determine how the funds in the Orca Treasury are used. We’ll use best practices developed by the wider Solana community to inform what aspects of the protocol can be adjusted by governance.
A few examples of how the Treasury could be used include:
- Staking: Just because we’re ending staking now doesn’t mean that it’ll never return! Precedents like SushiSwap’s xSushi program have shown that staking rewards can effectively incentivize long-term engagement, and we could imagine a future in which it suits a mature version of Orca.
- Fee discounts on trading: An alternative is to bake benefits for tokenholders into the core AMM itself. One example is fee discounts for large tokenholders, which encourages engagement with the entire Orca protocol.
- Additional rewards for LPs: Our current Aquafarm program has shown that token rewards are an effective way to incentivize liquidity; since the launch of the $ORCA token in August, our Total Value Locked has skyrocketed from $50 million to over $1 billion! After our current yield farming program comes to an end in a few years, Treasury fees could support a similar model.
We will also continue to research up-and-coming ways of allocating Treasury funds, such as protocol-owned liquidity, to guide the future Orca DAO.
As always, thank you for joining us on this voyage! There may be choppy waters along the way, but with all of you on board, we’re confident that our ship will continue sailing for a long time to come.
Happy Halloween, podmates! 🎃
Disclaimer: The content of this communication is not financial advice and should not be relied on by any persons as financial advice. This communication has not been provided in consideration of any recipient’s financial needs. We have not conducted any financial assessment based on the personal circumstances of any recipients. All persons are encouraged to seek their own independent financial advice prior to taking any further action.