PTIP-10: Incentivize Uniswap LP token Pool with POOL rewards

Governance PT Improvement Proposals
1

PTIP-10

Simple Summary

The goal of this proposal is to facilitate deeper POOL liquidity so that outside parties interested in buying POOL tokens may do so.

Abstract

This proposal aims to incentivize POOL liquidity on the decentralized exchange Uniswap. We propose to create a pool on the PoolTogether app for Uniswap V2’s POOL-ETH LP tokens. The treasury will reward participants in this pool with 300 POOL/day for 1 month (31 days), after which the rewards will drop to zero.

Motivation

Investors want to acquire stakes in POOL buy buying tokens. Currently they are unable to do so due to slippage on exchanges. As of writing, the +2% depth on the POOL-ETH pair on Uniswap V2, the largest venue for POOL trading at the moment, is slightly under $13k.

Specification

Overview

Incentivizing Uniswap V2 POOL-ETH liquidity providers with POOL will increase liquidity for the POOL-ETH pair and enable investors to buy POOL tokens.

Rationale

DEX choice: It is better to target POOL-ETH LP token holders from Uniswap rather than SushiSwap. Despite no LP incentives on Uniswap and Onsen reward on SushiSwap, liquidity is slightly greater and volume is over 3x higher on Uniswap.

Rewards: We reward 300 POOL / day. We base this on the performance of the POOL pool: currently the POOL pool has over 25% of circulating POOL staked with a reward of 100 POOL / day. Given the additional cost of locking up ETH to participate in the POOL-ETH LP pool, we estimate that a 3x higher reward should properly incentivize liquidity.

Duration: We limit the POOL rewards to 1 month (31 days) so that we can redefine reward targets based on future changes in liquidity as well as community sentiment.

Technical Specification

As LP tokens are ERC-20s, we will use the regular pool builder to create a pool for Uniswap V2 LP tokens and set the winners to zero. The treasury will fund a faucet of 9,300 POOL that drips proportionally to participants of this pool over 31 days at an even rate of 300 POOL/day.

Uniswap’s ETH-POOL LP token address is 0x85cb0bab616fe88a89a35080516a8928f38b518b

Status

Vote on PTIP-10

  • For
  • Against
  • Abstain

0 voters

4 Likes
2

With this short time frame I still think that 500 POOL/day is better. That ensure better odds of people taking the risk to provide liquidity.

5 Likes
3

I think this is worth trying! I personally prefer Sushiswap because they have been helping us out with incentives but I’m open to Uniswap. To move forward from here we basically need to:

  1. Create a prize pool for the LP token using the builder: https://builder.pooltogether.com/

  2. Attach a token faucet to it: 🚰 Add a Token Faucet - PoolTogether 3.0

  3. Do a governance proposal to transfer POOL to that token faucet to start the drip

2 Likes
4

I think it generally makes sense to use Uniswap and do it for a little while to see how things work. It currently seems to have quite a bit greater volume.

5

Given that bringing this proposal to a governance vote and implementing it will likely take more than 1 week, does it make sense to incentivize people to stay in a LP on v2 of Uniswap? AFAIK, v3 is about to launch and it will not use ERC20 LP tokens so this proposal will not be compatible with v3 and we’ll thus be incentivizing people to stay in v2 for at least a month after the v3 launch?

I did vote in favor because the general idea is worth trying, I’m just wondering about the implications.

6

Great idea, let’s do this.

7

I agree with @RegisIsland. 500 POOL per day is much, much better for this trial run. You’d rather shoot a lil higher and readjust after a month, rather than shoot too low and have this not attract the necessary attention.

300 POOL per day is arguably too low because simply won’t be enticing enough when you consider impermanent loss. I don’t have the math on hand, but by even rough estimates, it’s not enough for a reasonable goal with deep liquidity ($25,000 - $50,000 for +/- 2%).

So for now, although I really think we need liquidity incentives, I will abstain.

8

Good idea.However V3 is coming in May. Now is not the time.

1 Like
9

I still think it is worth doing on V2 for the proposed month. Transition to v3 isn’t going to happen overnight and many projects will take months to move over. No harm in not being the first guys through the door depositing funds into v3. I think seeders like to take their time before moving their funds into new contracts any way.

1 Like
10

Agreed @ageless. we still have time to get this program in. if we can get this through quickly and bootstrap the liquidity there we could potentially see some serious price action. This leads to attention on the protocol itself. I know token price is not discussed in the discord, but it is important. it is a tail wags the dog situation. The token price goes up, attention is drawn to the project, more people get involved, TVL rises, and the cycle repeats. It’s a glorious feedback loop.

11

Step 1 complete: https://reference-app.pooltogether.com/pools/mainnet/0x3af7072d29adde20fc7e173a7cb9e45307d2fb0a/home

For step 2, I’m here creating the faucet: TokenFaucetProxyFactory | 0xE4E9cDB3E139D7E8a41172C20b6Ed17b6750f117

For Asset, I’m using POOL PoolTogether: POOL Token | 0x0cec1a9154ff802e7934fc916ed7ca50bde6844e

For Measure, do I use the Ticket address shown in the reference app? Ticket | 0xeb8928ee92efb06c44d072a24c2bcb993b61e543

For Drip Rate per second, 9300000000000000000000 total divided by (31 * 86400) = 3472222222222222 POOL (in units of wei)

Can someone check my work on the above?

@Leighton for step 3, once step 2 is done, should simply I amend the current proposal’s specification to include the faucet transfer instructions?

1 Like
12

can we use the poll below to see how much POOL we should drip?

UNI LP Incentive Drip Rate
  • 500
  • 300
  • Something Else

0 voters

13

Giving rewards to V3 LPs won’t be technically possible with the method Leighton proposed.
If we think most people will move from Uniswap V2 to V3 next week, we should incentivize Sushiswap LPs.

3 Likes
14

how do we further incentivze sushiswap though? you already earn onsen rewards by staking your LP token on sushi. would we give POOL to sushi to distribute to LP stakers through their protocol?

2 Likes
15

This is my concern as well. I am open with reworking the proposal to be compatible with SushiSwap if Uniswap V3 launch will present conflict – but how would it work SushiSwap’s yield system / Onsen rewards? I see two possible approaches:

  1. I believe the Onsen rewards decay, does anyone have details / know when they will end? We could wait for it to end (or do it now and forego Onsen rewards) and use PoolTogether’s pool / faucet architecture with staked SushiSwap LP tokens.
  2. We adopt SushiSwap’s yield architecture, which is not currently understood by me, to distribute POOL rewards to LP’ers.

I would appreciate it if anyone had resources that clarified the unknowns laid out in the paths above.

1 Like
16

Yes, that’s what I thought, but I wanted to open up the discussion in that area. I don’t follow all the Uniswap news and technical stuff, but is there already any reference implementation how LP rewards could work given that the LP tokens will be ERC721?

17

I think it should be possible to set up a drip that goes to adresses that have deposited into the Sushiswap Onsen staking contract. The drip can be set to distribute tokens to any ERC-20 token as far as I know. We’d have to think about how we do it UI-wise.

18

So I talked to SushiSwap team today. They said they are launching “Master Chef V2” next week which will enable the ability for us to add additional rewards to their Onsen rewards.

I’d advocate we move forward with @frown’s proposal as is. Uniswap is where most the current trading and liquidity is. We can do it as a one month test and that will give time for both SushiSwaps new Master Chef contract to be out and also for Uniswap V3 to develop.

3 Likes
19

This is an interesting post about the uni v3 liquity mining issue

1 Like
20

I’ve inspected the pool 0x3af7072d29adde20fc7e173a7cb9e45307d2fb0a and can confirm:

  • It’s a Stake Prize Pool with the POOL/ETH Pair as the token
  • It uses a stock Multiple Winners strategy
  • The Multiple Winners strategy is configured with:
    • Chainlink VRF RNG
    • 1 winner
    • prize period of one day

@frown The parameters you’ve outlined for the Token Faucet are correct.

So, to ready this prize pool for the proposal these are the remaining steps:

  1. Create a Token Faucet using the factory with the parameters you outlined:

  1. Attach the Token Faucet to the Multiple Winners strategy using MultipleWinners.setTokenListener(faucet address)

  2. It would be safest to replace the Chainlink VRF with the Blockhash RNG (just in case someone hits start award): call `MultipleWinners.setRNGService(0xb1D89477d1b505C261bab6e73f08fA834544CD21)

At this point the pool, strategy and faucet should be setup correctly and it will be safe to transfer ownership to governance. The ownership transfer should be done before the proposal is executed, otherwise it’s possible for frown rug the POOL. Although we know they won’t :wink:

The governance Timelock address is 0x42cd8312D2BCe04277dD5161832460e95b24262E.

  1. Transfer the pool using PrizePool.transferOwnership(0x42cd8312D2BCe04277dD5161832460e95b24262E)

  2. Transfer the strategy using:
    MultipleWinners.transferOwnership(0x42cd8312D2BCe04277dD5161832460e95b24262E)

  3. Finally transfer the faucet using:
    TokenFaucet.transferOwnership(0x42cd8312D2BCe04277dD5161832460e95b24262E)

Once these steps are complete governance can take over and it will be safe to execute the proposal.

3 Likes