Bumper Crop Farming

An explanation of the beliefs that led to bumper crop farming along with a few tips.

Fair Launch: Ethereum Block Number 11260000

By: Masanobu Fukuoka

Bumper Crop Farming Tenets:

• Liquidity has no loyalty
• Wide distribution is top priority
• Farming is hard: crops don’t grow themselves
• There are no guarantees in farming
• Avoid one-way doors

Liquidity has no loyalty

Compound started distributing its governance token, COMP, to the protocol’s users this past June. The demand for that token kicked off a craze that has resulted in $11B+ being locked in DeFi as of November 2nd, 2020.

That said, there is a great deal of concern these days, and justifiably so, about yield farming. “Liquidity has no loyalty” said Andre Cronje, when challenged on his assertion that only the “liquidity locusts” won in the Sushiswap attempt to steal liquidity from Uniswap.

Ichi.swap attempts to address the loyalty problem with “bumper crop” farming. This approach will reward more actions than just providing liquidity. At launch, 50% of tokens will go to bumper crop farming and 50% will go to regular liquidity farming.

Wide distribution is the top priority

Wide distribution to talented developers and regular users is incredibly important to ICHI’s value as a governance token.

This is very different from the top priority in proof of work or proof of stake consensus algorithms: ensuring network security. Miners in Bitcoin and Ethereum are paid to validate blocks. As a second priority, a wide token distribution ensures that their incentive is aligned to fairly and efficiently add blocks.

Decentralized Finance (DeFi) projects have mistakenly attempted to apply these same priorities to the distribution of governance tokens. This has resulted in more centralized governance.

With ichi.farm, the priorities are reversed. Ichi.farm doesn’t need to distribute a token for a sustainable network. ICHI holders are paid directly from the trading fees, while the blocks themselves are validated by Ethereum miners. Ichi.farm distributes rewards through a greater number of actions. This will lead to a wider distribution versus solely rewarding proportional wealth.

Farming is hard: crops don’t grow themselves

“The steady addition of a constant amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended … this adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation.” — Satoshi Nakamoto

This is a strong analogy because both real world mining and proof-of-work cryptocurrency mining is painstaking and costly, and as a result miners tend to support the asset they are mining. Ichi.farm has implemented bumper crop farming as a way of putting more work back into DeFi (decentralized finance) incentives. It will reward farmers for winning ranks.

There are no guarantees in farming

With both proof-of-work mining and bumper crop farming, you can earn much higher yields if you work diligently and pay attention. However, there is a random element to both of them. With bumper crop farming, this comes in many forms:

• Crop Selection: It is difficult to know which block will include your transaction.
• Commodity Prices: It is expensive to send additional transactions to Ethereum. The additional yield from bumper crop farming may not cover your gas costs.
• Pests: You may miss out on a certain block rank because of the actions of other farmers.
• Soil Science: You can try depositing different amounts of LP if a rank isn’t very profitable.
• Weather: There is impermanent loss when being staked in an Uniswap-style pool.

Avoid one-way doors

Bumper crop farming is an experiment. The community may not like it. It may not work well at scale. Gas costs could skyrocket. The best way to deal with uncertainty is to avoid irreversible decisions. This is why the ratio of ICHI that goes to bumper crop farming is a governance parameter. The community may vote and implement a change to the ratio, subject to a 48 hour timelock.

FAQ:

1. How can I better understand the logic itself?

Read the launch article and review the sample logic here.

2. How do I use the sample logic to develop a good farming strategy?

This is highly dependent on many factors, such as the ICHI price, gas prices, number of participants, and your proportional share of the pool. That said, here are some guidelines to get you started.

• If you are a whale, consider staying in the highest rank you can afford. Block Ranks in the top 1% pay out bumper crop rewards on a frequent basis. It probably isn’t worth making many changes to block rank.
• If you are minnow, consider purchasing one more ranks with a lot of factors. You can use the spreadsheet logic to build out a bigger spreadsheet that models an entire round of blocks where a round is shortened block number 0 to n (n being the number of liquidity farmers in the pool). This modified worksheet could inform you on your best, affordable positions.
• If you don’t want to deposit liquidity, consider updating the reward balances for the minnows and whales. There is a function that can be used to update balances. It is demonstrated in the Farm Worker tab of the logic and will be available from the UI. It is designed to cover the gas cost of calling the function and provide a 10% tip for doing so, as long as the gas tank has enough ICHI. However, don’t call it too often or it may become unprofitable.

3. What about farming tools, dashboards, or bots?

Hopefully, developers can make tools and bots that make it easier for farmers to implement their strategies than the demo spreadsheet. If you have an idea for a tool, bot, or dashboard, please propose it in the discord so the community supports it. This is analogous to ASIC chips, mining pools, and cloud mining in proof-of-work mining.

How You Can Participate

Read the ichi.farm announcement. Join the Discord server, follow on Twitter, and join our Telegram group. Liquidity farming starts on http://ichi.farm at Ethereum block 11260000. After launch, you can …

1. Mint oneETH stable coins.
2. Provide oneETH-ETH liquidity to the oneETH-ETH liquidity pool.
3. Stake oneETH-ETH LP tokens and earn ICHI.
4. Nominate signers to govern the oneETH contract and ETH excess reserve fund.
5. Vote on ICHI protocol decisions with your ICHI-ETH LP tokens.
6. Vote on oneETH stable coin and excess reserve decisions with your oneETH-ETH.