I think we should reward pools were we want to be competitive.

I Also strongly agree with this. The question is what pairs to target, where UNI can provide value.

Imo, stable coin pairs such as usdt/usdc pairs should be out, as curve and other platforms have better dynamics in place for that.

I think wbtc pairs should be targeted, as wbtc will continue to grow as eth grows.

We need to find pairs with sustained long-term volume not chasing flash-in-the-pan new coins. Introducing more wrapped coins (not sure who will be custodian - perhaps even uniswap could), might be beneficial to tackle incoming competition from platforms such as pols.

Regardless, we should definitely use the funds to continue to give uniswap a competitive edge over competition and maintain its role as DEX market leader. We'd need to think up some business strategies for this.

Yeah i see that perspective. That seems to be the consensus here which worries me. The token model clearly has no support for holders right now. All benefits go to the LPs. I will just provide the liquidity in subsidized pool and sell my UNI to reinvest until we can get a change in the token model or the price drops to a level where the P/E ratio of the treasury is below 10.

I understand your worry, but I would emphasize two things about UNI:

1. Not everything is about the price! UNI is first and foremost a governance token, not a farming token. This is not a token that will 10x in a week, nor should it be. Speculators might hope it will, but speculation creates bubbles and hurts the protocol. I know it feels bad for someone to have bought at ATH and to see the token slowly decrease in value, but it is what it is.
2. If you are indeed worried about the price, then fear not! Once the dividend scheme is clarified and implemented, UNI will stabilize to a level in line with the return from the dividends. It's not adding UNI/ETH to the mining rewards that will make Uniswap more valuable as a protocol. If anything, this will just increase speculation. Dividends will come and the price will adjust accordingly.

You point out that other farming protocols give out additional rewards for those that provide liquidity for the protocol's token. As I mentioned, UNI is not a farming token. But even if it were, these schemes are not at all sustainable and we've already seen many rug pulls.

Think of UNI as a stock. Companies issue new shares all the time to raise money, so stocks could be said to be subject to some form of "inflation". However, if the money raised with these new shares is used to invest in the company and to make it more valuable such that the company grows in value more than it is diluted, then the company's stock price will rise.

You must remember that most (if not all) of the 2% yearly inflation will go to the community treasury. If that money is invested properly to grow the protocol's value (through proper governance) such that the protocol grows in value by more than 2% per year, then inflation will not hurt the price!

I think we should reward pools were we want to be competitive.

I Also strongly agree with this. The question is what pairs to target, where UNI can provide value.

Imo, stable coin pairs such as usdt/usdc pairs should be out, as curve and other platforms have better dynamics in place for that.

I think wbtc pairs should be targeted, as wbtc will continue to grow as eth grows.

We need to find pairs with sustained long-term volume not chasing flash-in-the-pan new coins. Introducing more wrapped coins (not sure who will be custodian - perhaps even uniswap could), might be beneficial to tackle incoming competition from platforms such as pols.

Regardless, we should definitely use the funds to continue to give uniswap a competitive edge over competition and maintain its role as DEX market leader. We'd need to think up some business strategies for this.

Yeah i see that perspective. That seems to be the consensus here which worries me. The token model clearly has no support for holders right now. All benefits go to the LPs. I will just provide the liquidity in subsidized pool and sell my UNI to reinvest until we can get a change in the token model or the price drops to a level where the P/E ratio of the treasury is below 10.

I understand your worry, but I would emphasize two things about UNI:

1. Not everything is about the price! UNI is first and foremost a governance token, not a farming token. This is not a token that will 10x in a week, nor should it be. Speculators might hope it will, but speculation creates bubbles and hurts the protocol. I know it feels bad for someone to have bought at ATH and to see the token slowly decrease in value, but it is what it is.
2. If you are indeed worried about the price, then fear not! Once the dividend scheme is clarified and implemented, UNI will stabilize to a level in line with the return from the dividends. It's not adding UNI/ETH to the mining rewards that will make Uniswap more valuable as a protocol. If anything, this will just increase speculation. Dividends will come and the price will adjust accordingly.

You point out that other farming protocols give out additional rewards for those that provide liquidity for the protocol's token. As I mentioned, UNI is not a farming token. But even if it were, these schemes are not at all sustainable and we've already seen many rug pulls.

Think of UNI as a stock. Companies issue new shares all the time to raise money, so stocks could be said to be subject to some form of "inflation". However, if the money raised with these new shares is used to invest in the company and to make it more valuable such that the company grows in value more than it is diluted, then the company's stock price will rise.

You must remember that most (if not all) of the 2% yearly inflation will go to the community treasury. If that money is invested properly to grow the protocol's value (through proper governance) such that the protocol grows in value by more than 2% per year, then inflation will not hurt the price!

I agree completely! We must realize how liquidity mining rewards are an extremely powerful tool to incentivize liquidity. However, we should us it tactically and sparingly; rewards should be increased to ward off competitors and, likewise, should be decreased when there is no immediate threat (down to a baseline level to further decentralize and distribute UNIs). If a competing DEX dominates a certain pair, then liquidity mining rewards should be used to incentivize the same pair on Uniswap to gain market share (provided the pair involves respectable tokens).

I've been thinking about the UNI liquidity mining program. And, I came to the following conclusions:

• Ultimately, we want more liquidity on Uniswap for all pairs. Not just a few of them. That being said, I'd love for any liquidity pool token to be used for the UNI liquidity mining program.
• Budget could be the same, or could be reduced. In case there's more pairs, there'd also be much more liquidity locked for UNI farming, so it'd make sense to keep the budget the same (for now).
• It would be nice to have 'locked' UNI be eligible for voting. After all, it's part of the ecosystem and it would (hopefully) increase voting participation. Again, Uniswap governance should only be used where needed and not just for small topics - but these ones seem major enough to me.

Just my 2 cents on this topic.

Edit, would encourage anyone to continue the conversation at : https://gov.uniswap.org/t/an-upgrade-for-uni-liquidity-mining-distributions-system/6478 [similar tokic]

I agree completely! We must realize how liquidity mining rewards are an extremely powerful tool to incentivize liquidity. However, we should us it tactically and sparingly; rewards should be increased to ward off competitors and, likewise, should be decreased when there is no immediate threat (down to a baseline level to further decentralize and distribute UNIs). If a competing DEX dominates a certain pair, then liquidity mining rewards should be used to incentivize the same pair on Uniswap to gain market share (provided the pair involves respectable tokens).

I've been thinking about the UNI liquidity mining program. And, I came to the following conclusions:

• Ultimately, we want more liquidity on Uniswap for all pairs. Not just a few of them. That being said, I'd love for any liquidity pool token to be used for the UNI liquidity mining program.
• Budget could be the same, or could be reduced. In case there's more pairs, there'd also be much more liquidity locked for UNI farming, so it'd make sense to keep the budget the same (for now).
• It would be nice to have 'locked' UNI be eligible for voting. After all, it's part of the ecosystem and it would (hopefully) increase voting participation. Again, Uniswap governance should only be used where needed and not just for small topics - but these ones seem major enough to me.

Just my 2 cents on this topic.

Edit, would encourage anyone to continue the conversation at : https://gov.uniswap.org/t/an-upgrade-for-uni-liquidity-mining-distributions-system/6478 [similar tokic]

It is hardcoded that UNI holders can take a maximum of 0.05% of the volume.

When it comes to the LP newcomers, that will bring them from 0.3% to 0.25% fees. These are still very high fees.

For LPs, the main problem is not the commissions they receive. These commissions are these high in the first place to compensate for the high risks they take due to the impermanent loss problem.

As a matter of fact, there are technical solutions that help deal with the IL problem. And if they're successfully implemented in Uniswap V3, the risks LPs take will get drastically lower.

And with drastically lowered risks, it makes sense to reduce the reward as well. In this scenario, I'd argue that reducing the overall fee is reasonable too, but it's not something we got control of.

There are another five months before the fee switch can get activated. It is also much more fruitful to wait until Uniswap V3 is released before activating it, as the rewards distribution will get much cheaper.

The main pro of activating the fee switch is that UNI holders will get part of Uniswap's fees. The main con is they take that money from the 0.3% commission LPs currently get.

So any liquidity mining program becomes much more fruitful for UNI holders after that event happens.

Before that, I find it highly unlikely that small pools could participate in the program.

As I've said earlier, presently, the only reason to vote for a pool getting additional UNI rewards is if you are an LP in the pair you vote for.

So only big pairs have a chance to get the rewards in the near future.

Increased liquidity is a good thing overall, as reduced slippage tends to increase the volume and, therefore, the protocol's profitability.

But there is no profitability for UNI holders here. They do not get any benefit from the increased volume until the fee switch is activated.

Currently, the UNI holder's only reason to vote for liquidity mining program continuation is if he/she wants to participate in it directly.

With all other things being equal, it would be much more fruitful for UNI holders to wait with liquidity mining program continuation until the fee switch is activated.

It is hardcoded that UNI holders can take a maximum of 0.05% of the volume.

When it comes to the LP newcomers, that will bring them from 0.3% to 0.25% fees. These are still very high fees.

For LPs, the main problem is not the commissions they receive. These commissions are these high in the first place to compensate for the high risks they take due to the impermanent loss problem.

As a matter of fact, there are technical solutions that help deal with the IL problem. And if they're successfully implemented in Uniswap V3, the risks LPs take will get drastically lower.

And with drastically lowered risks, it makes sense to reduce the reward as well. In this scenario, I'd argue that reducing the overall fee is reasonable too, but it's not something we got control of.

There are another five months before the fee switch can get activated. It is also much more fruitful to wait until Uniswap V3 is released before activating it, as the rewards distribution will get much cheaper.

The main pro of activating the fee switch is that UNI holders will get part of Uniswap's fees. The main con is they take that money from the 0.3% commission LPs currently get.

So any liquidity mining program becomes much more fruitful for UNI holders after that event happens.

Before that, I find it highly unlikely that small pools could participate in the program.

As I've said earlier, presently, the only reason to vote for a pool getting additional UNI rewards is if you are an LP in the pair you vote for.

So only big pairs have a chance to get the rewards in the near future.

Increased liquidity is a good thing overall, as reduced slippage tends to increase the volume and, therefore, the protocol's profitability.

But there is no profitability for UNI holders here. They do not get any benefit from the increased volume until the fee switch is activated.

Currently, the UNI holder's only reason to vote for liquidity mining program continuation is if he/she wants to participate in it directly.

With all other things being equal, it would be much more fruitful for UNI holders to wait with liquidity mining program continuation until the fee switch is activated.