Hi all, if the title is in any way confusing please see below:

Liquidity - When purchasing tokens from a DEX (Decentralised Exchange) you don't actually buy and sell to people, you interact with a "Liquidity Pool" (LP). The tokens on the LP come from people depositing a ratio of tokens, for example MOONS:ETH, and then as purchase & sells happen, the ratio of MOONS:ETH changes and therefore the price changes. THE MORE LIQUID A MARKET IS, THE BETTER PRICE STABILISATION AND EASIER IT IS TO TRADE

LP Providers - You can deposit a ratio of MOONS & ETH yourself to the LP and receive "LP Tokens" in return. This symbolises your 'ownership' of the tokens in the LP. When you want to claim your MOONS & ETH back, you deposit your LP tokens and receive your original tokens back.

Rewards - LP Providers open themselves up to something called "Impermanent Loss", but they are also given a portion of the trading fees as a reward for providing Liquidity.

Problem

Right now we are advertising AMA's & Banner rentals to third parties in the subreddit, as well as Moons token growing naturally and gaining attention from people outside of Reddit.

We have had two banner rentals so far, and both parties have expressed concern about how hard it is to acquire tokens due to the thin order books - where an entity would like to purchase 60,000 Moons, they may find the price has increased 25% by the time they have filled one half of their order.

Users and third parties are balking at the volatile market and having trouble acquiring Moon tokens for use in the Subreddit

Solution

The r/ethtrader sub has a solution for this - They have a mechanism that rewards LP holders using their subreddits own Crypto - Donut's - holders of LP tokens for the Donuts:ETH pair are given additional donuts.

Right now we have a community-voted mechanism (CCIP-30) that impacts future earnings based on your Karma Multiplier. If users have a poor Karma Multiplier, the moons they would have earned are instead shared amongst all other users with a poor Karma Multiplier.

That mechanism is slightly different for Moderators. If Mods have a poor Karma Multiplier, those Moons they would have earned sit in "TheMoonDistributor" (TMD). Currently, TMD's Moon count is ballooning because every month it receives a set amount of Moons, but doesn't distribute all of them.

As an example, last distribution TMD received 205,649 Moons yet only distributed 166,576 of them, leaving 39,073 Moons behind with no use.

I'm proposing that we implement the same mechanism as Donuts, and distribute these excess Moons to LP holders as a reward & incentive for providing Liquidity, which should help 3rd parties to purchase Moons to access Subreddit services like AMA's and Banners.

How it works

Every month after Moons are distributed, the leftover Moons from the Mod Distribution are sent to a Smart Contract (SC). This SC will then read the blockchain to determine Liquidity Tokens holders and the average Liquidity Tokens they held over the past 28 days, and then send them a proportional cut of the leftover Mod Distribution Moons.

Considerations

• For now, it will only consider the largest LP which is Moons:ETH on SushiSwap. The idea here is to grow the liquidity and then we can add LP's to the Smart Contract calculation later. I want to avoid a situation where it's cheaper to add liquidity to one pool, and then reap more rewards.

• It would be possible to add consideration of CCIP-30 KM to determine the payout, but this can be so easily bypassed by simply adding liquidity from a new wallet that it's rather pointless. We could give a bonus if you stake from a wallet connected to a Reddit account, but this would mean continually updating a list of wallets in the Smart Contract. Maybe we could make it give a bonus to wallets that have received Moons from the Mint address as then we know they are redditors.

• u/[Mr_Bob_Ferguson](Mr_Bob_Ferguson) made a good suggestion: To cap the max distribution in a similar way we do with Moons Distributions - where the top 1% of Karma earners have their average reduced. This stops one person with a large bankroll sweeping in with lots of liquidity and reaping all the rewards.

Example

Last distribution, 39,073 Moons were leftover.

This is the list of SushiSwap LP Token holders >>here<< (Exclude the top line as this is the contract itself)

For my example I'm just pretending that the top 20 holders are the only LP holders, but this is how those tokens would be distributed:

REPRESENTATIVE EXAMPLE WITH FALSE NUMBERS

As you can see, the top LP Token holder will receive the most rewards, but they have also submitted over 1.8 ETH & around 20,000 Moons which are at risk of Impermanent Loss.

CRUCIALLY, AS MORE PEOPLE ADD LIQUIDITY THE TOP HOLDERS REWARDS ARE DILUTED

The full list of all LP holders is here

I will need to find a developer who can fork the existing Donuts Smart Contract and allow it to distribute to owners of Moons LP tokens, this developer will likely be paid with Moons from TMD.

Pro's

• Increase of liquidity to enable smoother acquisition of Moons for 3rd parties
• Voting weight is not transferred so you still cannot buy Moon Governance
• Incentivises people staying within the Moon ecosystem - less selling pressure

Con's

• Like with all staking, it has a "Rich get richer" dynamic. However, people who are LP providers are taking on Impermanent Loss risk.
• Every month the number of Moons given to Mods reduces, which means less leftover Moons to distribute to LP holders, however this reduction is a small amount so there should be a decent amount to share.
• Users will not be able to add liquidity past 25% of their Moons without impacting their Karma Multiplier (CCIP-30) - however, I'd argue it's a good thing to encourage users to not lock up most of their Moons in liquidity.

View Poll