SURF’s Up — The Beach
Welcome to The Beach!
SURF’s Up is a series of articles about the Ethereum DeFi project Surf Finance. The Beach is the dynamic base article to the SURF’s Up series. Additional articles to the SURF’s Up series are Waves. Wave articles will provide new information and updates, while The Beach will continuously be updated with, and in between, Waves.
If you are new, you may want to get comfy here on the Beach before venturing out into the Waves. If you’re coming in from the Waves, welcome back. The Beach may have changed since the last time you were here.
The Beach was last updated: December 19, 2020
Imagine you arrive at a beach. It is shortly after sunset, the sand still warm beneath your feet. The horizon’s soft glow of brilliant colors slowly fading as beach goers pack their belongings and head to a quaint beach resort sitting under the shadow of an enormous construction site.
You notice a surfer come out of the ocean and head toward a cabana surrounded by surfboards. The surfer stacks his board with the rest and enters the cabana.
Intrigued, you approach the cabana. A soft white glow can be seen coming from the door left slightly ajar. Peering inside you see several people seated around a large table in the shape of a surfboard. A motley crew of beach bums and surfers. Most are on laptops; many are engaged in conversation.
You notice what could only be described as the big kahuna holding court with some of the members. The big kahuna begins typing. The room falls silent. Peering forward the door gives a creak. The big kahuna stops typing. He looks up and smiles. He raises a whisky glass to you, and then waiving it in the direction of the construction site says, “Welcome to Surf Finance, we are building something all together amazing here”.
Surf Finance is an Ethereum project with a dedicated dev team fully engaged with its surfer community. At its heart is the Whirlpool, the ultimate passive income machine. At its core is SURF, a deflationary ERC-20 token fairly distributed to the community using a revolutionary fixed APY farming model.
To some, the end of the 10 million SURF token distribution was the end. To others, it was the beginning. SURF’s Up!
The Beach is separated into the following sections, all of which will be updated on the regular as Waves come crashing to the shore:
- The Cabana (Surf Finance Ecosystem)
- Estuaries (Ancillary DApps)
- SURF Shells by the SURF Shore (Surf Finance Analytics)
- Making Waves (Links to Wave Articles)
- Road Trip (Other Related Links)
The Cabana (Surf Finance Ecosystem)
Welcome to the Cabana. Come inside. Get comfy.
It’s time for an in depth look at Surf Finance tokenomics and ecosystem.
Surf Finance Tokens
There are currently four different tokens in the Surf Finance ecosystem: Leviathan, SURF, S3D, and SURF Board:
Leviathan: See 🐉 AEGIS DAO in the Estuaries (Ancillary DApps) section below.
SURF (ERC-20): SURF is the life flow of the Surf Finance ecosystem. The entire 10 million token supply was fairly distributed through farming in October and November of 2020.
Contrary to its farmed origin, SURF is designed to to be a deflationary dividend paying token:
- A 1% fee is extracted from every SURF transfer and rewards it to those staking ETH-SURF LP tokens in the Whirlpool. (Note: This fee is not taken from transfers involving the Whirlpool contract.)
- DApps within the SURF Finance ecosystem will burn SURF tokens, permanently reducing the 10 million token supply. Burned tokens are located at the SURF token address here. As of December 19, 2020, there were 37,924 SURF tokens in the burn address.
- The Surf Finance ecosystem strongly incentivizes users to stake ETH-SURF LPs tokens to the Whirlpool. This locks up a significant percentage of SURF’s circulating supply.
SURF is intended to become a governance token with the governance contract being controlled by all SURF holders.
S3D: See SURF3D in the Estuaries (Ancillary DApps) section below.
SURF Board (ERC-721): SURF Boards are special NFT’s (non-fungible tokens) that provide some awesome benefits to anyone that owns one of the 100 in existence.
Surf Finance Ecosystem
If SURF is the water, the Whirlpool is the turbine powering the Surf Finance ecosystem.
The Whirlpool is designed to be the ultimate passive income machine. To earn income, you need to stake ETH-SURF LP tokens to the Whirlpool. As of November 19, 2020, ETH-SURF LP tokens staked to the Whirlpool were receiving the following benefits:
Unstaking: There is no fee to stake ETH-SURF LP tokens in the Whirlpool, however, there is a 20% fee to unstake them. Of the unstaking fee, 25% (5% of the unstaked amount) gets swapped for SURF and distributed to the remaining Whirlpool stakers. The other 75% (15% of the unstaked amount) gets added to the community locked liquidity in the SURF token contract.
SURF Token Transfers: Whenever SURF is transferred, 1% of the transfer amount gets sent to the Whirlpool. (Note: This is only applicable for transfers outside of the Whirlpool contract.)
Community Locked Liquidity: 75% of the 20% Whirlpool unstaking fee gets put into community locked liquidity. This liquidity is currently controlled by the devs, but will eventually be controlled by community governance and can be used for buy backs, token burns, and more.
Bonus Payouts: Of the locked liquidity accrued during the farming phase, 2,500 ETH was used to purchase SURF and was combined with the other SURF for a transfer of over 2 million SURF to the Whirlpool through something called the Event. This over 2 million SURF is currently being paid out to Whirlpool stakers in 100 equal daily payments (1% of the total per day for 100 days). Future events are at the discretion of community governance, so are likely to occur in the future.
SURF Ecosystem Projects: Team and partner projects will benefit Whirlpool stakers in multiple ways, including sending ETH to the Whirlpool to buy and distribute SURF. See Estuaries (Ancillary DApps) below for details on any current additional DApps integrated into the Surf Finance ecosystem.
Estuaries (Ancillary DApps)
Like estuaries feed our oceans, additional team and partner projects feed the Whirlpool and the Surf Finance ecosystem.
The Surf Finance ecosystem is expected to grow through the integration of ancillary DApps from the dev team and partners. Any ancillary DApps are listed and described below under the following categories: Dev Team DApps, Aegis DAO, Other Partner DApps, and Prospective DApps
As of December 15, 2020, the following DApps have been integrated into the Surf Finance ecosystem:
Dev Team DApps
SURF3d: SURF3d is an hourglass contract that utilizes S3D tokens to distribute SURF dividends to those who hold S3D. The longer you hold your S3D tokens, the more SURF dividends you accumulate.
S3D can only be bought with SURF. Every time someone buys or sells S3D, there is a 15% fee, which gets proportionally distributed as dividends to all S3D holders. No S3D was distributed to anyone before SURF3d launched on 11/10/2020.
The SURF3d smart contract automatically mints more S3D each time some is bought, and burns some when it’s sold, ensuring there is S3D for everyone — but it does not do it perfectly equivalently, or the price would not properly increase and decrease. The smart contract slightly increases the price every time S3D is bought, and slightly decreases the price every time S3D is sold.
The first purchase of SURF3d was made by the WhirlpoolManager contract, using 80k SURF (79,200 after 1% transfer fee). The WhirlpoolManager can never sell its S3D, which means the SURF used to buy them is also permanently locked, creating a floor price for S3D tokens.
On November 17, 2020, a little under half of the community locked liquidity (4,500 ETH-SURF LP tokens) was unwound and converted into 380,362.95 SURF (after the 1% transfer fee). This SURF was used to buy S3D for the WhirlpoolManager, permanently locking all of that SURF and significantly raising the S3D price floor.
As of December 18, 2020, the WhirlpoolManager owned 837,950.64 S3D. The estimated floor value (basis) of the WhirlpoolManager’s S3D is 511,809.95 SURF. In addition to community locked liquidity, SURF has been deposited into the WhirlpoolManager by two ancillary DApps: the Aegis DAO Harpoon and Stacker.
SURF dividends the WhirlpoolManager receives get distributed back to the community as follows: 80% goes to the Whirlpool, 10% goes to SURF board holders, and 10% gets burned.
For more information and a quick guide to SURF3d see the Surf Finance Medium article SURF3d — SURF In Three Dimensions.
SURFstacker: SURFstacker allows users to “stack” SURF into a SURF redistribution machine. The benefit to stacking SURF is a 115% payout of the deposited SURF, once the user is pushed through the front of the line. The benefit to SURF, is the way SURFstacker redistributes SURF back through the Surf Finance ecosystem.
SURF is processed through SURFstacker as follows:
- Users make an up to 10,000 SURF deposit into the SURFstacker contract.
- 61.8% of SURFstacker deposits go to the first user in line until that user gets back 115% of their deposit. The other 38.2% buys S3D on behalf of the Whirlpool Manager.
- The Whirlpool Manager never sells its S3D tokens, and pays 80% of dividends to the Whirlpool, 10% to SURF Board NFTs, and 10% are burned.
In a sense, SURFstacker issues bonds to its users, with the promise of returning principal plus 15% interest when the deposit amount plus interest is pushed through the front of the line.
The risk to the user is the uncertainty of when their deposit will get pushed through the front of the line. Some factors to keep in mind with SURFstaker are:
- The remaining payout to users of SURFstacker increases with every deposit. Historically, SURFstacker has had a consistent remaining payout equal to 53.2% of total deposits.
- SURF deposited into SURFstacker is immediately redistributed.
- There is no limit to how long the SURFstacker line can get, however, there is also no end to potential deposits that can be cycled back into SURFstacker.
- SURFstacker’s redistribution of SURF is arguably beneficial to the SURF ecosystem as a whole. This means that SURF from locked liquidity and other ancillary DApps are likely to continue feeding SURFstacker.
🐉 Aegis DAO
Although technically an Other Partner DApp, Aegis DAO’s involvement and seamless integration with SURF makes them practically synonymous with Surf Finance. Aegis DAO sits within the umbrella of the Aegis ecosystem, with Aegis DAO being the primary provider of a growing suite of second layer DApps to the SURF ecosystem.
Aegis DAO Tokens
Aegis DAO has a token called the Leviathan. The Leviathan exists as both an ERC-721 token (NFT), and a wrapped ERC-20 token called WLEV. A total of 333 Leviathan NFT tokens were minted. As of 12/19/2020, only 176 Leviathans existed as NFTs; the other 157 were in the form of WLEV (Wrapped Leviathans).
Leviathan (ERC-721): Each Leviathan NFT receives 1/333rd of all SURF received by the LeviathanClaim contract. The LeviathanClaim contract currently receives SURF from the following sources:
- 3 SURF Board NFTs.
- 333 SURF-ETH LPs permanently staked in the Whirlpool.
- A proxy farming contract called Harpoon that converts yields to SURF via Uniswap and sends them NFT holders.
There are also plans to bridge the lore of Ethercraft and Leviathan, that will use SURF as a consumable resource (burning it).
WLEV (ERC-20): WLEV is the wrapped ERC-20 version of the Leviathan NFT. WLEV can be traded on Uniswap. Users who accumulate 1 WLEV have the ability to convert that 1 WLEV into a Leviathan NFT. Current WLEV holders can be seen here.
Important Note: WLEV tokens do not receive an allocation of SURF rewards. This causes the divisor used to allocate SURF rewards to Leviathan NFT’s to be reduced from 333 to the number of Leviathans existing as NFTs. This means that a little under half of all Leviathans are ‘inactive’ in terms of rewards, effectively doubling SURF rewards for NFT holders.
Aegis DAO DApps
Harpoon contracts: The Harpoon contracts are currently using assets derived from 2,000 SURF-ETH LPs to proxy yield farm and convert earnings into SURF. The SURF is then deposited into SURFstacker.
Harpoon will eventually release HarpoonLauncher, which will allow users to deploy preconfigured proxy farm contracts. The HarpoonLauncher UI is currently being built. (See the below chart from Aegis DAO for details on HarpoonLauncher and other upcoming Aegis DAO DApps.)
Aegis DAO Prospective DApps
Other Partner DApps
(See Prospective DApps)
BetGalaxy: SURF Finance has partnered with Topia Network and their upcoming crypto casino BetGalaxy, launching December 20, 2020.
SURF will be a fully playable asset on BetGalaxy at launch. Users will need to pay the 1% Whirlpool transfer fee to deposit or withdraw SURF on the site, but since the casino is off-chain, there will not be a 1% transfer fee each time users wager with SURF.
The SURF team used 50 ETH from the community locked liquidity pool to purchase 61,000 uTOPIA tokens. This represents 6.1% of the total supply, and will be earning ETH dividends from the casino for the Whirlpool.
SURF Shells by the SURF Shore (Surf Finance Analytics)
Time to head down the beach to see what SURF shells have washed ashore.
Look! A nautilus shell. What a beautiful example of a golden spiral.
Golden spirals abound the natural world. It can be seen in the resilience of a nautilus shell, all the way to the majestic power of a spiral galaxy.
Perhaps our very own Whirlpool is what will lie at the center of a Surf Finance golden spiral.
Surf Finance has a unique and dynamic structure built for both longevity and growth, and has no true precedent from which we can compare. This will require some new ways to analyze its tokenomics and ecosystem. The analysis of Surf Finance must remain flexible as we explore the many SURF shells washing ashore.
SURF is slowly making a transition from abundance to relative scarcity, all while the Surf Finance ecosystem is expected to continually grow. A formula of increasing demand for a decreasing supply should create strong upward pressure on the long-term price.
To better analyze the changing availability of the 10 million maximum SURF tokens, a metric called the Value & Locked Liquidity Rating (VLLR) is used. The VLLR applies a percent value to a token’s supply, based on how available the supply of that token is on the open market.
The first step in determining SURF’s Value & Locked Liquidity Rating is to categorize and assign values to different aspects of SURF’s supply. The below chart summarizes seven categories of SURF supply and assigns a VLLR to each category:
Value & Locked Liquidity Rating Categories
Burned (Out of Circulation): Tokens that are burned are removed from circulation by being sent to the burn address here. As of December 18, 2020 there were 37,924 SURF tokens in the burn address. The VLLR for Burned (Out of Circulation) is 100%
Locked LPs/SURF (Permanently Locked): SURF tokens can become permanently locked in the contract of a DApp in the Surf Finance ecosystem. There are currently two sources for permanently locked SURF:
- SURF used to purchase S3D for the SURF3D WhirlpoolManager. SURF has been used to buy S3D for the WhirlpoolManager from Community Locked Liquidity, Harpoon, and SURFstacker. As of December 18, 2020, the WhirlpoolManager owned 837,950.64 S3D. The estimated floor value (basis) of the WhirlpoolManager’s S3D is 511,809.95 SURF.
- SURF attributable to the 333 SURF-ETH LPs permanently staked in the Whirlpool by the LeviathanClaim contract.
The VLLR for Locked LPs/SURF (Permanently Locked) is 85%.
Locked Liquidity (In TITO Contract): When SURF-ETH LPs are unstaked from the Whirlpool there is a 20% fee. 75% of the unstaking fee (15% of the unstaked amount) gets transferred into community locked liquidity. Community locked liquidity can be used for buy backs, token burns, and more. The VLLR for Locked Liquidity (In TITO Contract) is 50%.
Deployed/Dev (Deployed to Ecosystem): This represent SURF from Community Locked Liquidity that has been deployed into the SURF ecosystem. Currently, deployed SURF is being used by Harpoon contracts to proxy yield farm, and convert earnings into SURF, which is deposited into SURFstacker. SURF and SURF-ETH LPs can also sit in the Dev wallet to be used for various reasons. Most recently, SURF transferred to the Dev wallet was used to purchase 61,000 uTOPIA tokens, which will feed additional rewards into the Whirlpool. The VLLR for Deployed/Dev (Deployed to Ecosystem) is 50%.
Staked LPs (20% Withdrawal Fee): This represents SURF-ETH LPs staked to the Whirlpool. The VLLR for Staked LPs has a variable value derived from a projected reallocation of the 20% unstaking fee. The VLLR for Staked LPs has a variable value ranging from 12% to 12.61%.
Whirlpool/SURF3D (Pending Payout): This is SURF awaiting distribution or claiming. The VLLR for both of these two categories equals (SURF in Staked LPs/(SURF in Staked LPs + SURF Other))*(Staked LPs VLLR)
Other Supply (Circulating): This is the SURF Other tokens, and is simply 10 million minus the total tokens in all other categories. Although these tokens could be locked in something outside the Surf Finance ecosystem, they are considered freely circulating, and have a VLLR of 0%.
As of December 19, 2020 the SURF token supply breakdown was charted as follows:
The above infographic includes a color coded pie chart obscured by the Surf Finance wave logo.
The infographic also shows the Value & Locked Liquidity Rating (VLLR) as well as an additional metric (VLLR x Price) which is (Value & Locked Liquidity Rating) x (SURF/USD), or VLLR*P for short.
One problem with VLLR is that it counts all the SURF tokens attributable to SURF-ETH LP pools, which currently represents about 43% of the total supply. If SURF price goes up relative to ETH, the number of SURF tokens represented by the LPs will go down to maintain the LPs required 50/50 balance. The VLLR x Price metric takes into account both locked liquidity and price.
VLLR and VLLR*P are complimentary to one another.
If the price of SURF goes up, the VLLR will tend to go down due to increases in the SURF Other circulating supply, which has a VLLR of 0%. Whereas, if the price of SURF goes up, VLLR*P will put more weight on price change as it relates to token supply liquidity, and will tend to stagnate or go up.
If the price of SURF goes down, the opposite will happen. The VLLR will tend to go up due to the SURF token count in SURF-ETH LPs going up, and therefore SURF Other circulating supply going down. Whereas, if the price of SURF goes down, VLLR*P will put more weight on price change as it relates to token supply liquidity, and will tend to stagnate or go down.
Historical VLLR and VLLR*P are charted in the following graph:
The consistent uptrend in Value & Locked Liquidity shows the gradual migration of SURF out of general circulation. The VLLR x Price has had less of an upward trend due to the price of SURF remaining stagnant. This is actually bullish price action given the amount of SURF being paid out of the Whirlpool on a daily basis.
Charts & Infographics
Additional infographics and charts for Surf Finance as of December 18, 2020 are as follows:
The most transitional event in the SURF Token Lock ‘n Burn chart is the upswing in both locked and burned SURF on December 9, 2020. This corresponds to the release of SURFstacker.
All Other SURF (Circulating) continues its downward trend in waves.
The staking and unstaking of SURF-ETH LP tokens in the Whirlpool is a core piece of the Surf Finance ecosystem. The u-shaped sideways action portrayed in this chart has meant significant rewards to stakers and SURF-ETH LP tokens transferred to Community Locked Liquidity.
The end of Phase 1 and start of Phase 2 was only the beginning. As the Surf Finance ecosystem grows and changes, so will the Beach, and so will the analytics. This is a work-in-progress. Expect plenty of updates, changes, and additions.
Making Waves (Links to Wave Articles)
Road Trip (Other Related Links)
Time to pack our boards and hit the electronic highway.
Here are some Surf Finance related links as well as my very own Twitter.