Announcing: Sneed Recursive Liquidity Loop

[Snassy-icp]

Dear ICP Friends!

In November of 2023 the Sneed project posted its proposal in this forum to form the Sneed DAO SNS. It came with an ambitious road map, that we have since worked hard to deliver.

Proposal to create an SNS DAO for SNEED

I. Introduction The Middle Ages was a period of so-called feudalism, a system of classes that built up society. Nobles were rich landowners who were in charge of administration and growth. The poorer people (according to materialistic wealth), typically peasants, lived on the lands of the nobles. They were granted protection and safety but had to provide goods such as wheat to their lords. The handle of a scythe, which was a common tool to cut grass or agricultural products like wheat, was call…

It is thus with great pleasure that I can now write this status update for the Sneed SNS DAO, to announce the final pieces of our Recursive Liquidity Loop (RLL) going live, delivering on all the promises in our road map!

In this post, I will bring you an update on our RLL implementation, explaining what it is, how it works, and how you will be able to do something similar for your own SNS if you should be interested. Let’s start with its history.

The Sneed project was born from the ashes of the SNS-1 Blank Canvas DAO.

It was founded on two principles:

1. To be a new Blank Canvas SNS where ICP projects could benefit from our SNS infrastructure, even if they did not have the scope to form an SNS of their own.

2. To be strictly deflationary, in the tradition of SNS-1. However, leveraging our innovative Recursive Liquidity Loop (RLL) mechanism, we would be able to provide value for token holders via burns and buybacks, as well as give non-inflationary rewards to stakers/voters.

The RLL, then, is simply our name for a system of components that circulate liquidity in a way that benefit token holders and DAO members.

Back when we launched the pre-SNS Sneed token, not many tokens, on any blockchain, were doing anything much like it. Since then, especially on ICP of course, many projects have gone down similar paths, without any project (to the best of my knowledge) taking it quite as far as Sneed does with the RLL.

Concretely, it involves pumping our income - maturity from our 8 year ICP Neuron, rewards from our Liquidity Positions in trading pools, and revenue from our products such as SneedLock and Swaprunner - into components that can funnel these streams into restaking in the 8 year neuron, into the DAO treasury, to the burn address, to Buybacks of our Sneed tokens from the market, and into our new Reward Distribution canister, which can distribute tokens to Sneed DAO members as non-inflationary voting rewards.

Before we formed the SNS, we tested out the soundness of this approach using the pre-SNS Sneed token and by carrying out all the operations in the RLL manually: managing an 8 year neuron, harvesting rewards from Liquidity Pool Positions, and using maturity and rewards for burning, restaking and buybacks. The concept worked well, so it was decided it would be worth creating an SNS DAO where the whole system could be implemented to operate in a trustless manner.

Thus, when we posted our proposal for an SNS in this forum in November of 2023, we had an ambitious road map staked out ahead of us. We knew that implementing all of the pieces of our RLL in such a way that it could be handled not just automatically, but also in a fully trustless way by a DAO, would be a challenge.

And a challenge it has been. We originally estimated it would take us about a year to deliver on our RLL road map, and now, about one and a half years later, here we are. Not too bad, as software estimates go!

Significant challenges on the way have included:

• Life. Well, you know how it is.
• No ability for canisters to control ICP Neurons. Actually, Dfinity fixed this in good time before we were ready to use it, so this one is really more of a Big Thumbs Up to Dfinity for delivering on their road map in a way that other projects can depend on! Thank You! But until we saw that happen, we were very nervous about if a prominent piece of our RLL puzzle would maybe not work out.
• No infrastructure primitives for things like regularly collecting maturity from neurons, DCA Buyback from markets, splitting funds to multiple destinations, and distributing funds to DAO members based on their voting. Well, we knew this when we started, this is the infrastructure we intended to build. However, as Neutrinite DAO started building their ICRC55 DeFi Vectors, we knew that would be the right technology to go with, providing all the right primitives. As their first customers and partners, Sneed DAO leverages DeFi Vectors from NTN and NeuronPool heavily in its RLL setup.
• Losing our member’s voting record ballots that we needed for distributing non-inflationary rewards to our users! I have outlined this fiasco here:

Maintaining SNS Proposal Ballot Records

For a Decentralized Autonomous Organization, the public voting record fills essentially the same central role as the token transaction archive does for a cryptocurrency token. It is the artifact that imbues the whole system with trust, via its verifiability. The more important and valuable the token, the more important it is that its entire transaction history can be verified. The Bitcoin block wars were fought over this principle, and the “small blockers” won, maintaining that BTC would be con…

But we prevailed, and now, with the completion of the RLL Reward Distribution canister, the entire Recursive Liquidity Loop is operational.

In the end, the RLL can be summed up as the DAO using its revenue streams for Staking, Burns, Buybacks and Voting Rewards, and DAO members can control in what proportions the streams should be directed to these purposes. The whole system is visualized in our new RLL dashboard, complete with animated little tokens flowing through the system, which can be found here:

SneedLock

The main components of interest are:

ICP Neuron Vector: DeFi Vector from NeuronPool that controls our 8 year ICP Neuron and regularly collects maturity from it, sending it to:

ICP Splitter Vector: DeFi Vector from NeuronPool that takes incoming ICP funds and sends them to the ICP Neuron Vector (for restaking), to the DAO Treasury, and to:

SNEED Buyback Vector. DeFi Vector from Neutrinite that takes incoming ICP and buys SNEED from the market with it in small increments, sending the SNEED to:

SNEED Splitter Vector: DeFi Vector from NeuronPool that takes incoming SNEED funds and sends them to the DAO Treasury, to the SNEED Burn address, and to:

RLL Distribution Canister: A custom built canister developed by Sneed DAO that takes incoming funds and distributes them to DAO members according to the voting power they have used to vote on DAO proposals.

What this means is that Sneed DAO now has an indefinite source of base income from ICP Staking and from Liquidity Pool Positions, that will ensure there are always rewards available for DAO members who vote, as well as a never ending, constant buy pressure on the Sneed token.

On top of this, products such as SneedLock and Swaprunner, that have also been developed in parallel with the RLL by the DAO during this year, and future products, have an infrastructure where their revenue streams can be integrated to boost the buyback pressure, reward distribution and general value creation via burning that the RLL manages.

As DAOs mature and develop greater needs for their capital to work for them and not just sit in a treasury, we anticipate that many other SNS projects will be interested in setting up similar systems for themselves.

To help with that, Sneed DAO is pleased to announce that we have plans, in partnership with Neutrinite and NeuronPool, to set up RLL as a turn-key product that any SNS can decide to use at their convenience.

In conclusion, we are thrilled to see this multi-year vision come alive and deliver on our promises to our members, from over a year ago. Thank you all for your patience and constant encouragement throughout the whole process, it is thanks to your endless support that this ambitious road map could come to fruition!

[vavram]

That’s a really interesting concept. Is there any way for a user to check that the transactions are indeed occurring according to the flow diagram presented?

[XanderBrendon]

The nodes in the diagram on the info page link to their relevant sites where the user can see how the vectors are split up and such (for example the Sneed splitter will take you here Vectors - NeuronPool). The nodes represented by canisters link to the appropriate site on the dashboard as well where you can see specific transactions (though some transactions are spaced out slowly overtime - like the sneed buyback transactions). Also the main RLL site (where Sneed stakers can claim their distributed rewards) shows information like tokens that are being distributed and recent distribution/claim events Sneed RLL

[vavram]

So a user needs to rely on 3rd party tools to investigate transactions between each node, that’s better than nothing I guess. It would’ve been great to have an integrated explorer where users could easily track each transaction in the RLL flow, especially when it comes to organizations such as DAOs.

[XanderBrendon]

I agree, I think it’s a good feature request to ask for more detailed views of specific transactions and movements of coins.

But also keep in mind, these types of features take time to build and there’s always the tradeoff between how you spend your development time and when you choose to release a product to the public. Consider the swap transactions that trade ICP for Sneed as part of this process. These currently occur at .1 ICP increments every half hour. While you could show a very long list of these very regular transactions occurring, I’d argue that what the Sneed RLL Info diagram shows is much more meaningful to most of the target users (people who are staking sneed and voting on proposals):

In this case I think Snassy did a great job in delivering enough information without letting feature creep delay the release of a product integral to voters such as myself receiving rewards. I can see the vector is active, how much its buying and how long until the next purchase, I can see how much ICP remains to purchase more sneed in this way. It’s really got great details that I think are the most relevant information.

For those “deeper” features such as listing the individual transactions that more technical users might care about, the ICP ecosystem has reasonably good default tooling that users of that technical level can use to uncover them, so I totally understand this one not making the cut. But I’m positive that in future releases Snassy will give us more great features. I’m super pumped to see how this product keeps evolving!

[Snassy-icp]

Hi @vavram

Absolutely agreed! As @XanderBrendon discussed, it is all a matter of priorities and when to ship. Sneed usually works by an agile development philosophy of trying to release early and often - start with an MVP, add the smallest step that adds user value, and keep iterating based on user feedback.

But we have lots of plans, so stay tuned! This is just the beginning! We plan not to just show transactions, such as all transactions to and from our treasury, but also add the ability to label and associate such transactions with treasury proposals, and other such features that can improve transparency and traceability of DAO assets for our members.