Flamingo FLOCKS
In this section we explain the Flamingo FLOCKS dividend-bearing asset.
What is FLOCKS?
FLOCKS is Flamingo's dividend-bearing asset. Owning FLOCKS tokens can be seen as owning a piece of Flamingo. Flamingo users can buy a share of FLOCKS to receive passive income (yield). FLOCKS holders receive this yield from many different sources: platform fees, loan interest, and minting rewards. FLOCKS holders will have various income sources and can also receive this income in various assets. This means FLOCKS holders who decide to diversify their yield rather than receiving it solely in FLM will receive BTC (WBTC), ETH (WETH), USDT, FLM, NEO, and FUSD.
Acquiring FLOCKS
There are several ways to acquire FLOCKS, each with its own rules and cost.
What is the cost of FLOCKS?
What is the cost to acquire a share of FLOCKS? The price of a single FLOCKS share varies based on several factors. Here's a breakdown of the methods available for acquiring FLOCKS:
FLUND Migration: Acquire FLOCKS by migrating FLUND (see A Head Start for FLUND Users section below).
Using Staking Rewards: Purchase FLOCKS with your unclaimed FLM (from providing liquidity).
With your FLM: Acquire FLOCKS directly by burning FLM from your wallet.
Buy FLOCKS on the market with the Flamingo Orderbook+.
With unclaimed dividends: Acquire FLOCKS by minting them with your unclaimed dividends from a previous FLOCKS Epoch.
Let’s delve into each option to understand the cost implications of acquiring FLOCKS.
Unclaimed FLM Price (Buying FLOCKS with unclaimed FLM from staking rewards and/or FLOCKS dividends)
1 FLOCKS = 1 FLM + (FLM_USD_PRICE * (DIVIDEND_VALUE / FLOCKS_TOTAL_SUPPLY))
Buying FLOCKS with FLM
1 FLOCKS = 1.1 FLM * UNCLAIMED PRICE
Users that buy FLOCKS directly with FLM not gained from staking in liquidity pools on Flamingo (unclaimed FLM yield) pay a 10% premium on the FLOCKS price. This is because the Flamingo ecosystem greatly benefits from users being active liquidity providers on the platform.
The longer a user waits to buy FLOCKS during an Epoch (the more dividends that accrue) the lesser FLM to FLOCKS ratio the user gets since they will then need to "buy" their share of the dividends thus far into the Epoch. The FLM to FLOCKS ratio will always be 1:1 plus the current value of their share of the monthly dividend. If a user waits and then buys FLOCKS at the beginning of the next Epoch, the ratio will return to 1:1. This applies to buying with FLUND, buying with unclaimed FLM, and buying with FLM from a wallet. This does not apply when buying FLOCKS on the market with the OrderBook+, however a 0.5% fee is applied (and will stay in the Orderbook+ Contract and be considered burned as the Orderbook+ contract is blacklisted and does not receive any rewards from FLOCKS).
Buying and selling FLOCKS on the market
If and when users want to exit a FLOCKS position, it will be available for trading on Flamingo’s OrderBook+. Here, users will set the prices to buy and sell FLOCKS. The market will finally decide the price of FLOCKS. Again, whenever FLOCKS is bought/sold on the market, a 0.5% fee is applied (and will stay in the Orderbook+ Contract and be considered burned as the Orderbook+ contract is blacklisted and does not receive any rewards from FLOCKS).
With the Flamingo FLUND, there is a withdraw function that lets users sell their FLUND tokens and get back FLM that has accumulated in the period since they bought the FLUND tokens. With FLOCKS, there is no withdrawal function, and users receive yield differently. FLOCKS will be tradable on Flamingo’s OrderBook+ so that users can sell FLOCKS tokens to other users instead of withdrawing from the smart contract. This is the only official way to sell FLOCKS.
Burning FLM
One of the core mechanics of FLOCKS is that whenever users buy FLOCKS with FLM, FLM will be burned in exchange for getting future platform revenue.
Burning FLM will combat its inflation and could eventually make FLM deflationary. In fact, it could become so deflationary that the total supply of FLM could eventually be gone forever. The reason is that you can only mint new FLOCKS by burning FLM. Together with the fact that the only limiting factor for how much FLOCKS can exist is the amount of FLM burned, it will be possible to exchange the whole supply of FLM for a lesser supply of FLOCKS. A scenario with zero FLM in existence is unlikely, but it shows how powerful this mechanic is.
25% of all the income to FLOCKS will be used to buy back and burn FLM. This number can be adjusted in the future to find the perfect balance between rewards and FLM price. FLM Growth Flywheel
Affiliate Income
FLOCKS itself can be seen as a huge affiliate program. You hold FLOCKS and you get the fees from the people you brought in paid when trading. The drawback is that it's a collective program, and if you bring in a lot of trades, all other FLOCKS holders will also benefit from it.
In the future, there will also be set aside a percentage to direct affiliate income. This means that if you refer a user, you get a fixed percentage of that user's paid fees. From the start, this will not be initiated.
FLOCKS Dividends
Traditionally, a dividend is most often a distribution of earnings by a company to its shareholders in the form of cash or stock reinvestment. In Flamingo’s case, a dividend is a distribution from FLM minting, platform trading fees, and loan interest, by Flamingo to its FLOCKS investors in the form of FLM and/or other assets
FLOCKS holders will receive dividends every 7 days. Each 7-day period is called an Epoch.
By holding FLOCKS, users earn dividends at the end of every 7-day Epoch. At any time, FLOCKS holders can choose to receive dividends either in FLM only (by default) or diversified into other assets such as BTC (WBTC), ETH (WETH), USDT, FLM, NEO, and FUSD, helping users automatically diversify their yield and portfolio directly. Users are of course free to sell any token they receive as dividends to implement their own diversification strategy. Users can toggle the Diversify Yield setting on or off at any time, however toggling the Diversify Yield setting only changes current and future Epoch dividends. FLOCKS also gets a percentage of the newly minted FLM to boost APR for the holders. Currently, the value is 5%. This number can be adjusted in the future to find the perfect balance between rewards and FLM price. FLM Growth Flywheel
Diversifying Yield
As stated above, when users first buy FLOCKS, all dividends are converted to FLM before they can be withdrawn. Users can choose to diversify their yield and get dividends from fees in the form of FLM, bNEO, WBTC, WETH, USDT, and FUSD. The remainder of their dividends not in this list are still converted to FLM.
How does FLOCKS differ from FLUND?
There are several key differences between FLOCKS and FLUND.
FLOCKS has a more solidified goal of benefiting the platform as a whole, whereas FLUND had a similar purpose, but the FLUND mechanics were not defined enough to achieve that goal as positively as FLOCKS will.
FLOCKS burns FLM, FLUND did not.
FLOCKS has no withdrawal option, making it a long-term product rather than a more short-term “ratio play” that FLUND proved to be. If a user wants to withdraw from FLOCKS, it must be sold on the market.
FLOCKS can give a diversified yield; FLUND did not.
FLOCKS has a transfer fee, FLUND did not.
A Head Start for FLUND Users
FLUND users will get a head start to migrate their FLUND to FLOCKS so as not to interrupt their yield and to reward those who have been holding FLUND for a long time. The head start will be prior to the first Epoch, and there will be no exit fee once this period starts. As migration starts, FLUND rewards will stop and the FLOCKS rewards will begin. In this period, FLUND holders can exchange their FLUND tokens for FLOCKS tokens at a dynamic rate. We calculate the exchange rate as follows:
FLOCKS_AMOUNT = FLUND_AMOUNT * FLM_PER_FLUND
The calculation above means that for every 1 FLUND token you exchange, you will get an equal amount of FLOCKS tokens as you would get FLM tokens if you withdrew from the FLUND at that time.
Users who wish to migrate their FLUND to FLOCKS benefit most by doing so in the FLUND migration period. Users who do not migrate during the migration period will miss out on the 1:1 ratio of FLM to FLOCKS since they will have to manually sell FLUND for FLM and then mint/buy FLOCKS.
Launch Timeline
Below is a timeline of how the FLOCKS launch, FLUND Migration, dividend payout, and Epochs work. Let's start with the FLUND Migration.
FLUND Migration
In this period, FLUND purchases and rewards will stop. Users can withdraw/sell their FLUND with a 0% exit fee. FLUND holders can swap their FLUND tokens for FLOCKS tokens.
From this day until the start of Epoch 1, fees from the platform get sent to the FLOCKS holdings instead of FLUND. Note the difference between FLUND and FLOCKS: we are not converting the assets from fees to FLM.
Platform fees for FLOCKS during the 7 days of FLUND Migration will stay in OrderBook+ (this means that Epoch 1 of FLOCKS get all fees generated since the launch of OrderBook+, plus one week of fees during migration and one week of fees during Epoch 1).
Epoch 1, Day 1 — FLOCKS Launch date
From Day 1-7, FLM minting, platform trading fees, and loan interest will start accumulating as dividends to FLOCKS holders. From Day 1 of Epoch 1 onward, anyone can buy or mint FLOCKS in any way they choose to. The price to mint FLOCKS becomes more and more expensive as the dividend holdings of the Epoch grow.
Epoch 1, Day 7 — Dividend Day
Every 7 days, FLOCKS will yield dividends. FLOCKS holders can claim the dividends with respect to their share of the total FLOCKS tokens. The dividends contain multiple assets that FLOCKS has accumulated in the previous 7 days. Users can claim diversified dividends or dividends converted to FLM. Dividends will convert to FLM by default unless selected otherwise.
Flamingo takes a snapshot of the FLOCKS token amount of each address every Epoch and their current FLOCKS holdings. That way, it is possible for the smart contract to keep track of what is claimed and unclaimed. When Flamingo "finalizes" an Epoch on Dividend Day, the dividend belongs to the address of the FLOCKS holders at that time, not the FLOCKS tokens themselves.
Epoch 2 - ∞, Day 1-7: Accumulation Period
In this period, users can buy FLOCKS using either their unclaimed FLM or FLM in their wallet, as explained above. The price to buy FLOCKS becomes more and more expensive as the dividend holdings of the Epoch grow.
Epoch 2 - ∞, Day 7: Divided Day
The event is the same as described in the last "Dividend Day" in Epoch 1. If a user forgets to claim their dividends after any epoch, that user can claim their dividends from finished Epochs at any time. A user can for example claim dividends for the last four Epochs if they have chosen not to claim them on past dividend days.
Technical Notes
Another way to save GAS
When a user claims dividends from an Epoch, the dividends are not directly sent to their wallet. This helps save on GAS fees. Claimed dividends will remain in their FLOCKS account balance until the user decides to withdraw them to their wallet.
Settlement
A settlement will be done every 7 days since the last Epoch was settled. On "Dividend Day," the FLOCKS contract performs a settlement. The settlement consists of:
Noting the total supply of FLOCKS
Claiming assets (fees, FLM mint, etc.) from other Flamingo contracts
Noting the amount of each asset from the claim
Noting the FLOCKS holders amount for each address. This is actually done ahead of time by noting the Epoch holding for each address on every transfer. See the explanation below.
On each transfer of the FLOCKS token, the contract will store the amount the sender and receiver have in the current Epoch by simply copying the sender and receiver holdings into separate storage prefixed with the current Epoch number. This way, Flamingo always has a record of how many FLOCKS each address holds within an Epoch. Anyone can settle the contract. The user that settles the contract gets a GAS bonus that is taken from the dividend holdings. This is to compensate for the GAS fees for the settlement and encourage early settlement after the Epoch has ended. After an Epoch has passed, any interaction with the contract will trigger a settlement. For example, when transferring FLOCKS after an Epoch has passed (but has not been settled), the user will settle before the transfer logic is triggered.
Trading FLOCKS on Flamingo
The aim is to let the market buy and sell FLOCKS tokens freely. This requires Flamingo to have an order book for trading that does not require an underlying AMM to work. This is implemented directly into the FLOCKS contract. The reason Flamingo does not use an AMM for trading FLOCKS is that the spread (the gap that exists between two prices/orders) will normally be quite narrow because users always also have the option to mint FLOCKS.
FLM Growth Flywheel
Burning FLM reduces supply, hopefully driving up the FLM price further.
Higher FLM prices attracts greater liquidity to Flamingo.
Greater liquidity leads to increased trading volume.
Increased trading volume generates more fees for FLOCKS.
More fees collected by FLOCKS results in more FLM being burned.
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