Unofficial Transcript of SaucerSwap AMA 2023 August 12

[15th AMA of 2023]

pine_apple

Hello everyone. Thank you all for joining us today. That was some really good music by DJ Nube. So I hope you guys had a chance to take a look at our new merch store. It’s SaucerSwap.shop. And if there are any merch items that you’d like to see, like a plush doll or like pins, feel free to suggest it and our general Discord and we’ll consider it for future releases. And also a quick note, if you haven’t already, please give us a follow on Calaxy. Our handle is Saucerswap labs.

pine_apple

So without further ado, let’s get this AMA started. So the first question we have is from Septia regarding AMA of April 9th 2022. And then wondering if the team has withdrawn the liquidity used to initialize the HBAR-SAUCE and HBAR-USDC pools? And what will that liquidity be used for?

Joseph

Hey guys, great to be here. So a portion of the Planck Epoch Collectible NFT sale proceeds were used to initialize the following liquidity pools in early August of 2022. HBAR-SAUCE, HBAR-USDC and USDC-USDC(hts). So after having been locked for one year, these LP tokens were distributed to the DAO and contributors in a 30–70 split. And this liquidity represents a small fraction of the overall TVL due to significant share dilution. And this was the rationale for our lock up period. So for the record, most of these funds remain in liquidity pools to the best of my knowledge. And in fact, monthly TVL on SaucerSwap is up by 40%, according to DeFi Llama.

pine_apple

Thanks for that clarification, Joseph. This question goes to Peter. When are you listing on tier one Centralized Exchanges?

Peter

Thanks for this question. So our thinking on this — and we’ve seen it asked a few times — is that listing on a tier one Centralized Exchange makes sense when there is greater market activity and participation in crypto in general. The cost alone to list on a tier one exchange can be quite high, so we want to make sure that we’re getting good value out of the listing, and this really comes down to timing. What we would expect out of tier one Centralized Exchange listing is wider access to get involved in the SaucerSwap ecosystem. And we want to enable this access when there are more market participants so that we can really capitalize on the opportunity afforded by such a big event.

So to answer the question directly, we are not currently pursuing any tier one Centralized Exchange listings, but listing on a tier one Centralized Exchange will become a priority when market activity picks picks up.

pine_apple

Thanks for that, Peter. This next question is from Dusk and they’re wondering if the planned reduction in HBAR native staking rewards will have any impact on the proposed SaucerSwap V2 changes?

Joseph

So the reduction in HBAR native staking rewards does not impact the SaucerSwap V2 tokenomics. It does however impact single-sided staking in its current form. So prior to the August 11th reduction, approximately 74% of sauce buybacks were sourced from native staking, with the remaining 26% sourced from swap fees and emissions. This breakdown is now closer to 54% native staking and 46% swap fees and emissions. So with the rollout of SaucerSwap version two, we expect swap fees to be an even greater contributor to SAUCE buybacks and xSAUCE rewards. In the interim, we do expect the single-sided staking APR to decrease. Likely stabilizing in the high single digit range at the current TVL.

And on the topic of HBAR native staking, it’s worth noting the positive impact this is expected to happen on Hedera DeFi. So if we think of this staking APR as the risk free rate of the network, it follows that the yields offered by SaucerSwap and other protocols are now much more competitive. And consequently, a larger subset of Hedera users are expected to interact with these protocols, thereby leading to increased TVL and trading activity. And we are already noticing this.

HBAR deposits in SaucerSwap’s wrapped HBAR contract have increased from 157 Million on August 2nd to 166 Million on August 11th. And as we know, single-sided staking yield scales proportional to the wrapped HBAR contract balance. And finally, the TVL of SAUCE in the Infinity pool has reached a new all time high of nearly $5,000,000 as users seek higher on chain yields. So I’m definitely curious to see where it goes.

pine_apple

Thank you, Joseph. This next question is from Leon and it’s for Peter, I think. Are there any collabs in the works with projects that could use liquidity? For example, Quarter Homes TOKO.

Peter

Yes, we are working on some collaborations with projects building on Hedera, specifically in the RWA use case sector — so that’s real world asset — and it’s something that we’re really excited about. We have not pursued a collaboration with the Quarter Homes TOKO use case mentioned specifically, but it does fit within what we think is a Unique Selling Proposition (USP) of Hedera, which is an intersection of enterprise and retail, and specifically in our case, RWAs and DeFi.

So it’s our opinion that Hedera is uniquely positioned to capture an intersection in the market by enabling access to those Real World Assets — those tokenized RWAs — in a decentralized and permissionless way. And this has been also postulated by some other leaders in DeFi. There was actually a great article by Andre Cronje, who’s kind of the father of DeFi on the Fantom Network. But we think that Hedera is the perfect network to pursue the USP of that RWA and DeFi intersection, so we’re excited to collaborate with Real World Asset use cases building on the network and we’re already doing so.

pine_apple

Awesome sauce. This is another question for you Peter. With the fires in Maui, Hawaii, data comes to mind. Are there any off-site backups? Do you have them? Are they secure or is there another option or both?

Peter

So in short, yes, we do have a distribution of our accounts to mitigate counterparty risk. In the case of a team member losing access to one or more of their keys, all of the primary company accounts are multi signature and configured so that if one of the team members were to lose one or more of their keys, we could spin up a new multi signature account transfer tokens to that new account with an adjusted configuration. As for our smart contracts, of course they exist on the Hedera network and are therefore distributed by nature. And in terms of our server and database, this is all handled by Amazon Web Services. We have, however, to that point added a load balancer to our server so that we can automatically spin up new instances in the case of a server malfunction or high traffic. So to answer the question, we have architected our systems to mitigate as much risk as possible.

pine_apple

Thank you for that. On this next question is actually a two-part question and it’s for Joseph. From H. Barb, why did the team propose a 60% reduction in emissions as opposed to something like 70% reduction for a longer runway? And what happens with V2 emissions if we don’t see an increase in APR compared to V1 due to volume not picking up? Do you have any plans for that scenario?

Joseph

Yeah, good questions. So we arrived at this 60% figure based on a series of project projections. Firstly, we assumed a SaucerSwap version two TVL of $12 Million, taking into account that some liquidity will remain in V1 pools. Next, we assume to volume-to-liquidity ratio of just under 30% and this is the median ratio of Uniswap V3 and it’s forks. So PancakeSwap, Quickswap, ApeSwap, etc. The protocol fee — i.e. the fraction of swap fees used to buy back SAUCE for single-sided staking rewards — was set to 1/6 and this is consistent with SaucerSwap version one.

So using the above information, we projected a $3.5 Million daily volume, which translates into $1.8 Million of liquidity provider revenue per annum. Therefore, based on these projections, SS V2 returns a 15.64 % average fees APR versus the 2.50 % average fees APR currently offered by SS V1. And even when accounting for the 12% average farm APR of SS V1, SS V2 still has the potential to offer greater overall incentives to LPs.

So if the projections proved to be inaccurate, there exists the potential to supplement real yield with up to 29 Million SAUCE, which is $583,000 at current market value, in additional token incentives per annum. So this follows from the flexibility of an increased DAO allocation. And if the rate of inflation was reduced by more than 60%, it would be more difficult to supplement yields in the case where volume projections are not met. So that was the rationale.

pine_apple

Big brains Joseph. So this next question is for Peter. How come on the single-sided staking of SAUCE, a user cannot see the daily SAUCE they’re gaining from staking?

Peter

So this is something that we really want to add, but it’s trickier than you’d think. To do it, we would need to track every transaction in the Infinity pool per user and then calculate the daily SAUCE earned to give exact figures per user. Or I should say per account rather than user. What we could do now is estimate the daily rewards based on the current APR, which is what we do with the yield farms, but it’s not an ideal system and could lead to some confusion. We do intend to come back to providing better user specific analytics for single-sided staking after SaucerSwap version two and some other big ticket items, like governance and Community Pools. For right now, it just isn’t a high enough priority to be worked on immediately.

pine_apple

Thank you for that. And this next question is also for you, Peter. This from Mario. Is there a way to see which tokens are considered to be voted in or have applied for listing? How many requests for listings and votings do you get on average per month?

Peter

So most questions that apply for listings go for what’s called an extended listing, which is defined in our documentation. The general idea is that it’s the lowest friction way of listing a token on SaucerSwap. There’s no liquidity requirement or vote. So it is relatively more rare for a token to apply for what’s called the default listing. And those default listings tend to happen on average every 3 to 4 weeks.

Extended listings, on the other hand, occur much more frequently than that. We typically have at least one token listed per week, often more, and these tend to happen on Fridays. And to see the tokens listed on SaucerSwap in order that they have been listed, you can go to our website — which is SaucerSwap.finance — scroll down to the trending section and then click on the new tab there. That will show every token that has been added to the SaucerSwap, or I should say the most recent tokens added SaucerSwap.

And about the kind of visibility into tokens that apply for default listing, every token that applies for default listing, so long as it meets the criteria like a Sentinel report and ample token liquidity, is passed along to the SaucerSwap community for a vote, and all of those votes are visible in the PEC vote channel in our Discord.

pine_apple

Thank you for that, Peter. This next one is for Joseph. How has the AI revolution affected SaucerSwap? Is the code that has been reviewed that was created by an AI? How do you plan to use AI to future proof or improve the DEX?

Joseph

So the most tangible way that AI has affected SaucerSwap is with the upcoming SAUCE Pro subscription, and this incorporates an AI Help bot trained on the SaucerSwap documentation, which is integrated directly into the web app. So we’ve personified this AI Help bot to have a visual novel inspiration. Our illustrator and aBFT did a great job here bringing the bot to life and making it fun to engage with. So that will be released along with SAUCE Pro after SaucerSwap version two is shipped.

As for the AI code reviews, there is a GitHub copilot which is a cloud based artificial intelligence tool to assist with Visual Studio code. And this is developed by GitHub and OpenAI. So I believe most of our developers have been using this in addition to human reviews, as it’s a pretty convenient tool to speed up workflow productivity and code accuracy.

As for other plans to use AI, I think there will be opportunities to use it to review smart contracts in the future. The technology is not quite there, but in time it should help to improve info security and reduce vulnerabilities across DeFi and Web3. And this should help mature the space and attract more liquidity and serious investors.

pine_apple

Thank you for that, Joseph. And this one is for Peter. Is there a plan to deploy on another chain?

Peter

So we do not currently have a plan to expand to another chain, but we are not opposed to it if it makes sense strategically and specifically if it brings value to our users on Hedera. Sometimes DEXs go multi-chain and it dilutes their product and causes more issues than it brings value. So if we do decide to go multi-chain, we will do it methodically and diligently and make sure to architect it appropriately to ensure the best possible result. But right now we don’t have a plan.

pine_apple

Great. And this last one is also for you, Peter. A user is wondering, when will they be able to buy a Larry Plush doll?

Peter

Yeah, hopefully soon. We did just release our new merch store, so check that out at SaucerSwap.shop. We don’t have a Larry plush doll there yet, but we will be releasing some new designs in the next week or two, so keep an eye out on the shop. Will likely also just put out a tweet when those new designs are added to the store.

pine_apple

Thank you, Peter. And with that guys, that’s the last question for our AMA today. Thank you for joining us. As always, we’ll be releasing a summary transcript on Twitter, AKA X, in a few days.

Before we end this AMA, the team would like to announce a Dog Star awardee. So for those of you who are new to the community, Dog Stars are monetary awards in the sum of 10,000 SAUCE tokens that are given to members of the SaucerSwap community who actively help promote SaucerSwap. So without further ado, the Dog Star award goes out to HBAR Steve 0187. Thank you. HBAR Steve 0187 for your unwavering support on Twitter. Keep making awesome SAUCE content and if you do have a spare moment, please send Nariyoshi your Twitter banner. Haha, it’s awesome.

As mentioned before, if you’d like to see some items on a merch store, feel free to drop a suggestion in the general channel. So thank you all and have a great day.

Peter

Thanks everyone. Have a great weekend.

Joseph

Thanks guys.

[Note: This is an unofficial transcript of the SaucerSwap AMA. If there’s any mistakes, let me know on the SaucerSwap Discord]