We’re excited to introduce a new product we’re calling Socean Streams. These allow you to buy your favourite protocols’ governance tokens at a discount. We’ve secured partnerships with several great protocols in the space — with more to come — and will be using this product for our own tokenomics (to be announced soon).
What is Socean Streams?
Socean Streams allows you to buy governance token vesting contracts that unlock governance tokens over a period of time. In return, you get a discount on the tokens.
Suppose a protocol’s governance token (e.g. GOV) trades at 1 USDC. 100 GOV would thus cost 100 USDC. With Socean Streams, you could instead buy 100 b30GOV, which would turn into 100 GOV over time (in this case, 30 days). In return, you would pay a lower price. In this case, 100 b30GOV might only cost 95 USDC.
How does Socean Streams work?
To issue these bGOV tokens, a protocol has to first lock up the equivalent amount of governance tokens in a vault. Once locked up, these governance tokens cannot be withdrawn by the protocol. They can only be distributed to the people who purchase bGOV tokens. Thus, you are guaranteed to receive the GOV you bought.
How to buy bGOV tokens
How do you buy these bGOV tokens? The protocol selling the tokens will decide the amount of bGOV tokens to be sold, what they will be sold for (USDC/LP tokens/any other currency), the vesting time (anywhere from 30 days to 1 year). Then, these bGOV tokens will then be sold via a descending auction mechanism. The price of the bGOV tokens will decrease over time (updown to a floor), but people who buy will reset the price decrease, so you should jump in when you see a price that you like.
Here are examples of descending auctions. In this diagram, the price decreases over time, but people buying the token causes the price to increase.
How to change bGOV tokens to GOV tokens
Once you’ve purchased the bGOV tokens, you can start transforming them into GOV tokens via our UI. These tokens vest linearly and continuously; e.g. if you had 365 b365GOV tokens, 1 GOV token would be unlocked every day.
Why Socean Streams?
Why did Socean build this product? And why would anyone use Socean Streams?
We built this product because we were thinking about Socean’s tokenomics, and we saw many projects in the space make mistakes we didn’t want to. Many protocols give out a large amount of their governance tokens as “liquidity mining” (LM) rewards. They do this to grow aggressively and establish a dominant market position.
However, liquidity mining causes a collapse in token price. LM attracts mercenaries: people who are only interested in short term yield. After farming tokens, they immediately sell them, which causes token price to collapse. At the end of the day, the protocol is strip-mined of its value, with nothing to show for it.
We thought there was a better way: liquidity purchase, rather than liquidity mining. Protocols should sell their own governance tokens to purchase liquidity. Doing so enriches — rather than impoverishes — the protocol.
While this is certainly an improvement, selling tokens in this way floods supply and causes token price to fall. We were looking for a way to prevent this, and hit upon Socean Streams as a perfect solution. We started building this out just for ourselves, but as we spoke to different protocols we realised that there was a lot of demand for this solution. So we’ve decided to build it as a product anybody can use!
Our mission is to build positive-sum DeFi products. This is a great example, and is thus something we’re very proud to build. Both buyers and protocols benefit here. Buyers get to invest in their favourite protocols at a discount, and protocols get many benefits:
Own your own liquidity. Protocols can use Socean Streams to incentivise liquidity in a better and more sustainable way. In fact, protocols can use Socean Streams not just to purchase liquidity, but to capitalise themselves in general.
Control token supply inflation. By distributing bonded tokens instead of tokens, the protocol decreases the rate at which its governance token inflates, which is healthier for the protocol’s price action.
Attract long-term investors, shut out mercenary traders. There are two types of buyers: long-term investors who believe in the protocol, and people who are just interested in short term price action. Protocols should try to attract the first type of buyer, but when a protocol sells a token, it cannot choose who buys the token.
But with Socean Streams, you can. People with longer time horizons will find the bonded tokens attractive, while short-term traders will not. Long-term investors will be willing to pay a higher price for the bGOV tokens, and will thus outbid the short-term traders. This means that we can preferentially reward long-term holders vs short-term farmers, which is exactly what we want!
We’ve secured partnerships with several great protocols in the space, and will be announcing them very soon.
We want a future where every Solana protocol of note can achieve sustainable liquidity. If you represent a protocol that is interested in using Socean Streams, please reach out to us on Discord or Twitter.
🌊 | Visit us at socean.fi
💬 | Join our Discord community discord.gg/socean
🐦 | Follow us on Twitter @twitter.com/soceanfinance
📢 | Follow our Telegram Announcements Channel: https://t.me/soceanfi
✍️ | Our Medium: https://soceanfinance.medium.com/
🤝 | Help us build a better future: https://forms.gle/Td82dkBXD8UF1tyW9