Introduction

A yield farm with long term potential

TL;TR Red Pill is a yield farm with a limited token supply, deposit fees, transaction fees, whale protection, dynamic block reward and farming delegation. Got your attention? Go on and read the long version below!

Yield Farming

At this moment Yield Farming has become very popular on the Binance Smart Chain. It all started when Pancakeswap introduced a fork of Sushiswap on the BSC. Basicly you provide liquidity to AMM liquidity pools and you'll be rewarded with a farm token. This is your yield and you can sell it whenever you please.

Flaws of Yield Farming

In essence the concept is great, however there a certain flaws that make the system not sustainable in the long run, without action.

Infinite Supply

Yield Farms like PCS have an infinite supply, with means that every block (every 3 seconds) a certain amount of tokens is minted (created). These tokens are added to the total supply, hence the supply of the token is constantly growing, and inflating the market. This will result in large sell offs and will make farming in the end not profitable anymore.

Some yield farms have introduced deposit fees on certain farms to generate some cashflow that can be used for a buyback of the token, increasing the price a bit, and burning (removing it out of circulation) the token afterwards. The effect however is temporarily, 'cause deposit often take place at the start of a farm, after which the deposits decrease and the buyback effect disappears.

Dumping on the market

Accounts that got in early have accumulated large portions of tokens and at some point these tokens will be dumped on the market, which can let prices drop by significant amounts. This can cause a chain reaction of others dumping and fearing for their profits.

Rug Pulls

Another problem is the amount of rug pulls that are happening on the BSC. A rug pull is the situation where a development team just pulls the plug of the farm and dumps all their tokens on the market leaving the market with a valueless token or where a migrator code is used an the farming contract is migrated to a new contract with the option for the developers to pull all the funds out of it, leaving everyone without their liquidity.

Red Pill

With Red Pill these problems are solved as follows. Red Pill took the liberty to borrow some concepts invented by other (sometimes failed) projects, learn from it and improve them, to get a great conceptual yield farm.

Limited Supply

The RED-P token has a limited supply, therefor no new tokens shall every be minted. The majority of tokens is inactive and managed by a smart contract.

Dynamic Block Reward

Instead of a fixed block reward, the block reward will actively be re-balanced. Every 1200 blocks (about 1 hour) the block reward will alter based on the supply that is circulating and locked. This means that farmers have to be active to get the best rewards possible.

Transaction fees

On every transaction on the RED-P token a fee of 1% is charged. Then 30% of this fee will be burned, the other 70% of the fee will flow back into the locked supply of the smart contract which will generate more yield in farms as the block reward will re-balance accordingly.

Whale Protection

To prevent someone from moving the market in a very large way there is a transfer limit. This transfer limit is dynamic and calculated based on the circulating supply.

Below you can find the formula for it.

maxTransactionSize=circulatingSupplyround(4(1,05circulatingSupplytotalSupply),2)maxTransactionSize = {circulatingSupply * round(4*(1,05 - {circulatingSupply \over totalSupply})}, 2)

Deposit fees

Red Pill will charge deposit fees on tokens other than RED-P, to incentivize the use of the token and to allow for buybacks of the token and further development.

Farming delegation

To generate more liquidity within the project and allow for more development and buybacks, some tokens might be delegated to PCS to earn their token as well.

Referral Program

To gain more traction and let the RED-P grow there is a referral program. If someone deposits tokens to one of the farms using someone else's walletaddress in the url of the browsers, these addresses will be linked forever. On every deposit fee that is charged, the referrer will earn a 10% reward. Second level referrals are also registered, and those referrers earn 1% of the deposit fees forever.

Conclusion

RED-P is a yield farming implementation that on first sight will look and feel like a fork of Pancakeswap, but under the hood, the workings have been improved in many ways. RED-P is an attempt to make yield farming more sustainable in the long run.

Disclaimer

You should however be aware that there is no such thing as the holy grail in yield farming, we can only set the boundaries and tokenomics in such a way that we believe they create a great yield farming experience. As decentralized finance is still a very new space, there are certain risks involved using decentralized applications. Please do your own research before jumping in.