Proposal: Extend LM Rewards for UNI

Proposal to Extend LM Rewards for UNI

This proposal is expected to appear on Snapshot for voting on Monday 24th May 2021 at 12:00 pm UTC.

TL;DR

  • The liquidity mining (LM) rewards program started on the 1st of March 2021.
  • First 12 weeks of LM rewards for the UNIBNT pool will be over on the 24th of May 2021.
  • At the start of the LM rewards program, the pool liquidity was ~5,606.09 UNI (~$122,852.42), and has since grown to ~638,101.71 UNI (~$18,168,055.53), captured on the 19th of May [1].
  • In the past month, the pool has attracted an average APR of 3.15% corresponding to an average of $3,414.64 in daily fees and an average daily volume of $1,703,905 [2] [3].
  • Since the start of the LM rewards program, the liquidity in the pool increased roughly 148 times and the average weekly volume increased 623.84 times (compared in USD).
  • The pool is the 3rd deepest DEX pool, with half the liquidity of SushiSwap, which currently doesn’t offer LM rewards. The deepest pool is on Uniswap [4].

Justification

The choice to start the liquidity mining rewards was obvious - to capture LPs from Uniswap with a better offer for their UNI than any other DEX.

Here is a comparison of the fees obtained in the past 60 days from the pools with currently active LM rewards:
image

Please share your opinions/thoughts on the extension.

[1] Pool liquidity obtained from Dune Analytics
[2] Pool APR obtained from Dune Analytics
[3] Pool fees and volume obtained from Dune Analytics
[4] Uniswap markets checked on https://www.coingecko.com/en/coins/uniswap#markets

1 Like

I oppose any further LM rewards for the UNI/BNT pool.

The purpose of each LM rewards program is to bootstrap the pool, and with this deep liquidity, attract trading volume sufficient to provide a healthy fee-based APR.

With the UNI/BNT pool, the community also sought to educate UNI holders about the benefits of being a Bancor LP – namely, single-sided staking and IL protection – with the added bonus of LM rewards, paid in BNT. The ultimate goal was to convert UNI holders and Uniswap LPs into Bancor users.

That said, we provided a taste of the sweet life via a full LM rewards program, and now the time has come to cut off the free ride. UNI holders have no other incentivized pools to stake their token. In ending their LM rewards, UNI LPs can decide for themselves whether it’s best to continue holding a useless “governance” token or, instead, buy and stake BNT in one of our many lucrative pools.

By now we’re all aware that the Uniswap v3 launch has been a bit of a disaster. I’m sure many of their current LPs are looking for a new home to stake their bags, particularly one that provides IL protection without the need to play musical chairs with the price range.

And to those worried about the loss of volume we might face, UNI trading primarily takes place on Binance, Huobi, Coinbase, OKEx, and Uniswap. Our volume listed above is a tiny drop in the bucket, so we’re not looking at a massive loss if the UNI LPs leave.

TL;DR Uniswap is our top competitor among DEX AMMs. Its recent v3 launch has been negative for casual LPs. The UNI token currently has no utility or incentivized liquidity staking options. I propose we tighten the noose by not extending the LM rewards program. Make them decide if it’s worth holding UNI without those sweet BNT rewards.

Forever yours,

Carlos

3 Likes

Interesting Carlos - I’m torn here.

On one hand, I want the UNI community to see what a decent AMM looks like.

But yeah, why give UNI utility?

Much thinking I must do.

2 Likes

Agree that UNI holders have had a decent share of LM rewards. Other communities more engaging and relevant to the Bancor ecosystem definitely deserve them more.

The Bancor “trial” period of 12 weeks was a decently long one. SushiSwap doesn’t offer LM rewards on their UNI pool, yet it has twice the liquidity that ours does. Just goes to show how uninterested UNI holders are in staking on Bancor and educate themselves on single-sided staking and IL protection.

As a disclaimer, I made the proposal, but that doesn’t mean I’m in favour of it. It’s an opportunity to discuss it on the governance forum and let our community make a democratic decision.

I’d like to suggest that if no interested party comes forward on the governance forum, then the proposal shouldn’t even be put to vote. We should expect the communities to come forward with this kind of proposals, so I’m hoping that at least some UNI holders will comment here. If not, there really is no point in putting this proposal up on snapshot from my perspective.

3 Likes

For me, it is important this early on for people who are new to Bancor to be able to stake a variety of assets. Having one as widely held as UNI (#12 cap) available for a while longer is important to draw in new participants. I love Bancor but if I had to start unstaking multiple assets, I would be inclined to look elsewhere far an all encompassing option. I also think the complexity on V3 could push more Uni holders over to Bancor and we could miss a golden opportunity. In short, Uni is just too widely held to abandon at this point and should be extended.

2 Likes

Thanks, Tiago. Just wanted to add that I echo the same opinion of @Carlos and others about the purpose of the liquidity mining campaign from the original proposal

I think we have met and passed with flying colors the original intent of bringing exposure to UNI holders about Bancor DEX these past ~3 months. We have attracted the most UNI liquidity outside of Uniswap:

image

and this shows that our LM campaign has had the desired result (I don’t think we will ever have more UNI liquidity in Bancor than Uniswap).

With that said, like in other proposals (YFI/REN/etc…) that have come up for renewal, I have typically leaned against renewing LM rewards for the same pools unless there is a good benefit (in addition to fees which everyone focuses on) for us doing so. Some of the proposals that I have typically backed are the Aave LM (due to us submitting a proposal in their DAO to onboard BNT), wNXM LM (for the low insurance premiums that we get from their DAO by staking against our contract), etc… My thought process for this has always been the following:

There are other project out there that we could potentially run LM campaigns for to bring awareness about Bancor. I also think that we take for granted the value proposition of Bancor (single sided staking with IL protection) and even if rewards go away on the pools that some of the LPs will actually stick around. The alternative on other DEXes is worse since they would have to sell half of their stack to LP and if they are long on an asset then that might not make sense.

Perfectly said, other communities that are trying to get whitelisted/co-investment/LM rewards are very active in our telegram and social media channels (we have seen this with 1inch/Lido/Noia recently). The fact that the UNI community didn’t even put in the effort to submit a proposal in our DAO tells me that they don’t really have an interest. I would much rather put in the effort to work with communities that want to collaborate with us then those that don’t.

@Carlos @glenn I think we should extend the UNI LM rewards because I think that there is still much to gain by providing these rewards. One thing is certain; the first bout of LM rewards was extremely successful.

I wish to extend the LM rewards for one more cycle to see if there is a ‘leveling off’ of the popularity and success of the pool. You said that “The fact that the UNI community didn’t even put in the effort to submit a proposal in our DAO tells me that they don’t really have an interest.”

Let me offer a different interpretation; they don’t know. The fact is that Bancor is still utterly dwarfed by UNI in terms of popularity, exposure, and TVL. We need to continue to directly compete and that is done by attracting volume to our protocol.

This is my call to action: I think we should vote to extend the LM rewards in the UNI pool because there is still much room for improvement and by pulling away liquidity from UNI we are putting our best foot forward to compete with them BUT IF there isn’t a significant improvement (continued improvement) in the UNI pool by the end of the next 12 week cycle I would vote against renewing LM rewards.

Let me offer a different interpretation; they don’t know. The fact is that Bancor is still utterly dwarfed by UNI in terms of popularity, exposure, and TVL. We need to continue to directly compete and that is done by attracting volume to our protocol.

IMHO, this isn’t really a good excuse. It would have taken someone less than 5 minutes to hop on telegram/discord to ask about LM rewards and what the process is to get an extension. Anyone would have been able to point you here to create a proposal. From my end, I will be voting against this proposal and would much rather do an LM campaign for another community for reasons stated above.

I think that comparatively, it’s doing as well as other assets that have had their rewards being extended. I don’t think this should be thought of in terms of us/them : bancor/uniswap. This is bancor pool. Impossible to know how many people this brought over from Uni. Hard data to really get. Surely has increased exposure. I check the Dune Analytics page often, and it seems like it’s broken because the number of protected wallets hardly moves. I know Bancor growth is very limited due to gas right now. This is affecting all pools, even the new snapshot voting. I would like to see this, and all pools get fresh rewards on Arbitrum. That’s the data we need. Is it worth extending the rewards in the meantime? I think it probably is.

Great job on the proposal, i am in favor of this, and hope we can extend the rewards. If we attract the UNI holders, many will convert after they see how effective Bancor is.

Adding some data for the community regarding the BNT-UNI pool. The protected number of UNI tokens in this pool has been roughly ~600K since the week of 3/29:

There was a slight increase on the week 5/3 but not by much and it has dropped off slightly since then. The weekly fees for this pool since the week of 3/1 have been in the range of ~9.8K to ~42K:

Which corresponds to the following volume that we have seen on this pool (peak on 4/12 and has been down trending since then):

For comparison, here is the fees that have been collected since the week of 3/1 for other pools that have come up for renewal:

symbol total_fees
REN $181,416.32
GRT $197,408.21
OCEAN $236,464.86
ROOK $265,150.65
UNI $278,394.29
AAVE $337,880.04
SNX $345,144.42
YFI $414,453.73
ALPHA $433,338.40
wNXM $826,665.36
MATIC $1,397,954.19
ENJ $1,524,218.78

Full data below:

symbol time Conversion Fees in USD Volume in USD
UNI 3/1/2021 0:00 $16,338.13 $8,152,724.72
UNI 3/8/2021 0:00 $20,880.73 $10,419,482.42
UNI 3/15/2021 0:00 $18,808.09 $9,385,237.35
UNI 3/22/2021 0:00 $33,504.21 $16,718,599.85
UNI 3/29/2021 0:00 $14,792.22 $7,381,315.99
UNI 4/5/2021 0:00 $9,845.31 $4,912,808.63
UNI 4/12/2021 0:00 $42,407.07 $21,161,127.69
UNI 4/19/2021 0:00 $34,660.33 $17,295,506.39
UNI 4/26/2021 0:00 $23,750.13 $11,851,314.01
UNI 5/3/2021 0:00 $28,988.25 $14,465,138.26
UNI 5/10/2021 0:00 $20,031.77 $9,995,855.68
UNI 5/17/2021 0:00 $14,388.05 $7,179,637.91