The first Zing are about to hit the hive-engine market in a few days. I thought I'd take the time to mention a few words of caution my readers and followers may want to hear or at least be warned about.
First of all, take it easy. Don't do any drastic trades or "FOMO" as we like to call it in the crypto space. Zing is a long term project and it will most likely take quite a while until the token is in full effect in terms of sinks and burns. It is meant to be used in the game and reward both players and supporters of the project and shouldn't be considered as a way to get rich from it later or make a living off of it as a player. A healthy economy is of course great for the game and its ecosystem but there are still a lot of things to build on top of it which are going to cost.
We will of course work with the best interest of the token in mind and the game, meaning we want the game to be fun for everyone (aside from bots) but not purely pay to win. You can think of it as more of a "earn to pay to win" and/or "earn to play". There'll be a mixture of having to spend zing on certain in-game progressions or evolutions while allowing free to play players (after signup) to also get value out of the game, albeit in a limited amount.
Game economy will be quite important in the game, similarly how the community by supporting the project with Hive Power delegations and pack + healer sales later are getting tokens in return without there being any unfair pre-mines/team allocations, the same thing will go for the in-game economy. People will spend zing to progress their professions, learn new crafts, enchant powerful items for others, and make delicious food for their creatures and other players they actively trade with.
Let's get back to the topic at hand, liquid Zing.
Zing started its distribution a few days ago as staked zing to
- Hive Power delegators
- POSH holders
- Staking rewards (after the first staked zing went out)
This means that after the first staked zing rewards went out people were able to unstake it which takes 4 weeks and gives you 25% of the unstaked amount each week. This means that in a few days there will be liquid zing in people's hive-engine wallet that they will be able to trade with.
Another part of our token distribution contains giving liquidity providers liquid Zing as daily rewards for providing liquidity. If you are new to providing liquidity, here's a quick guide.
We'll use Tribaldex for this example as one of the leading hive-engine platforms. In the "pools" tab you notice there's a "Add Liquidity" tab as well. Here you'll have to choose the amount of Zing and Hive you want to pair together for liquidity.
Based on the price of zing at the time, it will let you provide 50% of the value in Hive and 50% of the value in Zing to be added as liquidity. This liquidity isn't locked and can be removed instantly if you so choose, the thing you have to watch out for is that price movements will affect the liquidity you've added when you're about to remove it.
Here's a quick example of that, for simplicity's sake, if the price of 1 Zing is 1 Hive and you place 100 Hive and 100 Zing into the liquidity pool, you have 200 Hive's worth of value in there. In this example let's assume you are the only provider of liquidity.
If people now start swapping or trading Zing and Hive it will affect the price based on supply and demand. Let's say people want to take some profit in this example and some overdo it bringing the price of Zing down to 0.1 Hive per 1 Zing down from 1 Hive per 1 Zing when you added liquidity.
If they use the swap feature, you will earn a little bit of fees from the swaps onto your position, as example you earned 10 Hive and 10 Zing from 1000 Hive's worth of volume in that timeline. Your balance now should be 110 Hive and 110 Zing since you added 100 Hive and 100 Zing to the pool.
Due to the price change, though, if you decided to remove the liquidity from the pool, you will find that instead of 100 Hive and 100 Zing, you instead received 10 Hive and 1000 Zing since the price of Zing compared to Hive went down 10x from 1 to 0.1. You'll still get the fee rewards (once every 24 hours) but you would have a lot less Hive and a lot more Zing.
What I haven't mentioned yet in the examples above is that liquidity providers will also share a daily reward of 40,000 Zing which is 2x higher than Staking rewards.
The reason we decided this is because tokens (such as Hive) which have utility and other functions such as governance and curation rewards and staking rewards are difficult to justify to provide as liquidity when the base rewards for keeping it locked up are already so good. Having fees for swapping be too high is also counterproductive to try and match the base locked up rewards such as staking.
Liquidity providers are also prone to risk, such as Impermanent Loss (example: imagine if everyone removes their liquidity while you are AFK and you find yourself having 1 Hive and 10,000 Zing from the previous example and when you remove that liquidity and try to sell the 10,000 Zing to get your 99 Hive back there is no buy support to match it). While this isn't an issue in good projects that have long-term plans and continued development, it still can't be avoided that the risk will always be there.
The contract on Tribaldex will give liquidity providers 40,000 Zing daily, it is then your choice what you do with it (do you sell it, stake it or increase your liquidity (which will also require half of the value in hive every time you add to the pool).
We hope that the incentives we've provided will be enough to interest traders to provide liquidity for the token which in turn makes it possible to process large trades without much slippage or movements in the market. Since both Hive and Zing are tokens with staking rewards and utility, we decided the liquidity pool rewards should be a lot higher than the staking rewards.
Anyway, figured a quick post about this would help people out and be prepared to provide liquidity if they want, if not there'll always be staking rewards for those wanting to keep it safe longterm. There's been a lot of questions about delegations already since we launched so I'm sure there'll be questions about this too which we now could point to through this post partially.
So yeah, be careful, take your time, don't invest/trade more than you can afford to lose and stay tuned with our future update posts through our Discord or @holozing Hive account.