PoolTogether

Incentivize the POOL/ETH LPs

We passed the proposal for creating a POOL pool for the POOL holders, but to ensure we have a healthy and liquid liquidity pool, we need to increase the reserves in the Uniswap pool (Uniswap Info). It’s currently at 1.1M which means even a $20k USD buy/sell will incur a slippage of ~2%

I propose that we also have a pool for our LPs which will give an incentive for more people to stake – there are currently only 147 people doing LPing.

Just spitballing here, but prehaps the LPs can win NFTs by staking and the NFTs could boost their yield in the POOL pool.

Or we can just have a traditional pool and people deposit the LP tokens into it for a chance to win POOL.

What do you guys think?

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On-board with making a uniswap LP token pool and reward LPs that way, great idea

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Agree. I’m sure some people exited the Uniswap LP in favour of the POOL Pool instead. Another option would be to create a UNI-POOL/ETH prize pool similar to the POOL pool.

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Yeah in that case it might be better to have more rewards per LP token since there’s more risk to LPing (most farms incentivize the LP stakers over just governance token stakers for that reason).

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Agree @microape. This is something I have been thinking about with the new range of AMM Liquidity Pools as collateral. I believe in the near future there will be lots of locked LPs used to enter Pools to win prizes. Also ideas like where the Ppool lego block could potentially go (eg arcx). Currently POOL governance token has limited capture value for the token-holders. This is something we all can agree on needs to continually monitored and addressed to ensure the long-term POOL community continues to thrive.

I am happy to work with you on this project to craft a proposal to bring to a vote to help incentive the POOL/ETH Uniswap pool. Agree an unexpected side-effect of the Pool POOL creation is a decrease in LP providers (although the APY is very low for the POOL pool but does help increase the TVL and is a starting point for adding more value to the POOL token). If we can put forward a proposal I believe the community will back it if helps increase the liquidity which decreases the spread and potentially allows more participants to enter the uni-pool for the rewards (which then triggers new volume spike bots for other professional LP providers - and so leads to snowball effect).

We would really only need this for the next 2/3 months until a Coinbase or US centric exchange listing.

I’m free for a few hours next Monday if you want to chat in Discord to get this written up :slightly_smiling_face:

****(edit-note I didn’t mean to like my own post/comment - accident and no idea how to un-like) LOL

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I don’t see much value in incentivizing LP pools.
Liquidity isn’t terrible, and LPs get rewarded from the trading fees.
It should balance itself out naturally, less liquidity automatically makes the profitability of collecting fees higher.
What value does the community get by having a super-liquid market on Uniswap?
Price discovery will happen through supply/demand independently of how liquid the market is.

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If you look at the reserves of the pool, it’s been steadily decreasing, from a high of 2MM to around 1MM now. It’s less so being super-liquid but more so achieving less volatility since even a $20k USD order changes the price by 2%, which is why the price of POOL has been +/- 20% on a given day.

Are those 20% price swings a problem though?
What benefit does the protocol get by reducing the volatility?

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Another thing to consider is let’s say Binance lists POOL. Do we want Binance to have 100,000s+ POOL tokens and have the largest liquid markets?

Rewarding LPs is not much different than rewarding PPOOL holders. To be an LP you have to be a POOL holder in the first place. Why can’t we incentivise both types of holders and get both benefits. Having more liquid markets is beneficial. Just to give one example, how are we going to ever be integrated into lending protocols, etc as collateral currencies if it’s easy to manipulate the POOL markets?

@microape mentioned that the liquidity has been reducing over time; that is not going to be helped by the POOL pool incentive. I wouldn’t be surprised if it has already been responsible for some of the liquidity reduction from Uniswap. We also don’t want the POOL pool becoming too large either.

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If our goal is to get to 1B TVL locked as proposed by @leighton, part of the strategy should be to partner with other protocols. If they see that we don’t a healthy liquidity in the pool, then how can they be confident in partnering with us? Also lending protocol would definitely not want to see a volatile asset being added to their protocol.

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Hey everyone! I’m a dai/uni whale who also LPs , and I wanted to share my strategy in case its helpful here. I’ve been an LP since the token drop and have added over time, but mainly I liquidate my new POOL to re-enter the stable farms. I think an incentivized POOL/ETH LP is low hanging fruit in terms of removing a decent amount of sell pressure and would absolutely change the balance of my current operation. POOL has a bright future, i’d much rather be stacking!

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Why would incentivized LP be more attractive to you than joining the POOL pool with the POOL you farm? They’re both yield on POOL, right? Instead of selling into stables to farm, you already have the option to join the POOL pool instead.

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100% agree with you @Stakeybakey and @microape. Appreciate the input @Stakeybakey and understand your strategy. Hopefully we get more eyes on this issue to move to a vote for in the best interests of the actual holders of the Pool token.

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Hey @Torgin I think a lot of it comes down to personal risk profile. In my case I use MKR vaults to borrow dai, so I have to earmark a decent percentage to repay debt and unfortunately taxes. I’m extremely bullish ETH and from my experience LPing against it is one of the best ways to accumulate a token over year+ time horizons (all while avoiding compounding tax implications). While I think POOL pool is necessary to satiate holders at a certain scale, LP POOL is equally important from an infrastructure point of view. There is also the added benefit of fragmenting where whales allocate POOL further, potentially making the POOL pool slightly more forgiving to community holders.

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I appreciate your posts @Stakeybakey i tend to agree with you and i would support incentives for ETH/POOL LP’s.

The difference between incentivizing POOL pool and LPs is that POOL pool is made up of 100% POOL. LP tokens are 50% ETH, 50% POOL. So we are partially rewarding holding of ETH.

If our goal is to have POOL be accepted as collateral, then I agree we need liquid markets that price oracles can report on. Currently I don’t see any protocols looking to add POOL as collateral though.

If we want more liquidity, wouldn’t it also make sense to apply to some centralized exchanges?
There we would get liquidity without needing to continuously pay for it.
It seems Coinbase for example are quite open to listing new coins, and we know they are fans of Pooltogether. I’m not sure if joining the listing process there is free.

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I am currently working with the Quickswap team to bring some liquidity to their DEX on Matic. I will keep everyone informed as the conversation progresses.

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This is a must-read thread on this topic:

We’ll need to take into consideration changes coming from Uniswap V3, as it will break or at least dramatically alter the behavior of LPs.

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@Stakeybakey @0xSiam @microape @ageless @RegisIsland @Torgin @Macauley

Sushi Swap has added Onsen rewards for liquidity providers of the POOL / wETH pair! Staked liquidity providers are currently earning an effective 105% APR (in Sushi).

Provide liquidity and stake here: SushiSwap

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Nice 1! Did you apply to be on the pool or did Sushi select us? Also how long will it run for?