AMA Catch Up — 20th January 2022
We hosted the first AMA of 2022 with our Telegram Community. Thank you for attending. Here is the round-up in case you missed it.
Buckle up — It’s a big one!
Q: First up, when is the second snapshot? Will this be before the staking starts?
Taulant: It will be the day of the staking, 1 block before the staking contract is initiated.
Q: Next question! There is 50% allocated to liquidity farming, can you explain 1) why there is a significant portion of tokens still to be farmed and 2) what will happen to any tokens which have not been farmed?
Taulant: Many farmers have never redeemed their farmed XFIT since the beginning. Furthermore, the current circulating supply includes presale investors as well as Seed Liquidity providers. As the team intends to stake their (still vesting) tokens as well in the DEX most tokens with the exception of the ecosystem tokens will be either locked up in the staking contract with the rest in circulation.
Q: And to follow up on that, what happens if not all 50.6% out of 400 million total tokens are not farmed before the farming period ends? (Before the staking contract goes live). Will the remaining tokens be distributed? If yes, to whom? If not, will they get burned?
Taulant: They will be added to the ecosystem tokens which will be used to incentivize third party integrations, and later for other ecosystem purposes. This is not a unique problem as other projects have had similar issues to wrestle with. In our opinion for projects with fixed token caps (400m in our case) it makes more sense to move excess tokens into the ecosystem chest. Projects which can issue new tokens would be better off to burn them.
Q: That makes a lot of sense to me too. Next, when will users be able to harvest from the farm again? And is there anything they have to do when the switch over comes or will it happen automatically?
Lum: The main page and the Dapp will be updated sometime next week, making it possible for people to redeem their XFIT and LP. One week after that, we’ll activate the xfit staking feature.The switch is not automatic. Users have to redeem their XFIT rewards and LP manually.
Q: Brilliant for our community to know — and though you’ve given context to this a little in the above, when will the staking contract be available?
Lum: essentially 1 week after the legacy farming update goes online
Q: Thanks for making that clear! A question about the testnet next — will we be able to see how many test tokens are being burning?
Taulant: Once the testnet DEX launches all burning and other behavior will be publicly visible on-chain.
Q: I know we’re all waiting to see that! Next, a user is asking about adding Xfit to SafeMoon wallet, VNDT wallet, Antex wallet etc.? They have a huge amount of people to know about us.
Daniel: If you are suggesting a partnership with a wallet, we are open. It’s always good to have more platforms on our side.
Lum: Um.. if the question is “will we integrate lots of wallets”, yes, several.
Taulant: The token is standardized so any wallet can add them. Outreach is possible. our current priority is getting the DEX out.
Q: What chains do you intend on creating the Xfai DEX?
Taulant: We developed the DEX purposefully without 3rd party contract dependencies so that we can launch it on as many EVM compatible chains as possible. The bottleneck to launching on other chains will be 1) reliable rpc endpoints for those chains, 2) launching and maintaining a separate oracle price feed for the frontend for each chain. We intend to launch the DEX on as many chains as reasonable.
Lum: As our DEX is written in solidity, it can run on any solidity compatible chain. We will aim to launch it on as many chains as possible. The only restrictions are endpoints etc.
Daniel: if its EVM, then we can do most
Q: Thanks guys — more specifically now, do you have plans to make a Dex on Ada too?
Lum: I might be wrong here as I haven’t researched cardano for a while, but to my knowledge they have their own language (plutus or smth like that), so we can’t run solidity on it
Daniel: Ok, so I am not a tech guy but, they work on a different language to ETH.
Q: Clear answers there! Thankyou! When the website will be updated?
Lum: Sometime next week
Q: And the same question, this time about the roadmap?
Taulant: Roadmap and updates are being provided to the community as we go. Our web documentation will show target dates as well.
Q: The community will be glad to see that on our web documentation. Could you share more on when the dex on test net will be launched?
Taulant: ~1 month before the mainnet launch. Due to the open source nature of smart contracts anything longer would leave the door open for preemptive copycats.
Q: Especially in crypto, it’s always best to be vigilant! Will each chain have a different amount of xfit but total combined across all chains is 400million XFIT?
Taulant: No, each chain will have its own supply and cap.
Daniel: FYI, this does not mean we will make more tokens.
Q: Thanks for making that clear Taulant and Daniel. Next, a question about staking. What will be the best way to give a value to each NFT? Is there a formula for projecting the current value?
Taulant: Very good question! This is not financial advice. We would break down the value of the NFT as follows: (Total accumulated fees * slippage adjusted price of all shares * vesting percentage) + (Projected Discounted Cash Flow (https://www.investopedia.com/terms/d/dcf.asp) of the NFT * Projected future price of XFAI) + Artwork premium. This is why we believe that once people see the burn mechanism in action the NFT will become truly liquid. Again, people can come up with different ways to value each NFT.
This is similar to how subscription based startups value their equity, with the difference of vesting and changing denominator price. This is why the likes of Slack and Netflix can raise that much money on high valuations.
Daniel: It’s always hard to make an objective valuation. But, lets just say, that this NFT is a form of your share of the DEX which means the more the swap, the better.
Lum: hmm, the lower bound of the underlying value of a liquid nft will depend on the number of swaps (as well as the volume of those swaps). The upper bound is speculative.
Q: Some great information and summaries there. How established is your marketing strategy and how do you plan to attract new investors and LP?
Daniel: Now this is a very good question. First of all, attracting new investors and LP are not easy and for that I am very thankful for X-Force being supportive. Due to the nature of the question, I would like to make it a bit more concrete. DeFi projects can market themselves with the following:
- High TVL
- Integration with different chains or aggregators
- A strong community
- Highly attractive fees to LP or bonders
- Least impermanent loss
As you can see, it is very “product development” focused. We first need to have the strongest feature, which is the DEX. Afterwards, we lock in aggregators and partners that can bring TVL and attractive gains for all the community. But I would like to make a story where early X-Force farmers make XXX gains!
Q: That’s great insight — thanks for taking the time to provide an in depth answer. Do you have any forecasted TVL or swap volume for the end of the first year?
Taulant: No forecasts.
Lum: Nope, no forecasts.
Daniel: That kinda really depends on the fees and market flow.
Q: That’s understandable — and what was the thinking behind the rebrand?
Lum: I think the new (especially dark mode) version of the site looks pretty neat… we tried to keep the “punk” style of the old design and make it look more “modern” to appeal to a wider audience. We decided that after we received lots of feedback on the old design! Here’s a sneak peek.
Q: I know the XForce will LOVE to see that! Next, our elevator pitch and summary. What are the main problems within DeFi Xfai seeks to solve?
Taulant: Most tokens are illiquid, be that on-chain or on CEXs. Over the past year this has only gotten worse. Even the big tokens have bad and manipulated price discovery. Furthermore, most token holders have no way of increasing their stake in the token without selling. The DEX solves both these problems, and much more by simply creating the most efficient market mechanism there is.
Q: A very good summary, and a much-needed DEX! Next, a few questions regarding the airdrop. Where farmed tokens have been sold, what happens to the token that would be airdropped?
Taulant: Those people don’t get the airdrop or very little depending on how long they held. The same as stated before.
Q: Thanks for reiterating. Will there be private, ecosystem & team and advisor allocation on each chain?
Taulant: No. Everybody is on equal footing. We will likely reserve some of the bridge tokens on each chain to the company to be able to run and pay for everything regarding that chain’s expenses, but that’s it.
Q: A very fair playing field. As part of farming there is farmed and LP tokens, what happens to the LP portion, do you only get an airdrop for the farmed portion not the LP portion?
Lum: Only the farmed tokens, as that is already a function of a) the LP size, and b) the duration of the farming.
Q: That makes clear sense. What can we expect from the new website? Will there be information included with infographics to help new investor’s to easily understand the XFai concepts: my concern is most don’t want to read through multiple medium posts? Something like a GitBook could be useful.
Lum: The new website will gradually evolve in content. At the beginning the site will simply show what the DEX is about. After a short time, we’re going to add some high level documentation to it. Then we’ll develop a new video that focuses on the new DEX design. And when the DEX goes online, we’ll include the technical documentation as well as the Whitepaper to the page.
Q: Will the XFIT/XFAI token still be utilized for all future products/tools with associated revenue they may attract (as per the original vision)?
Taulant: Yes, our current intention is for XFIT to be used to kickstart future products. The industry is evolving rapidly and we need to evolve with it, which is why we can’t at this point commit to our other products before getting the DEX out of the door.
Q: Under the ‘all in’ approach, what will be the default slippage and will it be customisable?
Lum: Great question, but things have changed since the last update. Please have a look at the latest blog post for the mechanism changes for legacy farmers.
Q: Thanks for providing sight of that again. The next question from the XForce is, my understanding is that there is a significant difference the earlier you enter staking. With this in mind, do you intend on implementing a mechanism to ease gas wars and failed transactions during staking launch?
Lum: I know I said in the last AMA that we’re going to answer the liquidity provisioning questions in the next (this) AMA, but let’s wait for one more AMA. The staking infrastructure had to take some of our attention. We’re still brainstorming if two sided liquidity provisioning should even be an option. It will depend on a slight LP mechanism change that we are planning to make.
Q: I think that’s fair — we have a lot of new info for the community this AMA! We have to save some for the next one! 😉 Do you foresee XFai ever offering DeFi lending services?
Taulant: We have some very interesting ideas, but can’t commit to them yet. To give you an idea, the biggest problem current decentralized lending platforms face is that they might have a spot price for a tokens via an oracle, but they cannot know how great the slippage (ie the real price after everything is accounted for) would be *if* that collateral needs to be liquidated. Tokens which will have a significant percentage of their liquidity in our DEX will have exactly this. This means that small cap tokens which are farming on our DEX could also be used on a lending platform as collateral. That said, none of this is committed yet.
Q: Our community will be looking forward to hearing more on how those ideas develop over time, I’m sure! Can you talk about your plans to incentivize LP’s during the bootstrapping phase?
Lum: Farming ability for small cap tokens, fees for larger, well established tokens (lower slippage == more swaps == more fees).
Daniel: And as we all know, gems are always within the small cap token category.
Q: How much of the “team and advisor” allocation will be staked in the XFai DEX?
Taulant: A very large percentage. Team tokens are still vesting. Because the staking behavior locks the xfit in we decided it makes a lot of sense for alignment purposes to stake a large part of the team tokens as well.
Q: That definitely makes a lot of sense. Another question on allocations. What is the purpose of ecosystem allocation?
Taulant: Buffer, as well as the ability to incentivize third party protocols and tokens to integrate the DEX. Not to forget bounties.
Q: That’s clear! Can you give any hints of any new exciting partnerships in the pipeline?
Taulant: Not yet.
Daniel: Most of them are on hold because we have to finalize and launch are DEX :) But rest assured, we are always discussing with them.
Q: The XForce will be very eXcited for when these are unveiled. Do you have the auditors booked for the staking contract and the DEX: and when will these be completed by?
Taulant: We are in contact with 3 audit firms for the DEX. The way they operate is that they need the final git commit hash first, otherwise they won’t give you a price or timeline. That said, we’ve been also working on internal procedures. You might have noticed that we are rather paranoid :)
Q: Paranoia in this space is a very desirable trait! It has been said “our design encourages traders to effectively be both LPs and traders within our DEX”. Can you expand on this comment and confirm if I have LP on the DEX, can I swap LP for another tokens LP with zero slippage? Does this make transfer between LP immensely more efficient?
Lum: Paranoia is a feature 😉
Taulant: You got it. That’s exactly the point. This would also lead to arbitrageurs using our DEX as their “homebase”, i.e. their starting and endpoint.
Q: There’s no place like home! What would you say is XFai’s competitive advantage that is going to defend its market share in the future?
Lum: I would say the zero slippage for cross pool swaps. That feature enables us to have deep pools (no fragmentation), smth quite unique.
Taulant: As we argued before (and we were proven right https://rekt.news/uniswap-v3-lp-rekt/), the competition is making their products actually worse now. It is our opinion that in a competitive landscape you should do best what others are unable to do better than you. UniV3 was pretty much designed just to compete with Curve on stablecoins (where most of the liquidity and therefore fees is *today*). By doing so UniV3 is worse at what UniV2 was relatively good at. While Curve did the opposite, they tried to compete with UniV2 on non-stablecoins, and are now worse as well. This is change for the sake of change, which we are against.
Q: Can you expand on the recent new team members and how they are going to further XFAI development?
Lum: The new graphics designers: Will make awesome tech look even more awesome (video animations, NFT illustrations, blog post illustrations, website updates, etc.)
The new DevOps / serverless team members: Will help with the necessary infrastructure for a DeFi project. DeFi projects require quite a large DevOps infrastructure for frontend oracle calls, keeping NFT key value stores, etc etc.
Team members with solidity know-how: Will focus on side contracts that will communicate with the DEX and add extra value to the project (e.g. yield farming, fragmented NFTs, etc.)
Frontend team members: Will develop the UIs, page updates, etc.
Q: It’s great to have more insight into this — I personally look forward to when we share more of the NFT illustrations with the XForce! Where do you foresee Xfai in 5 years’ time?
Taulant: The backbone of DeFi. :)
Lum: *laughs in Jeff Bezos*
Q: Another question from a member of the XForce. Suppose I choose to stake my entire bag over in the new contract, at what price of xfit does that happen? How do you manage the entry price for those who have been staking for a while?
Taulant: XFIT gets staked directly, so there is no price issue. If you want to put your “farming bag” in you will need to first redeem your LP on uniswap. Then you can stake your LP XFIT portion, and then you can also buy XFIT at market price with your USDT/USDC stake. Please see our blogpost for more info. (https://medium.com/xfai-official/xfit-staking-the-silence-before-the-storm-420a0b9454d4)
Q: Thanks for again making this clear for our community. When will you list xfit?
Taulant: if this is regarding CEX listing, we have spoken with exchanges and they require a certain amount of txs on-chain to list them. We should be able to reach that with the DEX quite easily. We will not pay for listing as we think that makes no sense.
Daniel: If you mean centralized exchanges, I personally think it depends on our situation and market situation. CEX listing is a great marketing strategy which I do not want to neglect.
Q: What happens to the farmed tokens after the first week, will redemption be possible at a later stage?
Taulant: No, redemption will not be possible anymore after that. This is because we cannot modify the drip rate and if we left it on for longer people would be able to wait and get way too many tokens as a result.
Q: How are you going to make it clear with regards to the implications of staking, conscious of people wanting their tokens they have staked before enough revenue is generated?
Taulant: I think some visuals will help, if you mean to explain the staking benefits better.
Q: Staking implies that you stake and get the tokens back, this is not the case, how are you going to make this clear as part of the UI?
Lum: Legit point, if you have a better term in mind that conveys the idea better, we’re open to changing the wording. There will be a popup explaining it in the UI.
Taulant: On that note, we think burning is also the wrong wording. We don’t think there has been an equivalent mechanism before.
Q: How are you going to get the message across that they only have 1 week to claim the tokens, this seems like a small window. What if someone is ill on holiday, family emergency and is not paying attention.
Lum: The UI will communicate that pretty clearly. We will also annoy the community during that week a lot about redeeming the xfit tokens.
Taulant: Unfortunately our hands are tied there due to the farming mechanics and the need to end farming asap and transition to staking. We will do a communication push to get people to notice.
Q: In case you have left the farm earlier but have transferred the tokens to a different wallet (not sold), will this cause issues for the airdrop?
Taulant: To make it clear to everyone, we only track the initiating address. Airdrop will happen to the old address up to the point where the tokens were held. the block at which the new address switch happens is when the script considers you “sold” the token.
Q: You are effectively purchasing a stake in the DEX with XFIT?
Q: So any farmed tokens which are not claimed are effectively burned?
Lum: The extra tokens would be used for community related activities.
Q: Today, all the explanations are very interesting and demonstrate that XFAI will be a leader in its sector, but to explain to new investors, it will be complicated for XFORCE to motivate to join the community if it is too complex…. in life often what is explained simply, it is easily understood
Taulant: I would argue for most projects the APR was misleading to say the least. We just have to do a good job to explain the system. I think we’ll see something similar happen to LPs in other DEXs. Initially nobody understood AMM dynamics, but eventually people got a feeling for it and got comfortable.
Q: So if someone isn’t able to exit the farm within a week they lose both their XFIT and USDT? I’m not farming but I can foresee this causing an issue where people are on holiday, not paying attention etc?
Lum: No, people can their LP even after the week.
Q: My question is: do you and the team feel you have been developing at the right pace? What do you think you did well over the last year and where do you think you can improve going forward? The question is in no way trying to challenge you or oppose anything that you’ve done. I have been an eager farmer from the very beginning and will be staking my entire bag.
Q: How many XFIT have been issued?
Lum: We will have an exact answer to that, after the first week of redeeming is over.
Q: So the platform we are currently farming on will no longer work after the dex is released?
Lum: The old farming UI will not exist after the update next week is out.
Q: When will we know the SOC allocation?
Lum: When we’re sure it’s the right %
Q: Have the instructions on how to migrate been released?
Lum: We will write a blog post with the UI and individual steps. It’s going to be quite easy.
Q: Could you share the construct for the bonding curve to give an idea how aggressive we would need to be within the first 24 hours? (For example, how shallow is the curve for the first 100 million tokens before it begins to climb significantly?)
Lum: The code for the bonding curve calcualtion is already online (in the liquid nft blog post)
Q: Don’t we run the same risk that happened during LGE where XFIT caused gas prices to spike?
Lum: There will be most likely a spike, unfortunately.
Q: Do you expect the price of xfit to be volatile while people are redeeming their LPs and then staking?
Taulant: Most likely as it will both reduce liquidity on uniswap and create trading pressures. but this is not investment advice.
Q: Will boosting still be available?
Q: Will farmers get early entry to staking, or is it just public and a mad rush?
Lum: Mad rush
Q: The ‘liquidity’ field showed the amount of XFIT one has staked … we have come to the conclusion that the ‘liquidity’ field needed to be dropped … the liquid NFT will now have only the share as a redeemable amount. So until there are fees generated the NFT can’t be redeemed for anything?
Lum: Correct. Notice though, that particular part isn’t new. Without a fee generating contract, even in the previous mechanism, there’s no real underlying value for a liquid NFT.
Q: I thought you could redeem a portion of the wrapped LP? So if I stake 100k after 10% of the year I could redeem 10k?
Lum: This is where the mechanism had to change. Have a look at section “staking updates” one more time (I know it’s a bit annoyingly technical). But re-reading it might clarify things. Essentially the “liquidity” field inside the liquid NFT structure had to be dropped
Q: With the share, the more staked the more % ?
Lum: The share % depends on the amount staked, as well as on the time when the user staked. Earlier stakers get a higher %.
Q: So let’s say there is $5M XFIT staked that would only be 100% redeemable when there is $5M in fees generated which would be at 0.3% ~170M in volume? If the value of XFIT doubled this would double the fee and volume requirements? How is the LP exposed to the increase in XFAi price if you can only redeem the fees and not the underlying tokens? Is there a much higher risk to the initial LP with this approach?
Lum: The vesting period is still time dependent, not stake dependent. If you staked for example $5M XFIT, you will get a certain share of the DEX. Now lets say the DEX is running and it is generating fees. If you have X% of the total sahres, and Y% of the generated fees from the DEX go to the liquid NFT holders, you will be able to redeem X% of that Y%. Obviously doing that while Y is only $10 would be super dumb (as you staked $5m). But the more XFAI tokens get accumulated in the slippage optimization contract, and the mroe valuable xfai gets, the faster your “break even” comes. Considering the way the xfai get burned, that break even would come pretty quickly. From that point on it would make financially sense to redeem the vested amount. But ofc the longer people hold, the more valueable the Liquid NFT gets.
Q: So the % share is of the SOC not just the swap fees generated?
Lum: Swap fees go to liquidity providers of the DEX (not including xfit stakers). Xfit stakers will have a (very) small % of the slippage optimization contract balance.
Q: Are you able to share the details behind the burning mechanism (ie. formulas used)? thanks.
Lum: The formula is pretty easy tbh, if someone swaps for example $1m of a token, $1m worth of xfai get burned. Because of the constant product function in the DEX, XFAI as a token won’t become 0 — it converges to 0, but it won’t become 0. One important thing to note, people won’t be able to buy xfai tokens on the DEX. The only way that will be done is through xfit staking. XFAI will be the bridge token, but it cannot be bought. This is a security measure. Otherwise everyone could buy xfai tokens, wait a bit until some swaps are done, and dump it.
Q: So how does burning benefit the liquid NFT? Doesn’t the burning drive up the price of the initially staked tokens which requires more fees to be generated in order to equate to your initial stake?
Lum: Lets say the slippage optimization contract has 100 xfai. You wait a couple of days, some swaps happen, and lets say now that slippage optimization contract has 10m xfai. If you have X% of Y% of the slippage optimization deep pool, you’d be quite happy 😅 About your second question: XFIT Staking has nothing to do with the DEX mechanics, so I’m not quite sure if I follow you. Liquidity provisioning and XFIT staking are two separate processes. Liquidity provisioning in the DEX will only become possible once the DEX is out
Q: Let’s say ETH and USDT were supported on the dex, and I swapped $1m ETH to USDT, then back again then $2m XFAI would be burned in the process? with the cost being price fluctuation and slippage?
Lum: Price fluctuation, slippage, and swap fees.
Q: Will the dex staking have any influence on Xfit price? And will Xfit tokens that have been purchased be able to be staked? Or just those that were farmed + LP?
Lum: XFIT tokens, regardless of their source, will be able to be staked.
Q: Thanks. What will the use case of the Xfit token be?
Lum: For all practical purposes, its only use case right now will be to get XFAI. XFAI on the other hand is the flash mintable bridge token of the DEX that enables all the cross pool swaps. Our plan is also for XFIT to kick start future products, as explained earlier.
Q: Sounds good. And will moving Xfit into XFai create downwards price pressure on Xfit? Or will the Xfit tokens just be removed from circulation rather than sold? Appreciating the communication 🙌
Lum: The XFIT tokens will simply be removed from circulation. Anticipating the price action here is a bit tricky, as there will be people saying “Damn, I have to buy that token” (creating an upward push), but there will also be people saying “ok I got my rewards, gonna sell them” (creating a downard push). The xfit price action though will most likely not really be of imporantce for those who choose to stake.
Q: With regards to our staked XFit tokens. This will no longer be part of the NFT. Am I correct in believing that when we stake our Xfit, it’s like basically exchanging cash for a company shares (cash is gone but you get equity shares instead) as we simply get percentage of SOC but our Xfit is gone. What happens to Xfit that is not staked? The holder can still sell this eventually (as it’s the same price as Xfai?)
Lum: Your comparison is correct. Not much, whoever doesn’t want to sell, can keep it and wait for the price of XFIT to eventually rise, with the rise of XFAI. Those who wait though will not be able to get significant shares in the DEX, if they decide to stake it. Also notice how we’re essentially going to drain the uniswap pool soon. Whoever wants to sell on uniswap, will face higher slippages. It would be smarter for those who do not want to stake, to wait until the DEX and sell it there.
Q: It says on the article that the only way to get the Xfai token is via redeemed liquid NFT. What about liquidity providers of other projects.I thought there liquidity fees will be earned in XFai?
Lum: Lets say we have token pair X-XFAI and Y-XFAI. If you insert into X and withdraw some Y (aka a swap), your fee will be in X (or Y). The LPs receive rewards and are exposed to the XFAI ratio of the pool as well, but they can never exit in XFAI.
Q: How much of the SOC as a % would you anticipate obtaining and how is this calculated?
Lum: I want to run a few more tests before deciding on a percentage, I wouldn’t want to hurry with such an important parameter. We have to find a sweet spot. Not too low to disappoint the community, and not too high to screw up the DEX.