Number of reasons to do this…
#1 we don’t want UNI being held on centralized exchanges because it allows CZ to vote for us which is obviously not good. UNI liquidity should stay on Uniswap
#2 Current UNI inflation penalizes UNI holders at the expense of providers of liquidity in the other pairs. Why are we punishing holders of the governance token? They should at least get same rewards, if not more than the other pools. If we don’t do this bots will continue to farm and dump using market orders, making the UNI market more chaotic than it needs to be.
#3 Instead of farmer bots instantly dumping all of their UNI (sometimes not even on our exchange!), they might direct a portion of it back into the UNI/ETH pool.
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Hope to start soon！
The fact that this would help UNI escape from centralized exchanges totally sold me on this <3
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How do we get this over the line? Uni holders are bearing all of the protocol inflation to subsidize transient bot farmers that market sell all of their UNI.
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Please do it, I would be in heaven!
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Moving this year since Marco yelled at me 
Hey Everyone, I wanted to share some thoughts on the two main proposals being discussed within this governance channel, and why I think we should be championing a UNI/ETH farming pool before any retroactive airdrop that @nadav_dharma and the rest of the Dharma team have been proposing. This proposal is in no way questioning the merits of the retroactive airdrop. As an analyst working in this space I have my own opinions on it, but it will ultimately come down to governance to decide what to do. That is what is nice about governance tokens, my opinion doesn’t matter.
To discuss why I think a UNI/ETH rewards pool should come before any retroactive airdrop, I want to take a high level look at what has worked over the past few months in during the yield craze. To me the what has surprised me the most has not been the amount of capital going into farming (You can see growth in TVL here: https://defipulse.com/) but the speed at which this capital has been rotating to different assets. There is no other asset class where billions of dollars can rotate investments in a few clicks at 3am on a Sunday night But to me this makes it clear that these new assets have no investible moat. That has lead me to ask what does have a moat, and what else is benefiting from this trend when looking at how to invest. To me this is pretty clear, it is the underlying assets that are used to earn yield in almost all new farming projects. This is your YFI’s, SNX’s, LEND’s, and LINK’s. These have all been assets used to farm in multiple farming projects from YAM to Kimchi, and all saw increases in price because of it. I see this because of two reasons. The first being it locks up a significant percentage of the circulating supply causing a liquidity crisis on the buyside. With high yields, more people look to buy the underlying asset to capture that yield, causing a recursive feedback loop to the upside. The second and more important is that it gives an additional use case to a governance token. The token is making people money rather than just a say in governance I discussed this more in another thread about whether the fee switch should be a dividend or a token burn.(Message 47, [POLL] How Would We Structure a Fee Reward? ) Alittle different, but apply the same line of thinking here.
Turning towards a UNI/ETH pool. By having UNI as an underlying asset to earn more UNI we would accomplish both of the two things outlined above. We would lock up a significant chunk of UNI and holders of UNI would make money/earn yield rather than just a say in governance, and ultimately help end the sell pressure that UNI has been seeing. It would also begin pulling UNI off of centralized exchanges, which I think is everyone’s goal.
This should be done before any vote on either retroactive airdrop proposal because it will provide a way for the new UNI holders to make more money instead of just seeing 400 UNI offers across all exchanges. I believe a UNI/ETH rewards pool will have a significant impact on slowing down any dilution in the form of retroactive airdrops as well as begin building a price floor for UNI overall, and would love to see this proposal up for a vote and active before any retroactive airdrop proposals. I am happy to answer any questions or concerns to what I have outlined above. Long UNI.
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Yes! Let’s make this happen!
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agree, let’s vote for the UNI/ETH pool first!
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God a lot of posts here.
I have some issues with governance tokens in Liquidity pools.
Pros:
- Pairing a governance token that has value with another token (I would prefer this be to a stablecoin like DAI, USDC etc.) in effect the UNI UNI-DAI or UNI-USDC token has sqrt less volatility than the UNI token alone. The positive of a large number of people holding these is if a significant portion of the outstanding does this - it can provide a price support - and acts as a measure of confidence in the project. For UNI holders holding UNI in these pairs is a way to dampen price volatility as the UNI UNI-stablecoin volatility goes by sqrt of price moves. Particularly relative to the stablecoin price.
Cons
- Incentivizing these basically drains liquidity that would be used for governance.
I have a 3rd suggestion btw. How about rewarding people who provide liquidity in the common pools that also not just hold UNI in their wallets but have also participated in governance with it? This seems a more sensible way to additionally reward people who hold UNI. Give them a LP reward that includes a bonus based on the UNI in the LP providers wallet participating in governance decisions. Weight it as a UNI held at time of a vote (i.e. what they could vote) over all the times a vote happened to create a 0-1 weight of that UNI participating in governance and give them their governance participation weight * the UNI LP provider participation amount. This way you have to be a LP provider into a uniswap farming fund that gives UNI rewards AND be active in governance to receive any of the extra UNI returns based on your wallets governance participation.
Based on the above I want to abstain. IF we could have UNI UNI-pairs included in governance AND earn a UNI return I would be all for adding all UNI UNI-tokenpairs into governance with UNI rewards generally as well as a bonus for people who used the UNI in the UNI UNI-tokenpairs and any other UNI in governance as I describe in the suggestion above.
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I totally agree with this!!
Hi all,
Brock from YAM here. I just want everyone to be aware of the issues that come along with incentivizing locking up a governance token without taking necessary steps beforehand. We experienced this at YAM and I would like to pass my learnings onto this community.
There has already been an issue with getting enough delegation power to pass proposals. If this is implemented, it will almost certainly lock governance if the system stays as it is and a UNI/ETH pool is added. This is because of how the Compound-esc governance system works. Any UNI in the incentivizer will have 0 voting power. There would need to be additional work done to add voting power to the incentivizer staking contract as well as the Governor contract to prevent total lockup of the voting system.
Again to really nail the idea home: “just adding a UNI/ETH pool isn’t hard” is wrong and actually requires major changes to incentivizer contract and the governor. I’m not sure who would implement this as I doubt it is a priority for the team
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Very important to take in consideration, thank you.
If add UNI/ETH pool to create new UNI, will it effect the price ETH?
There are more benefits to stealing UNI from centralized exchanges. Leaving them on CEXs gives those CEXs a lot of voting power
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I personally think a reduction of UNI incentive distribution should be done for any pair that is not UNI/XXX. And slightly higher distribution rewarding for the actual believers who support UNI hence UNI/XXX pairs.
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This has been my major concern around a UNI/ETH pool and would need to be addressed before I could vote “yes”.
UNI is first & foremost a voting token, and it needs to retain its voting ability while it’s locked up as liquidity.
There have been some ideas floating around in other threads - perhaps someone can start a new thread with potential solutions to this issue?
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where and when we can vote on this?
I think there are a lot of risks if we couln’t add incentives to this pool
there will be more than 170 m UNI available in the treasury in the first year (14m each month)
if too much UNI accumulated is the treasury with relatively low UNI in the circulation this will increase the incentives for a coalition between few large holders to reach the Quorum and steal 10s of millions of UNI and they will face little resistance because of the low UNI supply in circulation
so spending part of the treasury on this pool will lower the incentives to do this attack and also will increase the resistance by the holders since there will be a higher circulating supply
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Incentivizing the UNI:ETH pool disincentivizes governance participation!
This is generally bad for governance as it lowers the cost of a governance attack.
Already, there are notable incentives for pooling UNI:ETH because you get the normal liquidity provider fees. Adding more incentive beyond that makes the incentive misalignment problem even worse.
The core of the problem is that the way voting and delegation is currently implement means that you have to choose to either participate in governance or participate in liquidity pooling. You cannot, currently, both participate in liquidity pooling and participate in governance.
If we first address the problem of being unable to vote while also pooling, then this proposal becomes slightly more reasonable. However, as it stands I think anything that incentivizes doing something with UNI other than holding it in a wallet is a bad idea.
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