How It Works
Inflation-based farming destroyed projects in 2021. Continuously mint tokens, distribute to stakers, call it yield. The problem is obvious. You’re diluting existing holders to pay new ones. Bots farm it, dump it, move on. Death by a thousand micro sells. Ponzu’s liquidity rewards come from fees. No new tokens are minted. The token contract has no mint function. The distributor sends the farm tokens. Impatience is the yield. Reward sources:| Source | Type | Origin |
|---|---|---|
| Forfeited tokens from early presale claimers | Project tokens | Presale holders who claimed early |
| 1% PonzuSwap trading fees | ETH | Every swap on PonzuSwap |
| LP penalties from early farm exits | LP tokens | Farmers who unstaked before 7 days |
Staking Mechanics
- Get LP tokens by providing liquidity on PonzuSwap, or use ZapETH to convert ETH to LP in one transaction
- Stake LP tokens in the Farm contract
- Each stake mints a Liquidity Card NFT (ERC-721)
- Rewards accumulate proportionally to your staked LP relative to total staked LP
stake() call creates a new Liquidity Card with its own timer and rewards.
ZapETH
Converts ETH into LP tokens in a single transaction. Splits your ETH, swaps half for project tokens, adds both sides as liquidity.7-Day Epochs
Unstake before 7 days and you leave a portion of your LP behind.| Days Staked | Penalty | LP Returned |
|---|---|---|
| 0 days | 100% | 0% |
| 1 day | 86% | 14% |
| 3 days | 57% | 43% |
| 3.5 days | 50% | 50% |
| 7+ days | 0% | 100% |
- 50% added to remaining stakers pro-rata. Future rewards increase proportionally.
- 50% becomes protocol-owned liquidity. Deepens the trading pool for everyone.
Risks
Impermanent loss. Standard AMM risk. You hold both the project token and ETH. If the token price moves significantly in either direction, your LP position can be worth less than holding the two assets separately. At large positions ($50K+), impermanent loss can exceed farming rewards during high-volatility periods. Model both sides. Low liquidity concentration. If very little LP is staked, individual stakers capture disproportionate rewards. Feature for early stakers, but large reward batches can be captured by a small number of participants. Smart contract risk. The farm contract is immutable post-deployment. No admin can upgrade, pause, or modify it. Bugs can’t be patched. No one can rug you. Tradeoff accepted.Ponzu vs. Inflationary Farms
| Ponzu Farm | Inflationary Farm | |
|---|---|---|
| Token supply | Fixed 1,000,000. No mint function. | Grows continuously. Mints to pay stakers. |
| Reward source | Swap fees + forfeited tokens | Freshly minted tokens |
| Dilution | Zero | Constant. Every reward dilutes non-stakers. |
| APY trajectory | Tracks real volume | Decays as emissions flood supply |
| Sell pressure from rewards | Minimal. One-time token claim. | Constant. Stakers dump rewards daily. |
| Sustainability | Tied to project usage | Requires perpetual new capital to sustain |
Kioke Card
Curation NFTs with two revenue streams and Koji voting credits.