Incentivize the POOL/ETH LPs

The Sushiswap LP incentives are a nice start, but I still think we need to incentiviize LPing on Uniswap still. I strongly disagree with @Torgin that it’s a non-issue. WIth all due respect, I think that’s a bit silly and short-sighted. I’ve heard of many protocols who sideline the liquidity issue with their governance tokens because they’re set on building, but you can easily die on this hill. Right now, the protocol has close to $170M in deposits, but a measly POOL price move of $20,000 can move the price +/- 2%. It’s just not proportionate.

So, I would say there are two possible options here.

  • Reward Uniswap LP’ers with an effective APY that is similar to the POOL pool. So, as it stands now, around 100 POOL per day distributed to all LP’ers.
  • OR (and I like this one more), set aside a small portion of the weekly rewards for those who staked their LP tokens. It can be ~1-2% of each prize pool. This way, it won’t ‘cost’ us any more inflationary POOL.

I think this is a reasonable request. Since we are a DAO and a protocol with a token, liquidity for the governance token should be comparable to the TVL which, as of now, it’s not.

Hopefully, we see Sushiswap liquidity keep growing nonetheless! It’s a great start. Let’s see how it develops.

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I agree with @Torgin
Plus the Pool pool is for Pool holder.
What sushi is doing is good too so uni should reward LPs with uni for LPs (eth/pool) if they don’t then too bad

Uniswap doesn’t incentivize LPs like Sushiswap, so your comment doesn’t make any sense.

U need to read it one more time.
I said if uni wants to reward lps for eth/pool that’s good if they don’t then too bad for the LPs

I think it’s important to understand that the LPs are doing a service to the protocol. They are taking on risk of impermanent loss in order to make sure there is a liquid market that isn’t easily manipulated. A liquid market is also an imperative for many other integrations.

So I do agree with @Andre that it seems reasonable to incentive LPs in the same way we incentive holders.

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Would this need to go through a vote? Would there be a timeline for this? Thanks

Yes, there would need to be a vote.

The process for governance is outlined here: About the PTIP | PoolTogether Improvement Proposals category

Personally I do think waiting a week or so makes sense though to see how the Onsen impacts usage. That just started yesterday.

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Thanks, you explained the reasoning behind incentivizing LPs better than I did.

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Yeah, now that the Sushiswap liquidity pool has run for close to a week, I think it’s pretty clear we need Uniswap LP incentives regardless. PoolTogether is simply too big now for its current liquidity, and there is currently no incentive to provide liquidity and risk incurring IL on Uniswap at the moment.

So, I think this is worth putting forward a PTIP as soon as possible. For simplicity’s sake, it would probably make sense to subsidize it with POOL and then later we can possibly incorporate LP tokens into lotteries.

Any thoughts?

I think the cleanest way to do it is to create a lottery for LP tokens associated with the ETH-POOL pair and distribute POOL to it in the same way the POOL pool operates right now. LPs could deposit their tokens into the pool and receive a POOL drip in return.

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Sounds pretty good to me @ageless

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To take it even further, I think we should just incentivize the POOL/ETH LPs and not the POOL holders. That should incentivize people who believe in the project long term to become LPs to help with the liquidity (it’s fragmented between Sushi and Uniswap which means slippage is even worse than before now).

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Yes, that is a bummer. I’ve noticed that too.

I’d like to incentive the Sushi LPs as that would be powerful in combination with Sushi rewards as well. I’m just not sure if that is possible because to get the Sushi rewards you have to stake them in the Sushi Swap contract. Does anyone know how other projects handle this?

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I don’t think dual rewards is possible out of the box – as far as I know the Onsen menu is just temporary and thus I don’t know if people are that incentivized to provide LP given the high gas fees.

Perhaps we should just focus on the Uniswap pool for now since traditionally that’s where most of the liquidity is from.

I don’t really see why it should be either or. The POOL pool should stay as is. It seems quite popular and gives people an opportunity to participate in lotteries by just holding POOL (even though the weekly rewards are quite small now).

Additionally, there is no way to further subsidize Sushiswap liquidity. I have looked into it. So, we should think of it like a bonus.

Let’s just focus on Uniswap liquidity since most people trade there anyway.

dont most other projects have a “staking” contract? you can either stake the token or stake the LP token. the rewards for the LP token are always much higher. the POOL pool is currently our staking mechanism for simple staking. we just need to create a staking contract to deposit POOL/ETH LP tokens into and set up a POOL faucet to that contract. it doesnt have to be another lottery pool. it could just be a staking pool.

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Yeah, it’s pretty simple. The LP tokens would be staked as is standard @RegisIsland.

Personally, I think that since LPs are taking on more risk than just HODLers (due to IL), the rewards amount for providing liquidity should perhaps be double that of what’s allocated to the POOL pool.

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Agree @Andre , locked/vested token holders and some casual holders of the token aren’t overly concerned with lack of liquidity and incentives for LP providers. Everyone wants a liquid POOL market for an exit but at the same time want it to be paid for by another protocol. I don’t get the logic at all on the opposition to this discussion. Where is the incentive at the moment to market buy a Pool token?

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Roughly, I think something along the lines of 30,000 distributed over a 3 month period or so. I don’t think we need to wait around for Uniswap to update to do that; the 3 months as oppose to longer factors in that we may want to use the upgraded uniswap.

Maybe something in the ballpark of 250-300 POOL/day will suffice. Currently there’s around 23k POOL in Uniswap, if it was in the POOL pool it would be generating around 5.5 POOL per day for itself. At 300 / day that would be around 55 times the reward, but then you have to factor in the inflow of POOL. If the uniswap pool grew to 250k POOL that 23k would be earning around 27 POOL per day or around 5 times the APY in the POOL pool ~45% APY. I think that would work pretty well to subsidise for the IL.

If someone did an in depth analysis on what the params should be would be cool.

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If we are deciding which AMM to point our liquidity on I think it should be uniswap. My perception at least is Uniswap is like DEFI OG, Pooltogether is DEFI OG. I think the early participants in uniswap probably were also early participants in pooltogether. I remember when gavin andresen was raving about pooltogether as the most novel innovation he saw on ethereum in 2019. At the same time Uniswap was just this interesting toy at the time too that not many people were using. I think the synergy is natural between pooltogether and uniswap; they grew up at the same time, so I would prefer to direct the liquidity there.

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