TribalDex Diesel Pools Update (fair warning)

You may have seen my recent post about the freshly rolled out TribalDex Diesel pools with LP rewards. This is great news for Hive in general and those that want to turn their holdings into a little extra through Liquidity Provider rewards!

Having said that, there are a few things that are still being worked on and this first week or so of LP providing has not been without its bumps in the road! With luck the issues below will be straightened out soon enough and things will be smooth sailing!

First off, when the pools first went live the payout schedule was delayed by adding additional rewards to the pool. What this meant for my dear Swap.Hive:PIZZA pool was that when some unknown entity came along and added a couple of additional tokens to the reward pool it prevented all payouts to the Liquidity Providers for the first couple of days!

Not the end of the world but it would have been nice to get those payouts from the first few days when there was less liquidity in the pool so it was easier to command a large share and earn more rewards!

Secondly... there is no real way to verify you are receiving payouts correctly. Transfers from the Liquidity Pool Rewards don't appear correctly in any of the various frontend wallets OR on the block explorer. Due to this it is pretty difficult(impossible) to go in and verify that you are being paid correctly for your liquidity... Ok fine there is a way to check but it involves knowing the block that the payout occurred in for your pool(not easy to figure out) and using the block explorer to go and comb through the virtual transactions for payouts to your account... it looks something like this:

Here's the link to the block that contained the latest payout for the PIZZA pool:
https://he.dtools.dev/b/9487125

And finally... and this issue is on going and has directly affected me and my earnings from the pool...

If you add liquidity to a pool it resets the timer on the payout schedule. This applies to pools that you already have provided liquidity to. What this means is that if you are already in a pool and add more liquidity to it YOU WILL NOT RECEIVE A PAYOUT FOR THAT 24 HOUR PERIOD.

I understand the need to have provided liquidity for more than a 24 hour period before payouts start to occur. This is done to prevent people from providing liquidity just before rewards are paid out and then removing the liquidity immediately after they have received rewards- avoiding price action risk and impermanent loss in the process. BUT if a liquidity provider has had liquidity in place in the pool for longer than 24 hours and ADDS more liquidity they should not be penalized by losing that days earnings.

As it stands for my position in the PIZZA liquidity pool I have yet to actually receive a PIZZA payout for the liquidity I have provided. This is in part because of the initial issue with people adding additional reward tokens and delaying the contract from starting to pay rewards. The other reason is my desire to continually increase my position in the liquidity pool.... I have added more SWAP.HIVE and PIZZA to the pool multiple times so far. Knowing that I wouldn't be able to see transactions in my wallet I didn't worry much about it until today.

Now I know- I haven't been receiving rewards from the pools I am supplying liquidity to because I have been adding more liquidity frequently- most days in fact. Each time I have added more liquidity I have prevented myself from being paid for that 24 hour period. Combine my additions to the pools with people still occasionally adding an additional reward to the pool and the result is missing out on the rewards regularly.

Unfortunately there is nothing that I can do about it! Each time I added liquidity my portion of the reward pool was distributed to the other providers who had not added to their position....

So congratulations to the other Liquidity Providers I guess. You've been regularly getting extra rewards as I've increased my position!

After all of this I have a few things that I feel need to be dealt with by the TribalDex team:

First better documentation of how exactly the Diesel Pool LP rewards work would have been helpful. I would have known how this works and could have planned to skip a day of rewards in order to increase my position by larger amounts at a time rather than by a small amount regularly! Yes I know its on me as a liquidity provider to do the research etc but the reality is that there was no research to be done! Very little information was available! At that point it's still on me for providing liquidity anyway. I'm not (very) mad about it. You still should have given us more info and I still would not have agreed with the mechanic but at least I would have known about it.

Second, only pool owners should be able to add rewards to the pool. And additional rewards shouldn't delay the payout of rewards already in the contract. If possible have the additional rewards start paying on the next 24 hour period.

Third, the way the pools currently work prevents users from putting their earnings back into the pool. At least... it will now that it is known that we wont get paid on days we add more liquidity... That needs to be changed!

It's a pretty normal practice for users to want to compound their returns. Lots of people do it daily with other pools, daily claiming and staking of tokens, etc. It does not make sense for a user to lose the rewards they earned that day if they increase their position. I should have been paid rewards on the portion of the pool that existed for more than 24 hours before I added, and then the additional earnings start on the next 24 hour period. Anything else prevents users from compounding their returns. If smaller fish can't compound their returns it makes it that much harder to compete with others that can drop 50+% of the liquidity into a pool at the start and just skim the returns to sell.

TL:DR

Be careful trying to compound your earnings in Diesel Pools, there are several mechanics that will stop you from getting paid, little transparency about how they work, and no easy way to verify whether you've received rewards or not!

P.S.
I actually love the work these guys are doing and am excited for what the Diesel Pools and rewards can bring to Hive, that said... I am not exactly pleased with my experience so far and think there is a lot of room for improvement

JD