Honeypot funds cannot currently be used as part of a passive reward system to Bear holders despite initial statements. An alternative solution may be to implement a system where Bear holders can exit the community for guaranteed minimum value, referred to as the Bear Fund.
Parameters outlined below:
- Honeypot value: 250ETH
- Allocate 50% to Bear Fund: 125ETH
- Total Bears: 10,000
- Bear Fund/Total Bears: .0125ETH
Under this arrangement, if a Bear holder wanted to exit the community and immediately sell their Bear, they would receive .0125ETH (less fees) per Bear. To avoid fees and maximize value delivered to the Bear holder, pursue the most efficient transaction. Honeypot cannot use more than the allocated Bear Fund per Bear amount on any given transaction.
The Bear Fund per Bear amount will depend on the allocation percentage and the Honeypot value:
- Allocation percentage should be reviewed and adjusted routinely, perhaps quarterly. Comment period beginning the month prior, with voting open the week prior to implementation of changes.
- Bear Fund Value per Bear to be set quarterly. Dynamic adjustments throughout quarter to be discussed
- Honeypot value depends on the actions of the community. As Honeypot grows, Bear Fund and the absolute minimum value of Bears increase.
- Those who are looking to benefit from the value of the Honeypot are incentivized to increase the value of Honeypot, as there is direct correlation to the value of Bears.
- Benefitting from Bear Fund results in exit from the community, compelling longer holding periods and multiple holdings
- Absolute minimum provides a sense of security - guaranteed Bear value regardless of what may happen.
This process may increase the value of the Honeypot:
- Bear Fund acquires Bear for .0125ETH
- 4% to Honeypot from purchase
- List for sale at mint (.05ETH) if acquired below mint less % noted below
- List for sale at acquired price * 125% (.06ETH * 125% = .075ETH)
- May need to increase percentage to account for fees + desired gain
In this sense, assuming resale is completed, accessing the Bear Fund results in a higher Bear Fund value, compelling the individual to hold for a longer period.
Realistically, the Bear Fund becomes the buyer of last resort. It is likely more profitable to sell on the secondary market. The Bear Fund provides immediate liquidity whereas the secondary market may result in a long period of time between list and sale.
Open for discussion.