This proposal seeks to determine community opinion on reducing the Uniswap LP rewards from 500 POOL per day to 300 POOL per day.
With clear consensus in this forum poll @brendan has graciously said that we can include this change in PTIP-29.
Looking at Uniswap V2 volume history for POOL we can see that the incentives and liquidity growth have not been paralleled by increased usage of the LP. In March of this year (before current LP rewards) we averaged $1MM in liquidity and volumes over $500k a day. Now we have $6MM in liquidity and our average daily volume is close to $50k. Compared to many other protocols with similar trading volumes and protocol sizes we have concluded that we are over-subsidizing the Uniswap V2 liquidity.
Wrapping this change into PTIP-29 is an attempt at efficiency and timeliness. This LP rewards reduction is also proposed in PTIP-28. However the Polygon planning has proved to have some complexities so it feels prudent to move the LP Rewards change forward into the next vote.
This change is not meant to reduce returns for LP providers, as it’s reasonable to assume liquidity will move proportionally and effective yields will not be substantially changed. We can also speculate that reducing emissions could mend the ETH/POOL ratio which has been bleeding for some time and with rising POOL price the incentive returns also increase.
With 200 POOL a day additional treasury budget to work with we can grow the protocol with new prize pools and expand on L2’s like Polygon without saturating the market with more POOL. 200 POOL a day amounts to roughly a 10% squeeze on our total emissions. We can also look forward to utilizing Uniswap V3 which has shown to be 4x as efficient compared to V2.
faucet contract: 0x9A29401EF1856b669f55Ae5b24505b3B6fAEb370
*edited for formatting error
- Yes I approve of proposed Uniswap LP 300 POOL per day rewards
- No I do not approve of proposed Uniswap LP 300 POOL per day rewards