Blockmine: A Revolutionary Sustainable Liquidity Mining Solution on Binance Smart Chain
Tags: Amm, Bsc, Yield Farming, Decentralization, Liquidity Mining

Blockmine: A Revolutionary Sustainable Liquidity Mining Solution on Binance Smart Chain Blockmine Apr 25·13 min read

Sustainable Mining, Wild-West Gaming & Restricted Chain Routing

Since the dawn of time (or at least the launch of UniSwap/SushiSwap on Ethereum Chain), many things have changed in the DeFi space. While exchanges are being more and more regulated (on most centralized exchanges, you are required to provide ID and proof of address), decentralized exchanges gave back what cryptocurrency was meant to be: A fully non-centralized ecosystem. Of course, centralization comes with advantages and disadvantages, but being able to trade assets without the need to register is still one of the main incentives that a decentralized exchange provides.

Looking at telegram chats, discord, and Reddit, it still seems that people are not aware of the full potential of such decentralization. We often read, “What does yield farm XYZ provide, why dumping, why not moon, etc.” It seems (and we only say it seems since it sounds better, but we mean it is a fact): People use yield farming for quick money only. Ok, many people. Nevertheless, all people want to earn money by providing liquidity. One thing that is undervalued is the reason WHY to provide liquidity. Like centralized exchanges, decentralized exchanges depend on liquidity. Without a certain amount of assets on Binance, Coinbase, or Kraken, no one would be able to buy cryptocurrencies. Same states for decentralized exchanges. When founding a centralized exchange, it would be sufficient to get people to provide either side of the assets, and the exchange would work due to order books. Decentralized exchanges, on the other hand, rely on automated market makers (AMMs). The main concept is to have a pool that keeps two sides of assets that are tradable (such as ETH and BTC). Thus, liquidity providers need to provide both sides. This approach comes with certain risks. One of the most known ones is impermanent loss. Interestingly, 99% of people providing liquidity do not really get it. Simply put, an impermanent loss (IL) is a difference between holding tokens in an AMM and holding them in a wallet. Sounds complicated? Well, it is not 🤓, as can be seen in the formula below (x, y:= percentage change of asset X and Y, assuming a 50/50 liquidity pool, no worries, you do not need to understand that right now 😎):

Impermanent loss formula… since we want our community to finally understand their investment risk.

People do not know: IL does not mean you have a loss. Think about it: An increase of two assets can still result in an impermanent loss. So, the only condition that counts is:

Profit 📈 > Impermanent loss 📉.

Fact: A decentralized exchange would not work without people providing liquidity. Thus, incentives are needed that fulfill the condition. Yield farming offers the most straightforward form of incentive: Liquidity. However, usually, the profit is eliminated by price dumps. Besides many scam projects, most yield farms are therefore anything but sustainable. Take goosedefi, for instance. The concept of layered farming looks attractive at first glance, but still, people experience a dump after dump (> 80% by now, 66% TVL gone within weeks — and we talk about 200 million $ +). The problem here is: Yield farming is not liquidity mining, but it is often confused. We rather distinguish between three terms:

😢 Liquidity Dumping

🎁 Liquidity Gifting

🥳 Liquidity Mining.

THE ULTIMATE QUESTION FIRST: What is Yield Farming? 🤔 🤔 🤔

THE ANSWER OF ALL ANSWERS: Liquidity Dumping 😢

Yield farming is the practice of staking or lending crypto assets to generate high returns or rewards in additional cryptocurrency. It could be called liquidity dumping, and it is the only incentive to keep a Decentralized Exchange (DEX) operating. Due to the market dynamics, we see it as a quick transfer of money from the LESS RICH to the RICH or the BIG BAGS (often referred to as people who own many cryptocurrencies). Yield farming should, however, offer everyone a way to make money in the long run. Most Decentralized Exchanges (DEXs) offer enormously high APRs (annual percentage rate) and APYs (annual percentage yield) to attract users. However, this also attracts the guys with the BIG BAGS, called THE RICH. Thus, the concept of yield farming becomes a monopoly.

The DYNAMICS of HOW THE BIG BAGS get rich (Liquidity Gifting 🎁)

In the Crypto space, the investors include the BIG BAGS and the AVERAGE users; the former payout their profit, which means they take away the average users’ money. A quicker way would be to transfer it directly to the BIG BAGS (thus referred to as liquidity gifting). This inevitable USER-TO-WHALE money transfer is further enlarged by generating Decentralized Exchange (DEX) tokens virtually out of thin air as a reward.

Where does the money come from when someone cashes out? Yes, from those who do not cash out (early enough), and the weaker ones without natural patience and unnatural fear have no choice but to also cash out, but with a loss and call the project a SCAM/RUG, although it was just the standard market dynamics and the greed of the BIG BAGS.

How it should work 🥳

SUSTAINABLE LIQUIDITY MINING AS ENVISIONED BY BLOCK-MINE

BLOCK-MINE is determined to provide sustainable liquidity mining, one which serves the purpose it was designed for — TO PROVIDE LIQUIDITY (… and to EARN LIQUIDITY SUSTAINABLY) …

✍️ Money NOT just generated out of thin air.

✍️ NO high incentive of the BIG BAGS to cart users’ money.

✍️ HIGH incentive to KEEP the money in the LIQUIDITY POOLS.

Analysis showing how this works:

The LIQUIDITY REWARDS are covered by 1) the deposit fees (3%) that the platform receives, 2) the native token minting in a sustainable manner as part of the sustainability contract, and 3) the gaming fees (see below for more information), and 4) finally by the fees of the revolutionary DEX protocol (restricted chain routing RCR, see roadmap). The fees are DISTRIBUTED as analyzed below (considering a 3% fee, different fees have the same ratio of fee distribution):

✍️ 1.84% are paid out to LIQUIDITY PROVIDERS.

✍️ 0.92% are used for smart buybacks and AUTOMATIC burns over time

✍️ 0.15% goes to BLOCKMINE TREASURY, to be used for DEVELOPMENT & MARKETING COSTS (more people, more transactions, more gaming people, more revenue for liquidity providers).

✍️ 0.09% are used as fees paid to platform Operators.

Block-Mine solves the major problems by…

✍️ … smart decaying and varying, non-fixed coin minting.

✍️ … automatic smart buyback and burn algorithms to ensure stable growth.

✍️ … limited utility tokens linked to the native platform token, thus, serving as a deflationary mechanism.

✍️ … locked LPs in mines to prevent the “1-day-jump-in-jump-outs” of BIG BAGS.

✍️ … having awesome utilities of tokens due to the gaming features and DEX.

✍️ … revolutionary DEX with restricted chain routing (RCR protocol).

From $Nuggets to $Bitbars (What the heck is that?)

It is a well-known issue that native tokens can be subject to a lot of inflation over time. While some yield farms have come up with max-supply solutions, this solution cannot pay out rewards once the max supply is reached. To tackle this limitation and the inflation of unlimited tokens, we provide both limited tokens and our unlimited native token ($Nuggets), which give the users exclusive privileges (such as governance and using our game features).

Blockmine Tokens ($NUGGETS, $GOLDCOINS, $GOLDBAR, $BITBAR)

Playing lottery or other games is a nice way to burn native tokens, but we believe this hardly solves inflation in the long term unless more and more users enter overtime or more and more tokens are burned for nothing. It is obvious that the rarer a token, the higher its value gets. As a deflationary mechanism, the minting of these tokens is therefore also subject to burning native tokens. We have currently planned three limited utility tokens (the special use-cases of $GoldBars and $BitBars will be revealed someday (spoiler: they may be essential for the restricted chain routing protocol), but not in this paper 😉, for $GoldCoins see below 👇)

$GoldCoin Token (max supply: 1,000,000)

$GoldBar Token (max supply (100,000)

$Bitbar Token (max supply (10,000)

The burning ratio 🔥 of $Nuggets and the token minting is determined by math (we will get to that later). To access features on the platform (such as games), both $Nuggets and one of the tokens above are needed (the ratio is determined by the smart gaming contract, thus, the value of $Nuggets is always linked to the limited utility tokens). Why is that a deflationary factor? Well, first of all, deflation is achieved by burning $Nuggets. Secondly, the limited tokens work as value storage, and since (it gets a ‘lil complicated..) the utility of $Nuggets is linked to the utility tokens, the value of the $Nuggets is linked to that limited token as well. Does that make sense🤔?

Initially, there will be a $Nugget pool that generates 0.046875 $GoldCoins / Block. As a further deflation mechanism, $Nuggets are locked for 30 days before collecting the $GoldCoin token. We call such an operation refinement, and the contract is the so-called Refinement Master (👉 link to the contract will be added once deployed), who is the owner of the refined tokens. Thus, no one else can ever mint any of these tokens, and the contract itself ensures that the max supply is never exceeded by math. Some readers may think: “Why the heck have they come up with such a weird number as 0.046875?”. Do you remember when you had a weird number as a solution for solving an equation and you thought it must be wrong? Well, this time, it is not and is indeed the mathematical solution of the refinement algorithm. The algorithm makes use of the geometric series to determine the correct conversion rate between $Nuggets and $GoldCoin (the same applies to the other tokens as well). The geometric series states

Geometric series that the refinement protocol relies on

This means, that the value converges to value a (i.e., never exceeds a), where a = 985,500, which defines the number of tokens that is minted within the refinement contract (14,500 are pre-generated to set the initial conversion of $Nuggets:$GoldCoins of 1:0.046875 at launch time) and k = 1 year, the halfing period of token minting. Following the above formula, the tokens minted per block (TPB) are:

$Goldcoin minting / Block

As mentioned before, minting those tokens is not just for free but includes a burning mechanism 🔥… Thus, to refine tokens, $Nuggets must be burned in hell 😈 (or wherever $Nuggets can be burned safely). Therefore, for any amount of generated tokens b, the burned amount of used $Nuggets n is

$Nuggets are burned when refined into $GoldCoins. The formula determines the burning amount based on gained gold bars in relation to the max supply

This basically means that 1) every year a vast amount of used $Nuggets is burned in the refinement process (max. 50%) and 2) the burn-ratio of $Nugget:$GoldCoin doubles every year, which makes the gold coin minting even more valuable over time since the minted amount of $GoldCoins per year is halved every year (it will take approximately seven years to collect 99% of all $GoldCoins, while for the last 1%, >eight times as many $Nuggets must be burned to get one single $GoldCoin compared to year one). The conversion rate determines the value of the $GoldCoin, i.e.,

Value of $GoldCoin and $Nuggets as per minting ratio.

You may notice one crazy thing: Although the price of a $GoldCoin is 21.33 $Nuggets at app launch, only a fraction of the $Nuggets are actually burned, making it a huge incentive to stake $Nuggets in order to get gold coins (also you need them to be able to play our games… no $GoldCoins, no games). The actual burned amount is not fixed, but determined by the staked nuggets within the refinement contract, i.e., in theory (just to give a clearer understanding), if one single person staked 1 $Nugget for 1 year without anyone else staking, they would get 492,750 $GoldCoins for just 0.5$Nuggets (too good to be true?, yeah kind of, since obviously, a lot more people will stake $Nuggets). The overall burned amount of nuggets per coin type can be tracked in the refinement protocol. The launch time of the tokens is as follows:

$GoldCoin: APP LAUNCH

$GoldBar: ~ after 90d

$BitBar: ~ after 180d

Do $GoldCoins have an actual Use-Case? — The Gaming Feature in a nutshell

Obviously, as mentioned before, there is a bigger Use-Case for the tokens than just value storage. To recap: No use case -> dump dump dump… *add dumping sound here*. The use-case of gaming features we provide is one that many yield farmers have been waiting for, but yet… apart from the lottery on EVERY PCS copy-cat… no one has really come up with something special, something new, something that is truly amazing… until now!!! It is time to introduce the gaming feature in the wild-west style 🤠 (yeah you are right, that is exactly the smart connection between games and $Nuggets). What to do with $Nuggets? What to do with $Coins? Use it to pay an entry fee in every game the platform provides. We mentioned earlier that both $Nuggets and $GoldCoins are needed to play. This has two reasons: On the one hand, the utility increases the value of gold coins, on the other hand, it serves as a deflationary factor for the $Nuggets. Why is that? Simply put, first, a mathematically computed ratio of $Nuggets(n):$GoldCoin(c) is needed to play, ultimately linking the $Nugget value to the utility value by math,…

The required amount of nuggets is determined by the ratio of the supply and the required gold coins.

…and secondly, $Nuggets are burned 100% during the gaming process. Thus, the required amount of $Nuggets decreases over time, the more $Nuggets are burned (the above solution also ensures that at no point in time there won’t be enough $Nuggets available if people keep burning too many of them). The $GoldCoins are paid back to liquidity providers through the sustainability contract as well as partially used as gaming prizes, closing our circle of sustainability. We plan to release a new game EVERY MONTH… of course, depending on the complexity of the game, and the best thing, after all, is: We want THE COMMUNITY (YOU) to tell us what you wish to play on our platform 🥰.

Initial games will include:

(the first game released at the latest after four weeks after app launch when $GoldCoins are collectible)

🤙 Coin Games (Between two players)

🤙 Surprise boxes (Loot boxes)

🤙 Cart Race

Games that are further planned:

🤙 BlackJack (Between two players)

🤙 Treasury Boxes (Investment etc… )

🤙 Knife Dart

🤙 Blockmine russian roulette

🤙 Etc … (Our ideas and your ideas are considered here)

Initial MINES will include

🤠 $Nuggets-BNB (30d lock, instant mining/collecting)

🤠 $CAKE/BANANA-BNB (30d lock, instant mining/collecting)

🤠 $BNB-BUSD (30d lock, instant mining/collecting)

🤠 $ETH-ADA (30d lock, instant mining/collecting) <- hopefully, let’s see

🤠 $ADA-THETA (30d lock, instant mining/collecting)

🤠 $ETH-BTC (30d lock, instant mining/collecting)

Initial POOLS/BOOSTER include:

🤠 $Nuggets -> $Nuggets (30d lock, no burn, instant mining/collecting)

🤠 $Nuggets-> $GoldCoins (30d lock, burn, 30d collect lock for refined tokens)

📜 System/Contract Dependencies and Ownership 📜

Road map overview for 2021 + 2022

STOP-LOSS & Restricted Chain Routing

While in the first phase, we focus on the gaming part as a core part of the sustainability contract, there are other (sustainable) features to come that go far beyond that as previously mentioned. The platform will be extended with revolutionary DEX features. Common DEXs are kind of limited in their functionality compared to CEXs. Therefore, we will first build a top-level overlay protocol to support features that we heard a lot in the community to be needed, such as STOP-LOSS and AUTOMATIC SELL SCHEDULING. Besides that, once the overlay protocol is implemented above existing DEXs, such as Pancakeswap and Apeswap, we will build up an own DEX based on restricted chain routing. What does that mean? Well, we do not want to tell too much in advance, just that this contains a sophisticated protocol to control bot price dumping by math solutions that will revolutionize and enhance the DEX ecosystem significantly and foster sustainability throughout the entire dex space, not just block-mine. The DEX is to come in Q4 at the latest. Stay tuned for more information in Q3/4.

For best quality visit: block-mine.io/docs/roadmap.pdf

Unit Testing

We from Block-Mine take testing of code very seriously. To ensure the safety and state correctness of our code, we have run 300+ different unit tests. A unit test is an automatic execution of a system’s function, mathematically verifying the system’s internal state before and after the execution. Each single system state check is considered as one unit test. Thus, one function execution usually consists of multiple unit tests since multiple state changes are made. All performed unit tests can be found on GitHub.

Please never perform those tests on the main net due to gas costs 😉. Some tests can only be executed by the contract owner, so you may wanna re-deploy them on a local test net using ganache-cli!!!

Disclaimer

The document is a marketing document and is not intended to be legally binding. Nothing in this document shall be deemed to constitute a prospectus of any sort or a solicitation for investment, nor does it in any way pertain to an offering or a solicitation of an offer to buy any securities in any jurisdiction. This document does not constitute an offer to sell, or a solicitation of an offer to buy, an interest in any jurisdiction in which it is unlawful to make such an offer or solicitation. The information in this document does not constitute a recommendation by any person, nor does it constitute advice on the merits of participating in any purchase of Draw tokens or any other cryptographic token or currency. Nor has the information contained in this document been approved by any regulatory agency or governmental authority of any kind. Certain statements contained in this document may constitute forward-looking statements or speak to future events or plans. Such forward-looking statements or information involve known and unknown risks and uncertainties, which may cause actual events to differ materially