Authors: @itzler, @HelloShreyas, @verto0912
Summary:
This proposal outlines a framework for establishing a liquidity incentives program (Uniswap Liquidity Program, ULP) with the goals of: accelerating the migration of liquidity to Uniswap v3; encouraging new market participants to experiment with liquidity provision, and further distributing ownership of UNI tokens.
We propose the program start with an initial maximum budget of 1.650m UNI, to be allocated as liquidity incentives across two quarters. Continuation of the program will require an additional governance vote. Upon renewal of the program, each of the three initiatives can be broken out into separate proposals.
The program will aim to bootstrap liquidity across three different initiatives:
Similarly to the Uniswap Grants Program (UGP), pair selection is a subjective process that cannot be easily automated: any action requires close monitoring and frequent reporting to the Uniswap community. To this end, we propose a discretionary committee of 8 members — 5 core members from LlamaDAO to actively lead & manage the committee, as well 3 members for oversight. Find LlamaDAO’s full proposal & management plan detailed here.
The committee structure allows for incentives to be allocated efficiently across many pairs without requiring a full governance vote on each pair selection. However, Uniswap governance retains ultimate oversight by granting a budget on a bi-quarterly basis.
We hope that the Uniswap community will suggest additional application questions throughout the proposal process.
Purpose & Background:
While Uniswap v3 has quickly emerged as the market leading DEX, we believe that it has yet to reach its full potential. In particular, large amounts of liquidity remain locked in Uniswap v2, and a majority of v2 LPs have yet to migrate over the v3.
Liquidity incentive programs have seen varying degrees of success. In Uniswap’s case, the initial liquidity incentive program between September—November 2020 was met with considerable interest:
A contributing factor here is that Uniswap v2 has an organic user-base, which drives organic swap yields to LPs.
We expect and hope that a liquidity incentives program on Uniswap v3 would succeed in increasing wider LP participation, liquidity across sought-after pairs, UNI distribution, and swap volume. Importantly, due to v3’s Concentrated Liquidity feature, Uniswap governance can afford to pay significantly lower reward rates than previous liquidity mining programs to achieve similar market depth.
Quarterly Budget:
Pair Selection Committee:
Committee Members:
Committee member criteria include:
Committee members must recuse themselves from any ULP decision related to a project they hold an investment in or are otherwise related to.
Core Committee Members (LlamaDAO):
Oversight Committee Members:
Implementation:
UNI is distributed to LPs that provide in-range liquidity, with those that concentrate their liquidity closer to the market price (i.e. higher virtual liquidity) receiving larger allocations.
https://github.com/Uniswap/uniswap-v3-staker/releases/tag/v1.0.0
Initial Proposed Reward Distribution Across Initiatives:
Stablecoin pairs:
We suggest an initial stablecoin/stablecoin liquidity mining program over the course of the next three months conservatively targeting $250m in each of the following pools:
A reward rate of 2% APY feels like an appropriate target for stablecoin/stablecoin pools as v3 stablecoin/stablecoin pools are already generating organic yields in-line with money market protocols.
Based on a 30D moving average UNI price of $20.06, the committee would distribute 741.82 UNI per day to each of the three pools listed above for a total of 186,939 UNI across all three pools over the next quarter.
Mid-tail pairs
We suggest an initial mid-tail pair liquidity mining program over the course of the next quarter. We are conservatively targeting $100m in each of the following pools:
A reward rate of 10% APY feels appropriate for mid-tail pair pools. Compared to stablecoin/stablecoin pools, LPs in mid-tail pairs must bear more price risk.
Based on the 30D moving average UNI price of $20.06, 1,483.64 UNI per day to each of the five pools listed above for a total of 623,130.61 UNI across all five pools over the next quarter.
Deposit Receipt Tokens (DRT)
We suggest an initial DRT liquidity mining program over the course of the next quarter. Due to Uniswap’s brand recognition and gas optimized contracts, deeply liquid DRT pools may serve as an effective alternative distribution channel for yield-generating platforms. We are conservatively targeting $10m in each of the following pools:
As with stablecoin/stablecoin pools, LPs in DRT pairs take on minimal price risk. Additionally, they earn passive yield by maintaining inventories of yield-bearing assets. A reward rate of 2% feels appropriate.
Based on the 30D moving average UNI price of $20.06, the committee would distribute 29.67 UNI per day to each of the four pools listed above for a total of 9,970.09 UNI across all four pools over the next quarter.
Conclusion:
We recommend the establishment of a Uniswap Liquidity Program (ULP), which will actively incentivize liquidity across three strategic categories:
ULP will exist as a 8-person committee with 5 core members, where core committee members are tasked with closely monitoring ongoing programs and frequently updating the Uniswap community via regular written reports. The 3 oversight members are responsible for monitoring the core committee and multisig signing.
We believe that the targeted nature of ULP’s proposals coupled with Uniswap’s organic user base will help achieve various objectives: wider LP participation, more liquidity across sought-after pairs, further UNI distribution, and increasing swap volume.
Next Steps:
We want the establishment of ULP to be a community-driven process. We actively seek questions and feedback from the Uniswap community over the next 5 days and hope to incorporate relevant points. After this, we will post this proposal for a vote on Snapshot before an on-chain vote.
Authors: @itzler, @HelloShreyas, @verto0912
Summary:
This proposal outlines a framework for establishing a liquidity incentives program (Uniswap Liquidity Program, ULP) with the goals of: accelerating the migration of liquidity to Uniswap v3; encouraging new market participants to experiment with liquidity provision, and further distributing ownership of UNI tokens.
We propose the program start with an initial maximum budget of 1.650m UNI, to be allocated as liquidity incentives across two quarters. Continuation of the program will require an additional governance vote. Upon renewal of the program, each of the three initiatives can be broken out into separate proposals.
The program will aim to bootstrap liquidity across three different initiatives:
Similarly to the Uniswap Grants Program (UGP), pair selection is a subjective process that cannot be easily automated: any action requires close monitoring and frequent reporting to the Uniswap community. To this end, we propose a discretionary committee of 8 members — 5 core members from LlamaDAO to actively lead & manage the committee, as well 3 members for oversight. Find LlamaDAO’s full proposal & management plan detailed here.
The committee structure allows for incentives to be allocated efficiently across many pairs without requiring a full governance vote on each pair selection. However, Uniswap governance retains ultimate oversight by granting a budget on a bi-quarterly basis.
We hope that the Uniswap community will suggest additional application questions throughout the proposal process.
Purpose & Background:
While Uniswap v3 has quickly emerged as the market leading DEX, we believe that it has yet to reach its full potential. In particular, large amounts of liquidity remain locked in Uniswap v2, and a majority of v2 LPs have yet to migrate over the v3.
Liquidity incentive programs have seen varying degrees of success. In Uniswap’s case, the initial liquidity incentive program between September—November 2020 was met with considerable interest:
A contributing factor here is that Uniswap v2 has an organic user-base, which drives organic swap yields to LPs.
We expect and hope that a liquidity incentives program on Uniswap v3 would succeed in increasing wider LP participation, liquidity across sought-after pairs, UNI distribution, and swap volume. Importantly, due to v3’s Concentrated Liquidity feature, Uniswap governance can afford to pay significantly lower reward rates than previous liquidity mining programs to achieve similar market depth.
Quarterly Budget:
Pair Selection Committee:
Committee Members:
Committee member criteria include:
Committee members must recuse themselves from any ULP decision related to a project they hold an investment in or are otherwise related to.
Core Committee Members (LlamaDAO):
Oversight Committee Members:
Implementation:
UNI is distributed to LPs that provide in-range liquidity, with those that concentrate their liquidity closer to the market price (i.e. higher virtual liquidity) receiving larger allocations.
https://github.com/Uniswap/uniswap-v3-staker/releases/tag/v1.0.0
Initial Proposed Reward Distribution Across Initiatives:
Stablecoin pairs:
We suggest an initial stablecoin/stablecoin liquidity mining program over the course of the next three months conservatively targeting $250m in each of the following pools:
A reward rate of 2% APY feels like an appropriate target for stablecoin/stablecoin pools as v3 stablecoin/stablecoin pools are already generating organic yields in-line with money market protocols.
Based on a 30D moving average UNI price of $20.06, the committee would distribute 741.82 UNI per day to each of the three pools listed above for a total of 186,939 UNI across all three pools over the next quarter.
Mid-tail pairs
We suggest an initial mid-tail pair liquidity mining program over the course of the next quarter. We are conservatively targeting $100m in each of the following pools:
A reward rate of 10% APY feels appropriate for mid-tail pair pools. Compared to stablecoin/stablecoin pools, LPs in mid-tail pairs must bear more price risk.
Based on the 30D moving average UNI price of $20.06, 1,483.64 UNI per day to each of the five pools listed above for a total of 623,130.61 UNI across all five pools over the next quarter.
Deposit Receipt Tokens (DRT)
We suggest an initial DRT liquidity mining program over the course of the next quarter. Due to Uniswap’s brand recognition and gas optimized contracts, deeply liquid DRT pools may serve as an effective alternative distribution channel for yield-generating platforms. We are conservatively targeting $10m in each of the following pools:
As with stablecoin/stablecoin pools, LPs in DRT pairs take on minimal price risk. Additionally, they earn passive yield by maintaining inventories of yield-bearing assets. A reward rate of 2% feels appropriate.
Based on the 30D moving average UNI price of $20.06, the committee would distribute 29.67 UNI per day to each of the four pools listed above for a total of 9,970.09 UNI across all four pools over the next quarter.
Conclusion:
We recommend the establishment of a Uniswap Liquidity Program (ULP), which will actively incentivize liquidity across three strategic categories:
ULP will exist as a 8-person committee with 5 core members, where core committee members are tasked with closely monitoring ongoing programs and frequently updating the Uniswap community via regular written reports. The 3 oversight members are responsible for monitoring the core committee and multisig signing.
We believe that the targeted nature of ULP’s proposals coupled with Uniswap’s organic user base will help achieve various objectives: wider LP participation, more liquidity across sought-after pairs, further UNI distribution, and increasing swap volume.
Next Steps:
We want the establishment of ULP to be a community-driven process. We actively seek questions and feedback from the Uniswap community over the next 5 days and hope to incorporate relevant points. After this, we will post this proposal for a vote on Snapshot before an on-chain vote.
Off-topic for this reply thread but was curious to see what is held in the Uniswap treasury? From what I'm seeing in this thread, it seems like there is a mountain of Uni tokens and then some stable coins. Besides protocol fees, how are contributors being rewarded? Does the treasury plan to diversify more? Sorry not active in the community and trying to learn more about the treasury. Forgive the noob question please.
Are there plans to adopt a specific management toolstack to enable transparency and some degree of automation for this program?
For example, I'm thinking the payroll component could be automated to reduce time/effort needed on operations and ensure all full-time contributors or contracted (like Llama) get paid on time. I believe Coinshift recently did an integration with Superfluid, so DAO payroll can run automatically via real-time streams and settle multiple "salary streams" in a single batch.
Hey @papiporn, off topic from this thread but to directly answer your question about UIs and contracts for liquidity mining Uniswap v3 LP NFTs, we have what I believe is the first full suite front end at Frax Finance. For example, you can check out our Uni V3 farming pair UI and contracts here: app .frax .finance/staking#Uniswap_V3_FRAX_USDC
We also allow locking the NFT LP for an additional boost to increase stickiness of the LP program. The farming contract also allows setting of range/ticks that are incentivized instead of generalized. The contract itself can be found here: etherscan .io/ address/0x3EF26504dbc8Dd7B7aa3E97Bc9f3813a9FC0B4B0
Hey @papiporn, off topic from this thread but to directly answer your question about UIs and contracts for liquidity mining Uniswap v3 LP NFTs, we have what I believe is the first full suite front end at Frax Finance. For example, you can check out our Uni V3 farming pair UI and contracts here: app .frax .finance/staking#Uniswap_V3_FRAX_USDC
We also allow locking the NFT LP for an additional boost to increase stickiness of the LP program. The farming contract also allows setting of range/ticks that are incentivized instead of generalized. The contract itself can be found here: etherscan .io/ address/0x3EF26504dbc8Dd7B7aa3E97Bc9f3813a9FC0B4B0
I think the other protocol that might have full Uni v3 farming infrastructure other than FRAX is Gelato's G UNI system. Maker is using them to manage their PSM module. I think they also are expanding it to generalized farming for end-users right now as well.
Hope that helps :)
For “set it and forget it” options, LPs could provide an ~infinite range on v3 today, but that might not generate reasonable revenue or improve the swapper experience.
Hey guys, is this website https://app.uniearn.fi/#/staking anyhow associated with current thread ? :thinking:
See, this is the problem with liquidity mining. It's all fun and games in the beginning when nobody knows about the protocol, we attract liquidity (of course we do, we're giving LPs free "money").
But then how quickly it becomes a slippery slope. Like a drug, basically. We have no choice but to keep distributing rewards and incentives because if we stop, a competitor will come in who will and liquidity is going to migrate to them. Our LPs are addicted. It's already the case with SushiSwap and others on other chains. And more protocols will be created in the future because everything is open source and forkable and despite what we might think liquidity has very little network effects. Liquidity in DeFi is a mercenary, it will go where it'll make the most money because there is no switching cost.
See, this is the problem with liquidity mining. It's all fun and games in the beginning when nobody knows about the protocol, we attract liquidity (of course we do, we're giving LPs free "money").
But then how quickly it becomes a slippery slope. Like a drug, basically. We have no choice but to keep distributing rewards and incentives because if we stop, a competitor will come in who will and liquidity is going to migrate to them. Our LPs are addicted. It's already the case with SushiSwap and others on other chains. And more protocols will be created in the future because everything is open source and forkable and despite what we might think liquidity has very little network effects. Liquidity in DeFi is a mercenary, it will go where it'll make the most money because there is no switching cost.
All this at the detriment, of course, of UNI holders. Case in point, the CRV token, where they are basically printing an unlimited amount of rewards just to try to keep liquidity there. As a consequence the price of CRV just keeps tanking and this despite basically CRV being completely useless outside of staking which is another artificial mechanism created to try to keep people from dumping it. Liquidity providers there are slowly realizing that they are being paid rewards in a token whose value keeps declining so they're incentivized to sell it as soon as they receive it, which puts further sell pressure on price. It's a vicious circle.
Liquidity mining was never anything more than a financial hack. Perhaps, in the very early days of a protocol, it has value in attracting capital. But it cannot be used all the time. When does it stop? There is no proof that liquidity mining attracts long term capital. At best, it attracts capital while rewards are running and most of that capital will flee elsewhere when the rewards stop.
We need a better strategy. We need to think long term. Liquidity mining is very short term thinking. Synthetix lives on liquidity mining and today exists as little more than a zombie protocol. They have an average of 42 trades per day over the past 30 days (!). Can you believe it? See for yourself on their stats site. The fact that they are valued at $1.8B is nothing more than financial hackery that is common in crypto (Cardano, anyone?). They have still not found product-market fit.
Uniswap, on the other hand, probably has. We don't need financial hackery schemes. It dilutes UNI holders but most of all it dilutes the brand and arguably the brand is one of the only sustainable competitive advantages we have against up and coming protocols.
If LPs aren't migrating organically from v2 to v3, then there's a deeper problem that a few UNI rewards won't solve, at least not in the long run. Perhaps they don't want to actively manage their liquidity, which they'll have to do in v3. Perhaps the solution then would be to create liquidity management tools to help them do that. Rewards are not the solution.
I am disappointed in this proposal. It highlights the major problem of protocol governance more generally. Short term solutions will sometimes prevail at the detriment of longer term sustainable solutions. This is not a problem we'd have if governance was in the hands of a small founding team who think about Uniswap 24/7. Arguably given the amount of votes Hayden & co control, it still is, which is a good thing, in which case what we have is simply the illusion of governance.
Food for thought.
I believe that if we are going to start this program, we should add gitcoin (GTC) to the list of targets. They have been incredibly instrumental in expanding DeFi and the OSS culture, and have a strong DAO.
The only utility is DAO, but if it is eligible for this program and its market capitalization expands, it will have a beneficial effect on the development of Ethereum.
Hi, I have a couple of questions with regards to the Staker.sol contract.
Off-topic for this reply thread but was curious to see what is held in the Uniswap treasury? From what I'm seeing in this thread, it seems like there is a mountain of Uni tokens and then some stable coins. Besides protocol fees, how are contributors being rewarded? Does the treasury plan to diversify more? Sorry not active in the community and trying to learn more about the treasury. Forgive the noob question please.
Are there plans to adopt a specific management toolstack to enable transparency and some degree of automation for this program?
For example, I'm thinking the payroll component could be automated to reduce time/effort needed on operations and ensure all full-time contributors or contracted (like Llama) get paid on time. I believe Coinshift recently did an integration with Superfluid, so DAO payroll can run automatically via real-time streams and settle multiple "salary streams" in a single batch.
Hey @papiporn, off topic from this thread but to directly answer your question about UIs and contracts for liquidity mining Uniswap v3 LP NFTs, we have what I believe is the first full suite front end at Frax Finance. For example, you can check out our Uni V3 farming pair UI and contracts here: app .frax .finance/staking#Uniswap_V3_FRAX_USDC
We also allow locking the NFT LP for an additional boost to increase stickiness of the LP program. The farming contract also allows setting of range/ticks that are incentivized instead of generalized. The contract itself can be found here: etherscan .io/ address/0x3EF26504dbc8Dd7B7aa3E97Bc9f3813a9FC0B4B0
Hey @papiporn, off topic from this thread but to directly answer your question about UIs and contracts for liquidity mining Uniswap v3 LP NFTs, we have what I believe is the first full suite front end at Frax Finance. For example, you can check out our Uni V3 farming pair UI and contracts here: app .frax .finance/staking#Uniswap_V3_FRAX_USDC
We also allow locking the NFT LP for an additional boost to increase stickiness of the LP program. The farming contract also allows setting of range/ticks that are incentivized instead of generalized. The contract itself can be found here: etherscan .io/ address/0x3EF26504dbc8Dd7B7aa3E97Bc9f3813a9FC0B4B0
I think the other protocol that might have full Uni v3 farming infrastructure other than FRAX is Gelato's G UNI system. Maker is using them to manage their PSM module. I think they also are expanding it to generalized farming for end-users right now as well.
Hope that helps :)
For “set it and forget it” options, LPs could provide an ~infinite range on v3 today, but that might not generate reasonable revenue or improve the swapper experience.
Hey guys, is this website https://app.uniearn.fi/#/staking anyhow associated with current thread ? :thinking:
See, this is the problem with liquidity mining. It's all fun and games in the beginning when nobody knows about the protocol, we attract liquidity (of course we do, we're giving LPs free "money").
But then how quickly it becomes a slippery slope. Like a drug, basically. We have no choice but to keep distributing rewards and incentives because if we stop, a competitor will come in who will and liquidity is going to migrate to them. Our LPs are addicted. It's already the case with SushiSwap and others on other chains. And more protocols will be created in the future because everything is open source and forkable and despite what we might think liquidity has very little network effects. Liquidity in DeFi is a mercenary, it will go where it'll make the most money because there is no switching cost.
See, this is the problem with liquidity mining. It's all fun and games in the beginning when nobody knows about the protocol, we attract liquidity (of course we do, we're giving LPs free "money").
But then how quickly it becomes a slippery slope. Like a drug, basically. We have no choice but to keep distributing rewards and incentives because if we stop, a competitor will come in who will and liquidity is going to migrate to them. Our LPs are addicted. It's already the case with SushiSwap and others on other chains. And more protocols will be created in the future because everything is open source and forkable and despite what we might think liquidity has very little network effects. Liquidity in DeFi is a mercenary, it will go where it'll make the most money because there is no switching cost.
All this at the detriment, of course, of UNI holders. Case in point, the CRV token, where they are basically printing an unlimited amount of rewards just to try to keep liquidity there. As a consequence the price of CRV just keeps tanking and this despite basically CRV being completely useless outside of staking which is another artificial mechanism created to try to keep people from dumping it. Liquidity providers there are slowly realizing that they are being paid rewards in a token whose value keeps declining so they're incentivized to sell it as soon as they receive it, which puts further sell pressure on price. It's a vicious circle.
Liquidity mining was never anything more than a financial hack. Perhaps, in the very early days of a protocol, it has value in attracting capital. But it cannot be used all the time. When does it stop? There is no proof that liquidity mining attracts long term capital. At best, it attracts capital while rewards are running and most of that capital will flee elsewhere when the rewards stop.
We need a better strategy. We need to think long term. Liquidity mining is very short term thinking. Synthetix lives on liquidity mining and today exists as little more than a zombie protocol. They have an average of 42 trades per day over the past 30 days (!). Can you believe it? See for yourself on their stats site. The fact that they are valued at $1.8B is nothing more than financial hackery that is common in crypto (Cardano, anyone?). They have still not found product-market fit.
Uniswap, on the other hand, probably has. We don't need financial hackery schemes. It dilutes UNI holders but most of all it dilutes the brand and arguably the brand is one of the only sustainable competitive advantages we have against up and coming protocols.
If LPs aren't migrating organically from v2 to v3, then there's a deeper problem that a few UNI rewards won't solve, at least not in the long run. Perhaps they don't want to actively manage their liquidity, which they'll have to do in v3. Perhaps the solution then would be to create liquidity management tools to help them do that. Rewards are not the solution.
I am disappointed in this proposal. It highlights the major problem of protocol governance more generally. Short term solutions will sometimes prevail at the detriment of longer term sustainable solutions. This is not a problem we'd have if governance was in the hands of a small founding team who think about Uniswap 24/7. Arguably given the amount of votes Hayden & co control, it still is, which is a good thing, in which case what we have is simply the illusion of governance.
Food for thought.
I believe that if we are going to start this program, we should add gitcoin (GTC) to the list of targets. They have been incredibly instrumental in expanding DeFi and the OSS culture, and have a strong DAO.
The only utility is DAO, but if it is eligible for this program and its market capitalization expands, it will have a beneficial effect on the development of Ethereum.
Hi, I have a couple of questions with regards to the Staker.sol contract.
For “set it and forget it” options, LPs could provide an ~infinite range on v3 today, but that might not generate reasonable revenue or improve the swapper experience.
Concentrating liquidity around standard deviation from median or average price over a time period (say, 9 days as is accessible in v3), as opposed to rigid brackets can allow LP to "set it and forget it", while maintaining reasonable revenue, and Range Order protection from sudden price drops with the reduced capital cost.
This can be applied by modifying the v3 curve formula so that p represents time weighed average price now and d is percentage deviation from that.
(𝑥 + 𝐿/√{𝑝+d𝑝}) (𝑦 + 𝐿√{𝑝-d𝑝}) = 𝐿2
Thus LPs can concentrate their liquidity assets by "bounding" it within the percentage deviation from the time weighed average price. (to use the v3 whitepaper language 😉)
Not sure how much more computationally challenging this is, though.
Liquidity mining was never anything more than a financial hack. Perhaps, in the very early days of a protocol, it has value in attracting capital. But it cannot be used all the time.
Since in v3 liquidity tokens are NFTs, it would make sense to introduce a square root of time modifier to fee calculation, making the default fees (slightly) lower and growing to current levels and (slightly) beyond as time goes on. This would incentivise LPs to hold their liquidity pool on Uniswap, as they would loose the higher fees accrued. It can also make these NFT positions a desirable commodity traded as they are, rather than cashed in reducing liquidity. The prices for such "charged" tokens can be higher than the value of the assets they represent as an investor will buy them for future gains.
Wondering if there's any reason ETH-DAI isn't an incentivized pair here given it's still a top 10 pool on Uniswap v2 in terms of both TVL & volume?
I'd personally vote for adding ETH-DAI to the list of incentivized pools on Uniswap V3 :grin:
Thanks for the feedback! I’m Austin from Llama.
Thanks for the feedback! I’m Austin from Llama.
Llama is a collection of builders across the crypto industry with a diverse set of backgrounds. We don’t have a token and exist to be an independent voice on treasury management for protocol communities.
RE: Optimism/Arbitrum being early days. That’s exactly why I believe that any liquidity incentive programs should be targeted there.
I agree that we should watch Uniswap adoption on L2s closely. The focus of this proposal is incentivizing liquidity migration from v2 to v3, but we should be willing to evaluate the expansion of ULP as those ecosystems mature.
For “set it and forget it” options, LPs could provide an ~infinite range on v3 today, but that might not generate reasonable revenue or improve the swapper experience.
Concentrating liquidity around standard deviation from median or average price over a time period (say, 9 days as is accessible in v3), as opposed to rigid brackets can allow LP to "set it and forget it", while maintaining reasonable revenue, and Range Order protection from sudden price drops with the reduced capital cost.
This can be applied by modifying the v3 curve formula so that p represents time weighed average price now and d is percentage deviation from that.
(𝑥 + 𝐿/√{𝑝+d𝑝}) (𝑦 + 𝐿√{𝑝-d𝑝}) = 𝐿2
Thus LPs can concentrate their liquidity assets by "bounding" it within the percentage deviation from the time weighed average price. (to use the v3 whitepaper language 😉)
Not sure how much more computationally challenging this is, though.
Liquidity mining was never anything more than a financial hack. Perhaps, in the very early days of a protocol, it has value in attracting capital. But it cannot be used all the time.
Since in v3 liquidity tokens are NFTs, it would make sense to introduce a square root of time modifier to fee calculation, making the default fees (slightly) lower and growing to current levels and (slightly) beyond as time goes on. This would incentivise LPs to hold their liquidity pool on Uniswap, as they would loose the higher fees accrued. It can also make these NFT positions a desirable commodity traded as they are, rather than cashed in reducing liquidity. The prices for such "charged" tokens can be higher than the value of the assets they represent as an investor will buy them for future gains.
Wondering if there's any reason ETH-DAI isn't an incentivized pair here given it's still a top 10 pool on Uniswap v2 in terms of both TVL & volume?
I'd personally vote for adding ETH-DAI to the list of incentivized pools on Uniswap V3 :grin:
Thanks for the feedback! I’m Austin from Llama.
Thanks for the feedback! I’m Austin from Llama.
Llama is a collection of builders across the crypto industry with a diverse set of backgrounds. We don’t have a token and exist to be an independent voice on treasury management for protocol communities.
RE: Optimism/Arbitrum being early days. That’s exactly why I believe that any liquidity incentive programs should be targeted there.
I agree that we should watch Uniswap adoption on L2s closely. The focus of this proposal is incentivizing liquidity migration from v2 to v3, but we should be willing to evaluate the expansion of ULP as those ecosystems mature.
I agree that incentives should be done in L2. what reason that slect LINK, YFI, MKR, AAVE, and COMP for the mid-pair? Many projects will be want to participate. Is there any way for those projects to participate in mining?
Also, how to decide whether or not to participate?
Great in-depth answer. But perhaps the question I meant to ask was:
Why LlamaDAO?
Seems like there could be a conflict of interest with everyone on this team coming from one organization. What’s to stop you all from agreeing that your $LLAMA tokens (or whatever, I’m guessing) shouldn’t be strongly incentivized over other tokens?
Great in-depth answer. But perhaps the question I meant to ask was:
Why LlamaDAO?
Seems like there could be a conflict of interest with everyone on this team coming from one organization. What’s to stop you all from agreeing that your $LLAMA tokens (or whatever, I’m guessing) shouldn’t be strongly incentivized over other tokens?
RE: Optimism/Arbitrum being early days. That’s exactly why I believe that any liquidity incentive programs should be targeted there. If there are new users to onboard out there, an L2 launch will be the time to attract them.
Thank you for the thoughtful response! I'm Austin, one of the core committee members from Llama.
Not sure there is any point of going over every pair as what you are here are proposing: is to provide you with funds for exactly this core capability of choosing what pools to incentive + some periphery tooling, like dune, etc (for the latter I suggest applying to Uniswap grants could be more suitable)
Thank you for the thoughtful response! I'm Austin, one of the core committee members from Llama.
Not sure there is any point of going over every pair as what you are here are proposing: is to provide you with funds for exactly this core capability of choosing what pools to incentive + some periphery tooling, like dune, etc (for the latter I suggest applying to Uniswap grants could be more suitable)
This proposal is very much the beginning of the Uniswap Liquidity Program (v0.1). We want to ensure the community starts with a strong foundation and is able to adapt as we see the market response through a data-driven lens. Migrating liquidity is just one of the stated goals of our proposal. We also aim to encourage new participants to experiment with LPing and further diversify the UNI token holder base. We believe that incentivizing stablecoin pairs will be a big driver for the latter two goals.
Furthermore your suggested weekly rate, which is exactly the same as recent one requested by uniswap grants team, adds even more concerns to me, because I don’t understand how different size team, with different set of capabilities, responsibilities, challenges, etc could be cost the same
Given the experience of the committee and the unique skill set required to implement a comprehensive liquidity program, we believe $150/hr is quite a fair rate. I’m sure most of the committee members are used to being paid much more for their work. The 30 hour aggregate weekly limit means the community will only be paying a max of $4,500 a week for all the manual effort required to help the community manage a liquidity program. Pair selection is a subjective process that cannot be easily automated: any action requires close monitoring and frequent reporting to the Uniswap community. We take this job seriously and are committed to providing weekly updates to ensure the committee is more than justifying the cost of their work.
UNI holders are already highly incentivized to expedite the migration of liquidity to v3, so we figure it will be a better use of funds to start with these pairs.
Just to finish, as I have said I feel that I share many of the goals you have outlined here and understand where you coming from, but I simply think the proposal doesn’t solve the problem, hence I will be voting against it, if it comes to the vote, agains thanks for your effort and time!
We’re happy to hear that you share the same goals as us. This proposal is just the beginning of what the Uniswap liquidity program can be. As the program evolves, there is the potential to have a process to add new pairs to this list. Uniswap is a rapidly growing protocol and we think beginning with these selected pairs will maximize our chances to grow with it.
Would it be beneficial to include an incentivized UNI-ETH or UNI-USD so that LP’s are encouraged to parlay their earnings into a position that does not result in offloading the uni rewards. I’m coming at this from an angle of user retention rather than anything related to price impact on the UNI token. I think the more we incentivize people to keep their uni tokens, the more we incentivize them to stay on the Uniswap platform while also increasing decentralization. Would love to hear thoughts on this.
Other thoughts: The general defi public has yet to realize the earnings potential for v3 positions even with 0 incentives. I believe this program will do good things for introducing people to v3 positions and their unique mechanics without diluting the circulation of UNI too much. I am in favor of this proposal.
Appreciate your candid response. Most Llama members are actively part of other DAOs, it was important to us that we represent a number of different interests across the space. The committee members proposed here have shown a broad knowledge of the space, actively participate in other projects, and overall share a strong desire for the advancement of the DeFi ecosystem.
I was around for initial Uni Liquidity mining and also minted one of the first 500 v3 positions. I remember each time with excitement and trepidation and believe that a renewed liquidity mining program on v3 would not only accomplish the stated goals of bringing increased v3 liquidity, but also bring new users to the protocol.
Appreciate your candid response. Most Llama members are actively part of other DAOs, it was important to us that we represent a number of different interests across the space. The committee members proposed here have shown a broad knowledge of the space, actively participate in other projects, and overall share a strong desire for the advancement of the DeFi ecosystem.
I was around for initial Uni Liquidity mining and also minted one of the first 500 v3 positions. I remember each time with excitement and trepidation and believe that a renewed liquidity mining program on v3 would not only accomplish the stated goals of bringing increased v3 liquidity, but also bring new users to the protocol.
As for the pairs mentioned, we can certainly explore the inclusion of SNX in the initial program if there is support from the Uni community for it. If it doesn't make it in the first round it can also be part of our phased approach and be incentivized later if the Uni community deems the program to be effective
I am in support of this proposal. It makes sense to have a research based DAO to help with informing the community on key pairs to be focused on to keep Uniswap competitive with other AMM's and itself (v1 & v2).
I few concerns I have is that the treasury has mostly been spent so far on proposals that increase supply of UNI into the market, such as: UGP winners selling UNI to market, DeFi Education Fund selling $10 million usd worth of UNI. If this proposal passes we will mostly see participants who are coming for the APY in UNI rather than an interest in governance, which again will be more selling into a fragile market.
I am in support of this proposal. It makes sense to have a research based DAO to help with informing the community on key pairs to be focused on to keep Uniswap competitive with other AMM's and itself (v1 & v2).
I few concerns I have is that the treasury has mostly been spent so far on proposals that increase supply of UNI into the market, such as: UGP winners selling UNI to market, DeFi Education Fund selling $10 million usd worth of UNI. If this proposal passes we will mostly see participants who are coming for the APY in UNI rather than an interest in governance, which again will be more selling into a fragile market.
I overall am in support of this proposal, but I do think a UI should be built to encourage more governance participation in what pools are selected for further liquidity programs (supplemented by research done by Llama DAO), and a mindful awareness that UNI token itself losses all value as a governance, and treasury if it has little value.
Surprised SNX is left out here, I would think to gain the support of some members of the Synthetix community it would have been included in the mid-tail pair list.
I think many Defi users would prefer UNI incentives directed at pairs on Optimism since managing the liquidity positions becomes indiscriminately feasible. This proposal is missing that piece as well.
Surprised SNX is left out here, I would think to gain the support of some members of the Synthetix community it would have been included in the mid-tail pair list.
I think many Defi users would prefer UNI incentives directed at pairs on Optimism since managing the liquidity positions becomes indiscriminately feasible. This proposal is missing that piece as well.
Overall I dont think Uniswap in particular benefits from a Committee to manage liquidity incentives, but would perhaps give it more thought if the group was diversified a little better. I'm not sure a committee made up of mainly LlamaDAO members can adequately represent the Greater DeFi Ecosystem, and the exemption of SNX among the selected Defi gov tokens is an example of that.
I have no issue with the LlamaDAO members individually, however this proposal misses the mark for me in its current form.
100% agree that ecosystem growth, & more particularly, focusing on protocols/tokens that serve as public goods to Ethereum is a key goal (+ proposal's stated goals could be updated to better reflect this). We aimed to select the starting set of pairs with this in mind.
As the program evolves, it has the potential to add an additional mandate of incentivizing emerging public goods that fall within the initiatives - new stablecoins, additional receipt tokens, etc. Considering & proposing pairs like these to select as additions would be part of Llama's mandate.
100% agree that ecosystem growth, & more particularly, focusing on protocols/tokens that serve as public goods to Ethereum is a key goal (+ proposal's stated goals could be updated to better reflect this). We aimed to select the starting set of pairs with this in mind.
As the program evolves, it has the potential to add an additional mandate of incentivizing emerging public goods that fall within the initiatives - new stablecoins, additional receipt tokens, etc. Considering & proposing pairs like these to select as additions would be part of Llama's mandate.
We made the decision to start the proposal out with limited scope on this particular set & let it prove success first, but the flexibility of the committee structure means that this idea could definitely be within scope over the longer term.
I agree that incentives should be done in L2. what reason that slect LINK, YFI, MKR, AAVE, and COMP for the mid-pair? Many projects will be want to participate. Is there any way for those projects to participate in mining?
Also, how to decide whether or not to participate?
Great in-depth answer. But perhaps the question I meant to ask was:
Why LlamaDAO?
Seems like there could be a conflict of interest with everyone on this team coming from one organization. What’s to stop you all from agreeing that your $LLAMA tokens (or whatever, I’m guessing) shouldn’t be strongly incentivized over other tokens?
Great in-depth answer. But perhaps the question I meant to ask was:
Why LlamaDAO?
Seems like there could be a conflict of interest with everyone on this team coming from one organization. What’s to stop you all from agreeing that your $LLAMA tokens (or whatever, I’m guessing) shouldn’t be strongly incentivized over other tokens?
RE: Optimism/Arbitrum being early days. That’s exactly why I believe that any liquidity incentive programs should be targeted there. If there are new users to onboard out there, an L2 launch will be the time to attract them.
Thank you for the thoughtful response! I'm Austin, one of the core committee members from Llama.
Not sure there is any point of going over every pair as what you are here are proposing: is to provide you with funds for exactly this core capability of choosing what pools to incentive + some periphery tooling, like dune, etc (for the latter I suggest applying to Uniswap grants could be more suitable)
Thank you for the thoughtful response! I'm Austin, one of the core committee members from Llama.
Not sure there is any point of going over every pair as what you are here are proposing: is to provide you with funds for exactly this core capability of choosing what pools to incentive + some periphery tooling, like dune, etc (for the latter I suggest applying to Uniswap grants could be more suitable)
This proposal is very much the beginning of the Uniswap Liquidity Program (v0.1). We want to ensure the community starts with a strong foundation and is able to adapt as we see the market response through a data-driven lens. Migrating liquidity is just one of the stated goals of our proposal. We also aim to encourage new participants to experiment with LPing and further diversify the UNI token holder base. We believe that incentivizing stablecoin pairs will be a big driver for the latter two goals.
Furthermore your suggested weekly rate, which is exactly the same as recent one requested by uniswap grants team, adds even more concerns to me, because I don’t understand how different size team, with different set of capabilities, responsibilities, challenges, etc could be cost the same
Given the experience of the committee and the unique skill set required to implement a comprehensive liquidity program, we believe $150/hr is quite a fair rate. I’m sure most of the committee members are used to being paid much more for their work. The 30 hour aggregate weekly limit means the community will only be paying a max of $4,500 a week for all the manual effort required to help the community manage a liquidity program. Pair selection is a subjective process that cannot be easily automated: any action requires close monitoring and frequent reporting to the Uniswap community. We take this job seriously and are committed to providing weekly updates to ensure the committee is more than justifying the cost of their work.
UNI holders are already highly incentivized to expedite the migration of liquidity to v3, so we figure it will be a better use of funds to start with these pairs.
Just to finish, as I have said I feel that I share many of the goals you have outlined here and understand where you coming from, but I simply think the proposal doesn’t solve the problem, hence I will be voting against it, if it comes to the vote, agains thanks for your effort and time!
We’re happy to hear that you share the same goals as us. This proposal is just the beginning of what the Uniswap liquidity program can be. As the program evolves, there is the potential to have a process to add new pairs to this list. Uniswap is a rapidly growing protocol and we think beginning with these selected pairs will maximize our chances to grow with it.
Would it be beneficial to include an incentivized UNI-ETH or UNI-USD so that LP’s are encouraged to parlay their earnings into a position that does not result in offloading the uni rewards. I’m coming at this from an angle of user retention rather than anything related to price impact on the UNI token. I think the more we incentivize people to keep their uni tokens, the more we incentivize them to stay on the Uniswap platform while also increasing decentralization. Would love to hear thoughts on this.
Other thoughts: The general defi public has yet to realize the earnings potential for v3 positions even with 0 incentives. I believe this program will do good things for introducing people to v3 positions and their unique mechanics without diluting the circulation of UNI too much. I am in favor of this proposal.
Appreciate your candid response. Most Llama members are actively part of other DAOs, it was important to us that we represent a number of different interests across the space. The committee members proposed here have shown a broad knowledge of the space, actively participate in other projects, and overall share a strong desire for the advancement of the DeFi ecosystem.
I was around for initial Uni Liquidity mining and also minted one of the first 500 v3 positions. I remember each time with excitement and trepidation and believe that a renewed liquidity mining program on v3 would not only accomplish the stated goals of bringing increased v3 liquidity, but also bring new users to the protocol.
Appreciate your candid response. Most Llama members are actively part of other DAOs, it was important to us that we represent a number of different interests across the space. The committee members proposed here have shown a broad knowledge of the space, actively participate in other projects, and overall share a strong desire for the advancement of the DeFi ecosystem.
I was around for initial Uni Liquidity mining and also minted one of the first 500 v3 positions. I remember each time with excitement and trepidation and believe that a renewed liquidity mining program on v3 would not only accomplish the stated goals of bringing increased v3 liquidity, but also bring new users to the protocol.
As for the pairs mentioned, we can certainly explore the inclusion of SNX in the initial program if there is support from the Uni community for it. If it doesn't make it in the first round it can also be part of our phased approach and be incentivized later if the Uni community deems the program to be effective
I am in support of this proposal. It makes sense to have a research based DAO to help with informing the community on key pairs to be focused on to keep Uniswap competitive with other AMM's and itself (v1 & v2).
I few concerns I have is that the treasury has mostly been spent so far on proposals that increase supply of UNI into the market, such as: UGP winners selling UNI to market, DeFi Education Fund selling $10 million usd worth of UNI. If this proposal passes we will mostly see participants who are coming for the APY in UNI rather than an interest in governance, which again will be more selling into a fragile market.
I am in support of this proposal. It makes sense to have a research based DAO to help with informing the community on key pairs to be focused on to keep Uniswap competitive with other AMM's and itself (v1 & v2).
I few concerns I have is that the treasury has mostly been spent so far on proposals that increase supply of UNI into the market, such as: UGP winners selling UNI to market, DeFi Education Fund selling $10 million usd worth of UNI. If this proposal passes we will mostly see participants who are coming for the APY in UNI rather than an interest in governance, which again will be more selling into a fragile market.
I overall am in support of this proposal, but I do think a UI should be built to encourage more governance participation in what pools are selected for further liquidity programs (supplemented by research done by Llama DAO), and a mindful awareness that UNI token itself losses all value as a governance, and treasury if it has little value.
Surprised SNX is left out here, I would think to gain the support of some members of the Synthetix community it would have been included in the mid-tail pair list.
I think many Defi users would prefer UNI incentives directed at pairs on Optimism since managing the liquidity positions becomes indiscriminately feasible. This proposal is missing that piece as well.
Surprised SNX is left out here, I would think to gain the support of some members of the Synthetix community it would have been included in the mid-tail pair list.
I think many Defi users would prefer UNI incentives directed at pairs on Optimism since managing the liquidity positions becomes indiscriminately feasible. This proposal is missing that piece as well.
Overall I dont think Uniswap in particular benefits from a Committee to manage liquidity incentives, but would perhaps give it more thought if the group was diversified a little better. I'm not sure a committee made up of mainly LlamaDAO members can adequately represent the Greater DeFi Ecosystem, and the exemption of SNX among the selected Defi gov tokens is an example of that.
I have no issue with the LlamaDAO members individually, however this proposal misses the mark for me in its current form.
100% agree that ecosystem growth, & more particularly, focusing on protocols/tokens that serve as public goods to Ethereum is a key goal (+ proposal's stated goals could be updated to better reflect this). We aimed to select the starting set of pairs with this in mind.
As the program evolves, it has the potential to add an additional mandate of incentivizing emerging public goods that fall within the initiatives - new stablecoins, additional receipt tokens, etc. Considering & proposing pairs like these to select as additions would be part of Llama's mandate.
100% agree that ecosystem growth, & more particularly, focusing on protocols/tokens that serve as public goods to Ethereum is a key goal (+ proposal's stated goals could be updated to better reflect this). We aimed to select the starting set of pairs with this in mind.
As the program evolves, it has the potential to add an additional mandate of incentivizing emerging public goods that fall within the initiatives - new stablecoins, additional receipt tokens, etc. Considering & proposing pairs like these to select as additions would be part of Llama's mandate.
We made the decision to start the proposal out with limited scope on this particular set & let it prove success first, but the flexibility of the committee structure means that this idea could definitely be within scope over the longer term.
Hi, yeah good points on what the right model is. I'm Michael from Llama, working on dashboards for tracking the liquidity program.
Our primary motivation for migrating liquidity to v3 is that concentrated liquidity should provide better pricing for swappers, which leads to a better swapper experience. While I definitely agree that there’s a set of users (including me) who would prefer a “set it and forget it” LP model, there’s a challenge of how to balance the best LP experience with the best swapper experience. We’ll be monitoring performance of incentivized pairs to learn if these incentives are creating a better swapper experience or not.
Hi, yeah good points on what the right model is. I'm Michael from Llama, working on dashboards for tracking the liquidity program.
Our primary motivation for migrating liquidity to v3 is that concentrated liquidity should provide better pricing for swappers, which leads to a better swapper experience. While I definitely agree that there’s a set of users (including me) who would prefer a “set it and forget it” LP model, there’s a challenge of how to balance the best LP experience with the best swapper experience. We’ll be monitoring performance of incentivized pairs to learn if these incentives are creating a better swapper experience or not.
For “set it and forget it” options, LPs could provide an ~infinite range on v3 today, but that might not generate reasonable revenue or improve the swapper experience. They could also explore automated managers, who should be able to both generate fees and provide better trade pricing. We’d hope that anyone building to improve the LP experience should benefit from the extra incentives.
On mid-tail pairs, we started with what we (subjectively) perceived to have a high impact for v3, rather than incentivizing every mid-tail pair, but definitely let us know if you have suggested additions. Also, it’s worth noting that this is the initial program, so it could expand over time if the community sees enough benefit to.
At this stage, there are better options to broaden the investor base and to educate newcomers about LPing (Guides, Videos, Test Environment/Competition).
At this stage, there are better options to broaden the investor base and to educate newcomers about LPing (Guides, Videos, Test Environment/Competition).
So, I would say that the point of the proposal is not necessarily to incentivise adoption but to incentivise migration. More V3 liquidity will unlock better user experience through much lower price impact. I would say that automated LP strategies, if they are good, would actually benefit from the program.
We will also monitor things like "additional swap volume vs. competition" using Dune and can adjust the parameters of the program based on the data.
Targeting $100m in each of the DeFi-ETH pools seems excessive. I have serious doubts about swaps requiring such deep liquidity pools but would be happy proven otherwise.
Would agree that $100mm might be too deep. The goal is to use analytics as much as possible to support the parameters and decision making here. If we see that the pool is not getting utilised up to its potential, we can consider adjusting the rewards and targeting a smaller pool. I am tempted to try and get deeper pools and see if they attract different kinds of trades / unlock different user behaviours.
Thank you for this good proposal.
It's about time that the massive Uni treasury is effectively put to use. I personally hope this proposal will soon be further adjusted, voted on and be implemented - incl. varying incentives for Optimism experimentation.
A few comments
Thank you for this good proposal.
It's about time that the massive Uni treasury is effectively put to use. I personally hope this proposal will soon be further adjusted, voted on and be implemented - incl. varying incentives for Optimism experimentation.
A few comments
We expect and hope that a liquidity incentives program on Uniswap v3 would succeed in increasing wider LP participation, liquidity across sought-after pairs, UNI distribution, and swap volume.
In our opinion, a liquidity mining campaign for a DEX should mainly achieve
additional swap volume vs. competition (focus especially on trades routed towards Uniswap, not directly on Uniswap)
knowledge increase (e.g. experiment with 2-6 week incentive cycles)
Marketing exposure (e.g. co-campaigns with DeFi protocols, Optimism, etc.)
Encouragement of new token buyers and LPs was well done at the start and is an effective way to bootstrap a network. At this stage, there are better options to broaden the investor base and to educate newcomers about LPing (Guides, Videos, Test Environment/Competition). In fact, the liquidity mining campaign on majors will rather lead to more concentration since pros will farm with disproportionally more funds than newcomers. The LP base will broaden with 3rd party projects offering automated LP vaults - another interesting option for Uni treasury investment.
Agreed, these target pairs are most interesting for V3. I am especially curious on cToken and aToken liquidity and opening up more use cases - is a collaboration with Compound/Aave being discussed?
Targeting $100m in each of the DeFi-ETH pools seems excessive. I have serious doubts about swaps requiring such deep liquidity pools but would be happy proven otherwise.
Commitee setup looks very strong and compensation fair. I do believe long-term investors from Paradigm and core developers should also have a seat at the table as they have most certainly thought a lot about important pairs and pair incentivization.
Again, thanks for the good proposal.
Why is LlamaDAO getting 5 users paid $4500/week for this? No mention of arbitrum or optimism?
Right now we are competing with ourselves between v2 and v3, and we have control over both. I'd rather see the v2 fee switch get turned on first to move people then go from there.
I have three questions.
Is there any point in doing liquidity mining in L1 instead of L2 at now? What is the point of doing this prior to the V2 rate switch? What is the deciding process for determining the menu for liquidity mining? (of cource, everyone, every project will want to participate).
Thanks for making this! Would it perhaps be a better idea to wait until Optimism is ready for higher capacity & instant withdrawal options are available/liquid, then launch a program like this on there?
@uba.eth I think extending the program to include Optimism is an excellent idea, and definitely one of the directions we're hoping to include as the program evolves.
Like you mention, the Optimism ecosystem is quite young, so I agree it's best to let it & Uniswap on Optimism grow naturally before adding liquidity incentives.
@uba.eth I think extending the program to include Optimism is an excellent idea, and definitely one of the directions we're hoping to include as the program evolves.
Like you mention, the Optimism ecosystem is quite young, so I agree it's best to let it & Uniswap on Optimism grow naturally before adding liquidity incentives.
In the meantime, we think the proposal is great opportunity to help build Uniswap V3 adoption & liquidity on L1, which remains quite important even as Uniswap extends to L2.
I don't think this is necessary. UNI holders forgoing fees is more than enough incentive to provide liquidity on Uniswap over its competitors, not to mention the technical advantages protected by the creative licensing scheme.
Additionally, pair selection is implicitly political and opens up an opportunity for our competitors to service the "rejects." Not to mention adding this other DAO and compensation opens up another political attack surface that could be compromised. I like Uniswap as completely neutral exchange infrastructure.
Hello, I think it is a very good idea. I think we are all aware that it is important to migrate from V1 and V2 to V3. At the moment we are competing with each other and that is good when the competition is yourself, but at the rate that the projects move, we cannot stand still.
On the other hand, after almost 10 months since the launch of UNI, the creation of this liquidity program, sure that it helps to increase the number of users who obtain these rewards and, it will increase the deposits in all the groups.
Hello, I think it is a very good idea. I think we are all aware that it is important to migrate from V1 and V2 to V3. At the moment we are competing with each other and that is good when the competition is yourself, but at the rate that the projects move, we cannot stand still.
On the other hand, after almost 10 months since the launch of UNI, the creation of this liquidity program, sure that it helps to increase the number of users who obtain these rewards and, it will increase the deposits in all the groups.
In these months a lot of work has been done and, from my point of view, very well. I think it's a good time for this release. We are at the gates of the first year of UNI and we have to place our project in the TOP 5.
Thanks and greetings to all
Hi, yeah good points on what the right model is. I'm Michael from Llama, working on dashboards for tracking the liquidity program.
Our primary motivation for migrating liquidity to v3 is that concentrated liquidity should provide better pricing for swappers, which leads to a better swapper experience. While I definitely agree that there’s a set of users (including me) who would prefer a “set it and forget it” LP model, there’s a challenge of how to balance the best LP experience with the best swapper experience. We’ll be monitoring performance of incentivized pairs to learn if these incentives are creating a better swapper experience or not.
Hi, yeah good points on what the right model is. I'm Michael from Llama, working on dashboards for tracking the liquidity program.
Our primary motivation for migrating liquidity to v3 is that concentrated liquidity should provide better pricing for swappers, which leads to a better swapper experience. While I definitely agree that there’s a set of users (including me) who would prefer a “set it and forget it” LP model, there’s a challenge of how to balance the best LP experience with the best swapper experience. We’ll be monitoring performance of incentivized pairs to learn if these incentives are creating a better swapper experience or not.
For “set it and forget it” options, LPs could provide an ~infinite range on v3 today, but that might not generate reasonable revenue or improve the swapper experience. They could also explore automated managers, who should be able to both generate fees and provide better trade pricing. We’d hope that anyone building to improve the LP experience should benefit from the extra incentives.
On mid-tail pairs, we started with what we (subjectively) perceived to have a high impact for v3, rather than incentivizing every mid-tail pair, but definitely let us know if you have suggested additions. Also, it’s worth noting that this is the initial program, so it could expand over time if the community sees enough benefit to.
At this stage, there are better options to broaden the investor base and to educate newcomers about LPing (Guides, Videos, Test Environment/Competition).
At this stage, there are better options to broaden the investor base and to educate newcomers about LPing (Guides, Videos, Test Environment/Competition).
So, I would say that the point of the proposal is not necessarily to incentivise adoption but to incentivise migration. More V3 liquidity will unlock better user experience through much lower price impact. I would say that automated LP strategies, if they are good, would actually benefit from the program.
We will also monitor things like "additional swap volume vs. competition" using Dune and can adjust the parameters of the program based on the data.
Targeting $100m in each of the DeFi-ETH pools seems excessive. I have serious doubts about swaps requiring such deep liquidity pools but would be happy proven otherwise.
Would agree that $100mm might be too deep. The goal is to use analytics as much as possible to support the parameters and decision making here. If we see that the pool is not getting utilised up to its potential, we can consider adjusting the rewards and targeting a smaller pool. I am tempted to try and get deeper pools and see if they attract different kinds of trades / unlock different user behaviours.
Thank you for this good proposal.
It's about time that the massive Uni treasury is effectively put to use. I personally hope this proposal will soon be further adjusted, voted on and be implemented - incl. varying incentives for Optimism experimentation.
A few comments
Thank you for this good proposal.
It's about time that the massive Uni treasury is effectively put to use. I personally hope this proposal will soon be further adjusted, voted on and be implemented - incl. varying incentives for Optimism experimentation.
A few comments
We expect and hope that a liquidity incentives program on Uniswap v3 would succeed in increasing wider LP participation, liquidity across sought-after pairs, UNI distribution, and swap volume.
In our opinion, a liquidity mining campaign for a DEX should mainly achieve
additional swap volume vs. competition (focus especially on trades routed towards Uniswap, not directly on Uniswap)
knowledge increase (e.g. experiment with 2-6 week incentive cycles)
Marketing exposure (e.g. co-campaigns with DeFi protocols, Optimism, etc.)
Encouragement of new token buyers and LPs was well done at the start and is an effective way to bootstrap a network. At this stage, there are better options to broaden the investor base and to educate newcomers about LPing (Guides, Videos, Test Environment/Competition). In fact, the liquidity mining campaign on majors will rather lead to more concentration since pros will farm with disproportionally more funds than newcomers. The LP base will broaden with 3rd party projects offering automated LP vaults - another interesting option for Uni treasury investment.
Agreed, these target pairs are most interesting for V3. I am especially curious on cToken and aToken liquidity and opening up more use cases - is a collaboration with Compound/Aave being discussed?
Targeting $100m in each of the DeFi-ETH pools seems excessive. I have serious doubts about swaps requiring such deep liquidity pools but would be happy proven otherwise.
Commitee setup looks very strong and compensation fair. I do believe long-term investors from Paradigm and core developers should also have a seat at the table as they have most certainly thought a lot about important pairs and pair incentivization.
Again, thanks for the good proposal.
Why is LlamaDAO getting 5 users paid $4500/week for this? No mention of arbitrum or optimism?
Right now we are competing with ourselves between v2 and v3, and we have control over both. I'd rather see the v2 fee switch get turned on first to move people then go from there.
I have three questions.
Is there any point in doing liquidity mining in L1 instead of L2 at now? What is the point of doing this prior to the V2 rate switch? What is the deciding process for determining the menu for liquidity mining? (of cource, everyone, every project will want to participate).
Thanks for making this! Would it perhaps be a better idea to wait until Optimism is ready for higher capacity & instant withdrawal options are available/liquid, then launch a program like this on there?
@uba.eth I think extending the program to include Optimism is an excellent idea, and definitely one of the directions we're hoping to include as the program evolves.
Like you mention, the Optimism ecosystem is quite young, so I agree it's best to let it & Uniswap on Optimism grow naturally before adding liquidity incentives.
@uba.eth I think extending the program to include Optimism is an excellent idea, and definitely one of the directions we're hoping to include as the program evolves.
Like you mention, the Optimism ecosystem is quite young, so I agree it's best to let it & Uniswap on Optimism grow naturally before adding liquidity incentives.
In the meantime, we think the proposal is great opportunity to help build Uniswap V3 adoption & liquidity on L1, which remains quite important even as Uniswap extends to L2.
I don't think this is necessary. UNI holders forgoing fees is more than enough incentive to provide liquidity on Uniswap over its competitors, not to mention the technical advantages protected by the creative licensing scheme.
Additionally, pair selection is implicitly political and opens up an opportunity for our competitors to service the "rejects." Not to mention adding this other DAO and compensation opens up another political attack surface that could be compromised. I like Uniswap as completely neutral exchange infrastructure.
Hello, I think it is a very good idea. I think we are all aware that it is important to migrate from V1 and V2 to V3. At the moment we are competing with each other and that is good when the competition is yourself, but at the rate that the projects move, we cannot stand still.
On the other hand, after almost 10 months since the launch of UNI, the creation of this liquidity program, sure that it helps to increase the number of users who obtain these rewards and, it will increase the deposits in all the groups.
Hello, I think it is a very good idea. I think we are all aware that it is important to migrate from V1 and V2 to V3. At the moment we are competing with each other and that is good when the competition is yourself, but at the rate that the projects move, we cannot stand still.
On the other hand, after almost 10 months since the launch of UNI, the creation of this liquidity program, sure that it helps to increase the number of users who obtain these rewards and, it will increase the deposits in all the groups.
In these months a lot of work has been done and, from my point of view, very well. I think it's a good time for this release. We are at the gates of the first year of UNI and we have to place our project in the TOP 5.
Thanks and greetings to all
The proposal is in the works. We are just waiting for Optimism to roll out
So yet another proposal which introduces more dilution for the UNI token holders? Tell me, how would this proposal benefit the token holders? It is the prevailing opinion that the initial farming of the UNI token was a net negative for the holders in general. We saw the price of the UNI token drop significantly while the farmers farmed and then dumped the token and moved on. Who´s to say it wont happen again??
The only effective migration from V2 to V3 is by turning on the fee switch on V2.
So yet another proposal which introduces more dilution for the UNI token holders? Tell me, how would this proposal benefit the token holders? It is the prevailing opinion that the initial farming of the UNI token was a net negative for the holders in general. We saw the price of the UNI token drop significantly while the farmers farmed and then dumped the token and moved on. Who´s to say it wont happen again??
The only effective migration from V2 to V3 is by turning on the fee switch on V2.
This whole proposal feels incredibly redundant to be honest.
The proposal is in the works. We are just waiting for Optimism to roll out
So yet another proposal which introduces more dilution for the UNI token holders? Tell me, how would this proposal benefit the token holders? It is the prevailing opinion that the initial farming of the UNI token was a net negative for the holders in general. We saw the price of the UNI token drop significantly while the farmers farmed and then dumped the token and moved on. Who´s to say it wont happen again??
The only effective migration from V2 to V3 is by turning on the fee switch on V2.
So yet another proposal which introduces more dilution for the UNI token holders? Tell me, how would this proposal benefit the token holders? It is the prevailing opinion that the initial farming of the UNI token was a net negative for the holders in general. We saw the price of the UNI token drop significantly while the farmers farmed and then dumped the token and moved on. Who´s to say it wont happen again??
The only effective migration from V2 to V3 is by turning on the fee switch on V2.
This whole proposal feels incredibly redundant to be honest.
This is correct for all three tokens.
The only solution I can think of is wrapping but that creates a lot of headaches and I think is detrimental to the main goal (i.e. "pools may serve as an effective alternative distribution channel for yield-generating platforms."). Wrapping would be better for the LPs but much worse for the people swapping.
This is correct for all three tokens.
The only solution I can think of is wrapping but that creates a lot of headaches and I think is detrimental to the main goal (i.e. "pools may serve as an effective alternative distribution channel for yield-generating platforms."). Wrapping would be better for the LPs but much worse for the people swapping.
So I think the current suggested approach is best. At least for PoolTogether it will provide a meaningfully better experience vs. depositing directly (saves 100k gas). The LPs miss out on the Aave / COMP / POOL tokens but are compensated by getting the UNI tokens. And the Uniswap protocol gets to pilot demand for direct swapping into protocol tokens rather than using protocol UIs.... which I think is a really good strategy for Uniswap.
I also was wondering why we would not have a UNI/ETH pair. I would like to see a SNX/ETH pair as well. We could have a poll if these questions need to be answered.
Regarding the statement that we don't really need these incentives since v3 is already dominating the LP game, would it make sense that we plan to flip the v3 fee switch in addition to providing these LP incentives (after at least one layer 2 roll up is fully open)? I know we have proposal to flip the v2 fee switch, but if UNI members would like to see UNI token holders' incentives as well as LP's incentives fully align, a low fee v3 switch could be the answer. Without token holders and/or the treasury benefiting, we are potentially wasting some of the value for LP incentives. I would like to see the UNI community and Uniswap Labs discuss both of these topics at the next community call if possible.
Oh perfect, I was misinterpreting then. Thank you for correcting me!
Appreciate the feedback @jcp. We propose 30 hours/week limit for LlamaDAO, i.e. all core members of the ULP committee. (Not 30 hours/week per person.) Hopefully that clarifies things, but let me know if we should change any of the wording in the proposal here:
In addition to the quarterly budget, LlamaDAO (core committee members) is to be collectively compensated at a rate of $150 per hour up to 30 hours a week.
Thanks for the very solid post, and for soliciting comments and feedback before moving to a vote. I like this proposal. I'm sure I'll have other questions, but my first is just around the work from the committee.
I believe the $150/hr compensation is a fair rate for this kind of specialized work, but I have a question on the weekly hour limit for this committee. The 30 hour/week limit per person is obviously the same limit for the UGP committee, but there are more members of this committee, and I'm curious how the amount of work stacks up. Do you believe the amount of weekly work for this program will be equivalent to something like UGP, where there's (at least to me) more obvious human hours required week in and week out to keep the project going? My intuition would be that it might be good to have a lower cap on hours per person, or a team-wide hour cap that comes out to where we think weekly work will hit a plateau in terms of marginal utility. Curious to hear thoughts!
Hey Llama team,
Appreciate your proposal and work you have put into it, but to be precise and short, I find it utterly boring, please don't be offender, I mean no disrespect and as I said appreciate your work, if you could allow me, I would love to explain my reasoning.
First of all lets go over what you are proposing:
This is correct for all three tokens.
The only solution I can think of is wrapping but that creates a lot of headaches and I think is detrimental to the main goal (i.e. "pools may serve as an effective alternative distribution channel for yield-generating platforms."). Wrapping would be better for the LPs but much worse for the people swapping.
This is correct for all three tokens.
The only solution I can think of is wrapping but that creates a lot of headaches and I think is detrimental to the main goal (i.e. "pools may serve as an effective alternative distribution channel for yield-generating platforms."). Wrapping would be better for the LPs but much worse for the people swapping.
So I think the current suggested approach is best. At least for PoolTogether it will provide a meaningfully better experience vs. depositing directly (saves 100k gas). The LPs miss out on the Aave / COMP / POOL tokens but are compensated by getting the UNI tokens. And the Uniswap protocol gets to pilot demand for direct swapping into protocol tokens rather than using protocol UIs.... which I think is a really good strategy for Uniswap.
I also was wondering why we would not have a UNI/ETH pair. I would like to see a SNX/ETH pair as well. We could have a poll if these questions need to be answered.
Regarding the statement that we don't really need these incentives since v3 is already dominating the LP game, would it make sense that we plan to flip the v3 fee switch in addition to providing these LP incentives (after at least one layer 2 roll up is fully open)? I know we have proposal to flip the v2 fee switch, but if UNI members would like to see UNI token holders' incentives as well as LP's incentives fully align, a low fee v3 switch could be the answer. Without token holders and/or the treasury benefiting, we are potentially wasting some of the value for LP incentives. I would like to see the UNI community and Uniswap Labs discuss both of these topics at the next community call if possible.
Oh perfect, I was misinterpreting then. Thank you for correcting me!
Appreciate the feedback @jcp. We propose 30 hours/week limit for LlamaDAO, i.e. all core members of the ULP committee. (Not 30 hours/week per person.) Hopefully that clarifies things, but let me know if we should change any of the wording in the proposal here:
In addition to the quarterly budget, LlamaDAO (core committee members) is to be collectively compensated at a rate of $150 per hour up to 30 hours a week.
Thanks for the very solid post, and for soliciting comments and feedback before moving to a vote. I like this proposal. I'm sure I'll have other questions, but my first is just around the work from the committee.
I believe the $150/hr compensation is a fair rate for this kind of specialized work, but I have a question on the weekly hour limit for this committee. The 30 hour/week limit per person is obviously the same limit for the UGP committee, but there are more members of this committee, and I'm curious how the amount of work stacks up. Do you believe the amount of weekly work for this program will be equivalent to something like UGP, where there's (at least to me) more obvious human hours required week in and week out to keep the project going? My intuition would be that it might be good to have a lower cap on hours per person, or a team-wide hour cap that comes out to where we think weekly work will hit a plateau in terms of marginal utility. Curious to hear thoughts!
Hey Llama team,
Appreciate your proposal and work you have put into it, but to be precise and short, I find it utterly boring, please don't be offender, I mean no disrespect and as I said appreciate your work, if you could allow me, I would love to explain my reasoning.
First of all lets go over what you are proposing:
Thanks for the very solid post, and for soliciting comments and feedback before moving to a vote. I like this proposal. I'm sure I'll have other questions, but my first is just around the work from the committee.
I believe the $150/hr compensation is a fair rate for this kind of specialized work, but I have a question on the weekly hour limit for this committee. The 30 hour/week limit per person is obviously the same limit for the UGP committee, but there are more members of this committee, and I'm curious how the amount of work stacks up. Do you believe the amount of weekly work for this program will be equivalent to something like UGP, where there's (at least to me) more obvious human hours required week in and week out to keep the project going? My intuition would be that it might be good to have a lower cap on hours per person, or a team-wide hour cap that comes out to where we think weekly work will hit a plateau in terms of marginal utility. Curious to hear thoughts!
@HelloShreyas, I see your post above on the dashboard creation and documentation to be done, and I suppose my question is if you think that kind of work could possible add up to 5 people * 30 hours per week.
Hey Llama team,
Appreciate your proposal and work you have put into it, but to be precise and short, I find it utterly boring, please don't be offender, I mean no disrespect and as I said appreciate your work, if you could allow me, I would love to explain my reasoning.
First of all lets go over what you are proposing:
First of the goals you mention is:
Immediately you follow with suggesting subsidising these pairs:
Lets look at first pair
*v3 USDC/DAI 0.05% TVL is $118m compared to v2 which only $21m (so here it seems you completely ignore the market, and forces that move it, the lower fee offers better rate for end users and increases trading volume, and hence is natural migration for efficient capital, if we compare last 24h volume its $116k on v2 vs $7.29m (x62 difference), adjust it for 6x difference in fees (0.3 vs 0.05) and 5.6x difference in volume, we get that v3 gives LP an almost x2 ROI, and im deliberately leaving out all the benefits and earnings adjustments of concentrated liquidity
Not sure there is any point of going over every pair as what you are here are proposing: is to provide you with funds for exactly this core capability of choosing what pools to incentive + some periphery tooling, like dune, etc (for the latter I suggest applying to Uniswap grants could be more suitable)
So at this point I wouldn't even consider with voting to provide you with budget to allocate treasury funds for allocation between pools
Furthermore your suggested weekly rate, which is exactly the same as recent one requested by uniswap grants team, adds even more concerns to me, because I don't understand how different size team, with different set of capabilities, responsibilities, challenges, etc could be cost the same
Lastly I would like to finish where I started is why I think this proposal is utterly boring, I do agree with where you guys are coming from, making a good use of treasury and really feel these two goals you have set out in your proposal:
encouraging new market participants to experiment with liquidity provision, and further distributing ownership of UNI tokens
and that's why I completely not getting how is this experimental at all, its just basically the same old farming or what it called, that has been in the market for quite some time and personally I don't think in your proposed suggestion solves further distributing ownership of UNI tokens or experimental, hence boring.
What I would like to see, and would gladly vote for is some innovative ideas, i got couple just while reading this thread and writing a reply:
Just to finish, as I have said I feel that I share many of the goals you have outlined here and understand where you coming from, but I simply think the proposal doesn't solve the problem, hence I will be voting against it, if it comes to the vote, agains thanks for your effort and time!
We will provide full transparency on the hours worked. We will also build a dashboard to track the progress and effectiveness of ULP, share operational spending of the program, provide periodic updates on the governance forum, and be relatively responsive to feedback.
In fact, we strongly considered @DCinvestor's points mentioned here and incorporated them as much as we could - especially having defined deliverables, shared input on the roadmap, and regular reports on progress and spending.
@DCinvestor stated my concerns clearly in the Reinstating UGP v0.2 discussion: " Thanks for this. I mostly estimated the maximum costs because I think that this is a good best practice for any kind of fund disbursement, and is a practice we should try to formalize (e.g., estimate expected and maximum costs).
I think it’s reasonable, though would like to see some review of accrued hourly labor from Ken, with a tally of hours spent by participant ultimately published. The goal is not to find a “gotcha,” but to promote a culture of maximum transparency. " Reinstating UGP v0.2 with existing funds
@DCinvestor stated my concerns clearly in the Reinstating UGP v0.2 discussion: " Thanks for this. I mostly estimated the maximum costs because I think that this is a good best practice for any kind of fund disbursement, and is a practice we should try to formalize (e.g., estimate expected and maximum costs).
I think it’s reasonable, though would like to see some review of accrued hourly labor from Ken, with a tally of hours spent by participant ultimately published. The goal is not to find a “gotcha,” but to promote a culture of maximum transparency. " Reinstating UGP v0.2 with existing funds
Since this is a DAO and we don't have a full-time employee overseeing over your team's hours and budgeting, it will be important to provide transparency.
@Ruzhyo.eth Our compensation is $150 an hour for a maximum of 30 hours a week. Note that compensation may be less than 30 hours a week based on the work involved. We will make our timesheet public for Uniswap’s governance to view.
$150 an hour is reasonable compensation given the specialization involved in DeFi liquidity programs. For comparison, the Uniswap Grants committee proposes a compensation of $150 an hour.
@Ruzhyo.eth Our compensation is $150 an hour for a maximum of 30 hours a week. Note that compensation may be less than 30 hours a week based on the work involved. We will make our timesheet public for Uniswap’s governance to view.
$150 an hour is reasonable compensation given the specialization involved in DeFi liquidity programs. For comparison, the Uniswap Grants committee proposes a compensation of $150 an hour.
30 hours a week is a fair estimate for the work involved. This what we will work on:
We are focused on creating a gold standard for Uniswap’s liquidity program as well as liquidity incentives across the DeFi ecosystem. We will actively monitor ULP and make adjustments to the program based on the data we track.
These are the Dune Analytics dashboards that we will create (subject to some change based on ULP evolves):
Re. Optimism: it is definitely something worth considering but it is early days. We will monitor how Optimism evolves and potentially adjust the liquidity program to incorporate L2s in the future.
@A1igator v2 fee switch can be a separate proposal if you think there's a good case to be made to the community for it.
In addition to the quarterly budget, LlamaDAO (core committee members) is to be collectively compensated at a rate of $150 per hour up to 30 hours a week.
I saw the same hourly rate for the reinstating UGP v0.2 post. Is this hourly rate based on some source for the the going rate for developers? I'm mainly curious.
What really is the problem with organic user-growth?
V2 LPs enjoy ease-of-use, compounding interest w/o claiming withdrawals, flashswaps etc. V3 LPs enjoy concentrated liquidity, scarcer liquidity leading to a higher proportion of swap fees accrued, optimism support.
What really is the problem with organic user-growth?
V2 LPs enjoy ease-of-use, compounding interest w/o claiming withdrawals, flashswaps etc. V3 LPs enjoy concentrated liquidity, scarcer liquidity leading to a higher proportion of swap fees accrued, optimism support.
I'm quite doubtful that the size of proposed UNI distributed would achieve to accelerate the migration of liquidity to V3. Selective pair liquidity mining is not a fair approach to other token pairs left in the dust. V2 liquidity for mid-tail pairs not mentioned will most likely remain to stay locked in V2 without UNI incentives.
Has there been studies on the migration of liquidity from other DeFi projects? Could there be a hybrid bridge of connecting V2 liquidity to V3? Could we simulate the ease-of-use of V2 by allowing a user to select an approximate [0,∞] range on V3?
I'm not certain, but I'm assuming holding cTokens, aTokens, and plTokens in a Uniswap v3 pool will forfeit any of the underlying protocol's liquidity incentives. How can we solve for this?
Excited for this! I know when UNI liquidity mining started was the first time I ever LP'ed in a meaningful way. I think it's a very important thing to introduce users to what LP'ing is and how it works.
One piece of feedback:
The stated goals of the program are:
- migration of liquidity to v3, 2. new market participants to experiment with LPing, 3. further distribution of UNI ownership.
Excited for this! I know when UNI liquidity mining started was the first time I ever LP'ed in a meaningful way. I think it's a very important thing to introduce users to what LP'ing is and how it works.
One piece of feedback:
The stated goals of the program are:
- migration of liquidity to v3, 2. new market participants to experiment with LPing, 3. further distribution of UNI ownership.
Those are great but I think another very important goal is supporting the Ethereum ecosystem. Providing liquidity incentives to token pairs naturally does this but I think it should be made an explicit goal.
This may be out of scope but longer term I think there should be an additional category of "ecosystem growth". Ideal candidates for this would be promising token projects built on Ethereum but not yet trading on any Cexs. The issue is placement in this program could become highly political but I think Uniswap being active in supporting early stage projects would mean a lot to those communities -- you never forget your first supporters!
tl;dr liquidity mining is a big win to the whole community and that should be an explicit goal / narrative of the program.
Thanks for the very solid post, and for soliciting comments and feedback before moving to a vote. I like this proposal. I'm sure I'll have other questions, but my first is just around the work from the committee.
I believe the $150/hr compensation is a fair rate for this kind of specialized work, but I have a question on the weekly hour limit for this committee. The 30 hour/week limit per person is obviously the same limit for the UGP committee, but there are more members of this committee, and I'm curious how the amount of work stacks up. Do you believe the amount of weekly work for this program will be equivalent to something like UGP, where there's (at least to me) more obvious human hours required week in and week out to keep the project going? My intuition would be that it might be good to have a lower cap on hours per person, or a team-wide hour cap that comes out to where we think weekly work will hit a plateau in terms of marginal utility. Curious to hear thoughts!
@HelloShreyas, I see your post above on the dashboard creation and documentation to be done, and I suppose my question is if you think that kind of work could possible add up to 5 people * 30 hours per week.
Hey Llama team,
Appreciate your proposal and work you have put into it, but to be precise and short, I find it utterly boring, please don't be offender, I mean no disrespect and as I said appreciate your work, if you could allow me, I would love to explain my reasoning.
First of all lets go over what you are proposing:
First of the goals you mention is:
Immediately you follow with suggesting subsidising these pairs:
Lets look at first pair
*v3 USDC/DAI 0.05% TVL is $118m compared to v2 which only $21m (so here it seems you completely ignore the market, and forces that move it, the lower fee offers better rate for end users and increases trading volume, and hence is natural migration for efficient capital, if we compare last 24h volume its $116k on v2 vs $7.29m (x62 difference), adjust it for 6x difference in fees (0.3 vs 0.05) and 5.6x difference in volume, we get that v3 gives LP an almost x2 ROI, and im deliberately leaving out all the benefits and earnings adjustments of concentrated liquidity
Not sure there is any point of going over every pair as what you are here are proposing: is to provide you with funds for exactly this core capability of choosing what pools to incentive + some periphery tooling, like dune, etc (for the latter I suggest applying to Uniswap grants could be more suitable)
So at this point I wouldn't even consider with voting to provide you with budget to allocate treasury funds for allocation between pools
Furthermore your suggested weekly rate, which is exactly the same as recent one requested by uniswap grants team, adds even more concerns to me, because I don't understand how different size team, with different set of capabilities, responsibilities, challenges, etc could be cost the same
Lastly I would like to finish where I started is why I think this proposal is utterly boring, I do agree with where you guys are coming from, making a good use of treasury and really feel these two goals you have set out in your proposal:
encouraging new market participants to experiment with liquidity provision, and further distributing ownership of UNI tokens
and that's why I completely not getting how is this experimental at all, its just basically the same old farming or what it called, that has been in the market for quite some time and personally I don't think in your proposed suggestion solves further distributing ownership of UNI tokens or experimental, hence boring.
What I would like to see, and would gladly vote for is some innovative ideas, i got couple just while reading this thread and writing a reply:
Just to finish, as I have said I feel that I share many of the goals you have outlined here and understand where you coming from, but I simply think the proposal doesn't solve the problem, hence I will be voting against it, if it comes to the vote, agains thanks for your effort and time!
We will provide full transparency on the hours worked. We will also build a dashboard to track the progress and effectiveness of ULP, share operational spending of the program, provide periodic updates on the governance forum, and be relatively responsive to feedback.
In fact, we strongly considered @DCinvestor's points mentioned here and incorporated them as much as we could - especially having defined deliverables, shared input on the roadmap, and regular reports on progress and spending.
@DCinvestor stated my concerns clearly in the Reinstating UGP v0.2 discussion: " Thanks for this. I mostly estimated the maximum costs because I think that this is a good best practice for any kind of fund disbursement, and is a practice we should try to formalize (e.g., estimate expected and maximum costs).
I think it’s reasonable, though would like to see some review of accrued hourly labor from Ken, with a tally of hours spent by participant ultimately published. The goal is not to find a “gotcha,” but to promote a culture of maximum transparency. " Reinstating UGP v0.2 with existing funds
@DCinvestor stated my concerns clearly in the Reinstating UGP v0.2 discussion: " Thanks for this. I mostly estimated the maximum costs because I think that this is a good best practice for any kind of fund disbursement, and is a practice we should try to formalize (e.g., estimate expected and maximum costs).
I think it’s reasonable, though would like to see some review of accrued hourly labor from Ken, with a tally of hours spent by participant ultimately published. The goal is not to find a “gotcha,” but to promote a culture of maximum transparency. " Reinstating UGP v0.2 with existing funds
Since this is a DAO and we don't have a full-time employee overseeing over your team's hours and budgeting, it will be important to provide transparency.
@Ruzhyo.eth Our compensation is $150 an hour for a maximum of 30 hours a week. Note that compensation may be less than 30 hours a week based on the work involved. We will make our timesheet public for Uniswap’s governance to view.
$150 an hour is reasonable compensation given the specialization involved in DeFi liquidity programs. For comparison, the Uniswap Grants committee proposes a compensation of $150 an hour.
@Ruzhyo.eth Our compensation is $150 an hour for a maximum of 30 hours a week. Note that compensation may be less than 30 hours a week based on the work involved. We will make our timesheet public for Uniswap’s governance to view.
$150 an hour is reasonable compensation given the specialization involved in DeFi liquidity programs. For comparison, the Uniswap Grants committee proposes a compensation of $150 an hour.
30 hours a week is a fair estimate for the work involved. This what we will work on:
We are focused on creating a gold standard for Uniswap’s liquidity program as well as liquidity incentives across the DeFi ecosystem. We will actively monitor ULP and make adjustments to the program based on the data we track.
These are the Dune Analytics dashboards that we will create (subject to some change based on ULP evolves):
Re. Optimism: it is definitely something worth considering but it is early days. We will monitor how Optimism evolves and potentially adjust the liquidity program to incorporate L2s in the future.
@A1igator v2 fee switch can be a separate proposal if you think there's a good case to be made to the community for it.
In addition to the quarterly budget, LlamaDAO (core committee members) is to be collectively compensated at a rate of $150 per hour up to 30 hours a week.
I saw the same hourly rate for the reinstating UGP v0.2 post. Is this hourly rate based on some source for the the going rate for developers? I'm mainly curious.
What really is the problem with organic user-growth?
V2 LPs enjoy ease-of-use, compounding interest w/o claiming withdrawals, flashswaps etc. V3 LPs enjoy concentrated liquidity, scarcer liquidity leading to a higher proportion of swap fees accrued, optimism support.
What really is the problem with organic user-growth?
V2 LPs enjoy ease-of-use, compounding interest w/o claiming withdrawals, flashswaps etc. V3 LPs enjoy concentrated liquidity, scarcer liquidity leading to a higher proportion of swap fees accrued, optimism support.
I'm quite doubtful that the size of proposed UNI distributed would achieve to accelerate the migration of liquidity to V3. Selective pair liquidity mining is not a fair approach to other token pairs left in the dust. V2 liquidity for mid-tail pairs not mentioned will most likely remain to stay locked in V2 without UNI incentives.
Has there been studies on the migration of liquidity from other DeFi projects? Could there be a hybrid bridge of connecting V2 liquidity to V3? Could we simulate the ease-of-use of V2 by allowing a user to select an approximate [0,∞] range on V3?
I'm not certain, but I'm assuming holding cTokens, aTokens, and plTokens in a Uniswap v3 pool will forfeit any of the underlying protocol's liquidity incentives. How can we solve for this?
Excited for this! I know when UNI liquidity mining started was the first time I ever LP'ed in a meaningful way. I think it's a very important thing to introduce users to what LP'ing is and how it works.
One piece of feedback:
The stated goals of the program are:
- migration of liquidity to v3, 2. new market participants to experiment with LPing, 3. further distribution of UNI ownership.
Excited for this! I know when UNI liquidity mining started was the first time I ever LP'ed in a meaningful way. I think it's a very important thing to introduce users to what LP'ing is and how it works.
One piece of feedback:
The stated goals of the program are:
- migration of liquidity to v3, 2. new market participants to experiment with LPing, 3. further distribution of UNI ownership.
Those are great but I think another very important goal is supporting the Ethereum ecosystem. Providing liquidity incentives to token pairs naturally does this but I think it should be made an explicit goal.
This may be out of scope but longer term I think there should be an additional category of "ecosystem growth". Ideal candidates for this would be promising token projects built on Ethereum but not yet trading on any Cexs. The issue is placement in this program could become highly political but I think Uniswap being active in supporting early stage projects would mean a lot to those communities -- you never forget your first supporters!
tl;dr liquidity mining is a big win to the whole community and that should be an explicit goal / narrative of the program.