Quickswap Liquidity Mining on Polygon

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Quickswap Liquidity Mining on Polygon.

I have been speaking with the Quickswap team. Quickswap is a dex on Polygon. They are a fork of Uniswap. They would like us to provide a total of $500,000 of seed money for a liquidity pool on Quickswap with the POOL/QUICK pair. They are offering 2 QUICK/day in exchange for this amount for an initial period of 2 weeks. The current price of QUICK is $275.

$500,000 deposit into POOL/QUICK pool.

2 QUICK/day = $550/day

$550/day * 365 days = $200,750

$200,750/$500,000 = 40% APY

After the initial 2 weeks the QUICK/day emitted for the POOL/QUICK pair would adjust to an amount proportional to our trading volume on Quickswap. Currently Quickswap is distributing 726 QUICK/day. So for example if POOL/QUICK volume is 1% of total trading volume on Quickswap then we get 1% of the total daily emissions (726). That would be 7.26 QUICK/day if the POOL/QUICK pair made up 1% of trading volume on Quickswap. Total daily emissions are stated to fluctuate between 700-800 QUICK/day for the next three years.

In addition, to encourage further migration to the Polygon ecosystem, the team from Quickswap is proposing that we initiate a POOL drip to the USDT PoolTogether pool. I support this. This would allow us to grow our presence on Polygon, and with the liquidity available on Quickswap via this proposal we can create a market for POOL on Polygon. Also, this provides PoolTogether users on Polygon a place to earn yield on their POOL tokens. A yield source for the POOL token on Polygon would reduce sell pressure on the token by providing a place to park POOL. There are not many places to earn yield on the POOL token so this makes sense to me. Also with gas fees so low people can get in and out of liquidity providing with basically any amount. I think this will attract current users on Ethereum, and new users who are currently on Polygon, but not in PoolTogether. These users would receive WMATIC and POOL rewards. It would make us very attractive in the Defi landscape. Perhaps 50 POOL/day would be an appropriate amount. Feedback welcomed here.

Since governance does not control any assets on Polygon we would have to grant control of the funds to a multisig which can execute the appropriate transactions. I would propose two members of PT Inc and three community members for a 3 / 5 Gnosis Safe Multisig.

Those transactions would include the following:

Send POOL from treasury to multisig.

Swap the appropriate amount of POOL for QUICK

Bridge both assets to Polygon

Create a token faucet on Polygon for the POOL drip.

Fill the token faucet with POOL

Deposit POOL/QUICK on Quickswap

Stake POOL/QUICK LP token on Quickswap

Claim QUICK rewards

Benefits:

PoolTogether expands presence on polygon.

PoolTogether treasury earns liquidity mining rewards.

A new yield source is created for POOL

Increase revenue through USDT reserve rate.

Risk:

Impermanent loss with treasury funds

Smart Contract risk

Multisig risk

I think this proposal is the best current option we have to expand our presence on Polygon. I think the benefits greatly outweigh the risks. I welcome all feedback on this.

Thanks,

Do you support this proposal
  • Yes
  • No
  • Unsure

0 voters

4 Likes
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I just checked and Gnosis is live on Polygon since this week. Weā€™ll need a multi-sig on both chains of course.

Quickswap has decent volume, more than SushiSwap on Polygon actually (to my surprise).

I have two concerns:

  1. Can we get $500k of QUICK without moving the market too much? Looking at the QuickSwap analytics site, the answer is probably yes as the daily trading volume is about $2.5M, but I guess weā€™d still need to spread the buy order over a couple of days.
  2. I am wondering if a POOL/QUICK pair is the best combination? Only 3 out of 20 top-trading pairs on the analytics website are against QUICK and it feels a bit forced in my opinion.
1 Like
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  1. we only need 250K of QUICK.
  2. they award higher rewards for the QUICK pair. but definitely something to consider. i would have to ask what the rewards would be with an ETH pair instead.
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Okay, I just assumed it would be 500k on both sides.

Thanks, Iā€™d love to have the full picture!

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Thanks for putting the work into this, @RegisIsland ! The numbers stack up and building presence on Polygon is a good initiative.

What would happen to the QUICK rewards? Sell or hodl?

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Thatā€™s a good question. We could actually stake them and earn even more QUICK. they have single sided staking. Or we could sell them. Or we could distribute them to the USDT Pool and have the first ever triple asset liquidity mine. Deposit in USDT polygon pool and earn three different tokens.

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I was told the rewards would be equal for an ETH pair so we could go either way

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Awesome, thanks for checking! I guess weā€™ll poll for the preferred pair amongst the community then. I would expect people to like an ETH-pairing more, but weā€™ll see.

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Iā€™m a bit confused about a few things.

1). Who is seeding the QUICK liquidity in the POOL-QUICK pair and what price is the initial seeding at?
2). What does ā€œ$550/day * 365 days = $200,750ā€ mean since after 2 weeks it will adjust to a volume weighted distribution?
3). Isnā€™t the reward structure they are using gameable with stablecoin pairs for example if they are doing it volume weighted?
4). Would the QUICK rewards not apply for doing a POOL-ETH or POOL-USDC pair?

Itā€™s an automatic no from me doing it against a QUICK pair, I donā€™t even need to look into that to know itā€™s a bad idea.

In general Iā€™m quite sceptical of the necessity to spend money incentivising liquidity on other chains. I donā€™t really see what issue we are solving tbh when itā€™s 5 bucks to make a trade on ethereum.

2 Likes
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I wonder if this is the best use of treasury to incentivize what basically amounts to a single Pool on a single side-chain just to liquidity mine.
If my own experiences with liquidity-mining gov tokens are anything to go by, the actual rewards over the long-term fluctuate wildly and on the whims of the governance of the token on the other side of the pair. This feels risky.

Im all for incentivising more deposits in general, and yes, Polygon has users and liquidity. But imho we kind of need a wider ecosystem of actual Pools on polygon before putting a decent chunk of treasury at IL risk.

It could be im just missing the point entirely here :sweat_smile:

1 Like
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Thanks for the feedback.

  1. The treasury is seeding the liquidity. We will send the funds to a multisig, and that multisig will make a swap for QUICK.
  2. The calculation was simply to determine the initial APY. this will adjust as I laid out in the original post after the two weeks.
  3. I would say those pools do earn more of the trading volume. I hadnā€™t considered that. Iā€™m glad you asked that. I am going to reach back out and ask that question.
  4. I know we can do an ETH pair. apparently the rate would be the same with an ETH pair.

I think there are a lot of people using polygon who arent on PoolTogether. I dont think we have the most attractive pool on there. I think it needs some tweaking. we can gain many new users and grow our TVL.

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appreciate the feedback, I appreciate those concerns and I did consider them, however, I have outlined below my thoughts on this.

I donā€™t think we can widen that ecosystem without dripping some POOL tokens there. We cant drip POOL tokens there if there isnā€™t a market there.

It is a very flexible option as well. if we seed the pool on Quickswap and more people provide liquidity, the multisig can act quickly to get us out of the pool. If there is sufficient liquidity we can withdraw the funds, give them back to the treasury, and let the market operate organically. But, we need the liquidity there to get things going.

1 Like
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Ok this sounds a bit better. So the liquidity is not locked in any way. Im a bit more comfortable with it if we can react to market conditions and act accordingly.

Personally i have some funds on Poly that arenā€™t doing very much and iā€™d be happier supporting the protocol by doing LP. If the idea here is just to ā€˜seedā€™ the liquidity in Poly, it is at least a jumping off point to get some POOL activity on Polygon, which will probably be required long term anyway.

2 Likes
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But those same users are also on ethereum. One other issue with this is, the rates on quickswap outside of arbitrage arenā€™t going to be attractive versus rates on Ethereum. Why would a user that goes through all the trouble of figuring out how to set up on polygon settle for a worse rate buying POOL than the user would get on Ethereum through uniswap v2? Practically speaking I donā€™t think this move makes sense ā†’ it will only serve arbitrageurs that have to correct the price on polygon when the price moves on uniswap v2 on ethereum.

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I am all for adding pools on Polygon. I think we have missed significant opportunity by limiting ourselves to the USDT pool. I tend to think that new users are a more important metric than TVL, and while hard to quantify, I suspect Polygon puts Pool Together in front of more eyes at cost than Ethereum.

That being said I do NOT think we should be distributing POOL tokens on Polygon until those tokens have ability to vote without bridging back. As much as I believe in the marketing aspect of POOL distribution I think the ability to vote is a pre-requisite.

Generally I do not find the Quickswap offer to be that great. I read it as a farm offering, $10k worth of QUICK for $500k deposited for two weeks. After the two weeks I suspect our volume will be sub $50k a day (current UNI V2 volume) and as a proportion of total Quickswap volume that works out to be .04%. Netting our potential LP .3 QUICK per day. In the event that we are distributing POOL on Polygon it makes sense to have a market and Quickswap is the best candidate. I think we should just be aware that we either have to commit to providing the liquidity past the two weeks or incentivizing it ourselves because the QUICK rewards after the 2 week guarantee are pretty minimal.

Shall we proceed I also am against the treasury buying $250k worth of QUICK. I would prefer ETH. Though selling POOL for ETH does not look appealing either at the moment. Alternatively we could buy ETH with USDC.

If we want to expand to Polygon before POOL has the ability to vote we could use USDC instead of POOL. We could launch a USDC pool as an experiment in perpetual growth. I imagine we seed the pool with sponsorship USDC and use a relative distribution per day of USDC that is modeled to sustain growth based on expected returns and reserve setting. This experiment could be as small or big as we want. We could do $100 a day in USDC or we could do $10k. We have the means. And as a bit of a parallel to the other conversation of buybacks - if we think POOL is more valuable than dollars right now which should we be looking at using to launch new pools?

edit: $10k a day is probably not a good idea as the premise is to have rewards be less than revenues

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in terms of voting, the way I see it that POOL isnt being used to vote right now anyway. it is just sitting in the treasury. I dont see how else we grow our presence on polygon without a POOL drip.

I would be open to using 250k of the usdc to buy quick instead of swapping POOL for it.

I am open to an ETH pair. I was told that it doesnt matter what we pair POOL with, the rewards will be the same. in terms of volume it does not matter which token POOL is paired with. anytime that POOL is involved in a swap for any other token it counts for our volume.

I dont think we will have to stay in the pool that long. If we provide the seed, and users get POOL tokens dripped to them and then go provide liquidity on quickswap we can exit our position. the gas costs are basically zero there so depositors of any size can go provide liquidity.

If you have other ideas on how to grow our presence on polygon I am all ears. This is the best option ive come up with myself, but if there is a better way i will support it.

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Just my 2 cents, but if we want to grow on Polygon, creating more than one pool and dripping POOL in it is definitely necessary. I would also say weā€™d need a trading venue on Polygon if we drip POOL and then we may as well go with Quickswap. Of course, we should only create this program if we are serious about putting more effort in growing on Polygon.

1 Like