Farming
Decentralized exchanges like Uniswap V3 are fundamental parts of the Web3 ecosystem, allowing the exchange of tokens. They work differently from traditional exchanges where people put buy and sell orders that the operators of the exchange match with each other allowing people to buy and sell cryptocurrencies. But decentralized markets must operate automatically without intervention of third parties. This problem has been solved by introducing the concept of Liquidity Pools where users deposit or withdraw cryptocurrencies from a stockpile called liquidity pool.
Users are incentivized to provide liquidity to the decentralized markets by taking a share of the trades made by other users. The more transactions the more rewards you get by providing liquidity to the market.
However, if there are few transactions there is not a lot of incentive to keep your money in the liquidity pool. This is why Seasonal Tokens implemented Liquidity Farms, to provide an extra incentive for Liquidity providers.
Nine percent of all tokens mined by the Seasonal Tokens Mining Pool are donated to the Farms. There are two farms, one in Ethereum network and another in Polygon network. There is one Uniswap V3 in the Ethereum network, and another Uniswap V3 in the Polygon network. Both farms receive 4.5% of all mined tokens.
Investors and miners can receive a regular income of tokens by providing liquidity at Uniswap V3 and then depositing the Uniswap liquidity position into the farm. Farming helps to ensure that there is sufficient liquidity available for trades, and it generates a rotating demand for the tokens that complements the rotating scarcity.
Here is a tutorial on how to create a liquidity position and deposit it into the farm: Farming Tutorial on Reddit
In this page we will dive into the details about how profitable it is to farm the tokens.
Farming Rewards Correlate with Mining Supply
The 9% donation to the farm is distributed among the 4 liquidity pools in such a way that complements the changes in mining supply, adding a rotating demand that acts together with the mining supply to produce the oscillations in the relative price of the tokens.
Four months after the mining supply of a token is cut in half, the farming reward for that token is increased, creating a combination of reduced supply and increased demand helping the price oscillations.
Number of Tokens per Reward
Every ten minutes on average a miner finds a solution to the proof of work challenge and receives a reward in tokens. There are 144 rewards per day.
| Month | Year | Spring | Summer | Autumn | Winter |
|---|---|---|---|---|---|
| September | 2021 | 168 | 140 | 120 | 105 |
| June | 2022 | 84 | 140 | 120 | 105 |
| March | 2023 | 84 | 70 | 120 | 105 |
| December | 2023 | 84 | 70 | 60 | 105 |
| September | 2024 | 84 | 70 | 60 | 52.5 |
Farming Rewards
Nine percent of the tokens mined by the Seasonal Tokens liquidity pool are donated to the farms. Notice that there may be other liquidity pools and solo miners outside the Seasonal Tokens pool. Specially when the token prices make it profitable.
For example, in September 2021 the mining supply of Spring was cut in half, four months later, on January 2022 the farming rewards
| Month | Year | Spring | Summer | Autumn | Winter |
|---|---|---|---|---|---|
| Initially | 2021 | 0.19 | 0.23 | 0.27 | 0.31 |
| January | 2022 | 0.32 | 0.19 | 0.23 | 0.26 |
| October | 2022 | 0.27 | 0.32 | 0.19 | 0.22 |
| July | 2023 | 0.23 | 0.27 | 0.32 | 0.18 |
| April | 2024 | 0.19 | 0.23 | 0.27 | 0.31 |
| January | 2025 | 0.19 | 0.23 | 0.27 | 0.31 |