There are two distinguishable questions we’re discussing:
Is it good or not to reward other pairs with UNI distribution?
Is it good or not to additionally reward pools based on the volume that is generated through them?
1. My answer to the first question is that it is not good to add any other non-store-of-value token to UNI distribution other than UNI.
The perspective I’m looking on it from is the perspective of fostering mass adoption of the protocol .
I find that there is a good question to ask yourself when you think about investments:
“Would you recommend a poor friend of yours to invest his/her life savings into this thing?”
I think there is a lot of responsibility in where we direct newcomers to . We need to be empathic.
Because if we direct them to wrong places where they lose money, we lose their trust .
On current pairs available for UNI farming the potential downside is as limited as it can be in crypto. And I can’t stress enough how important this is.
2. My answer to the second question is negative as well. Pools are already fairly rewarded for the volume they get. If they weren’t, Uniswap wouldn’t be top-1 DEX. And it is a super flexible mechanism, the system balances itself out quite perfectly in this case.
If we were to distribute all the tokens based on the volume, there would actually be no need in emission of UNI token, as it would duplicate the previous model where all the fees go to LPs in proportion to volume/liquidity.
I think it is correct to think of LPs in a way we think of miners in Bitcoin ecosystem. It is good to have them, it is good that they are profitable, but we don’t want to skew incentives completely towards them, as it would hurt everyone. There are a lot of POW coins that are just in perpetual downtrends because the only people who make money off of them are miners, who sell their coins off at the first opportunity.
I think what we want for Uniswap protocol to get mass adoption is easy and risk-free inclusion of new participants .
So I’d like to view the UNI distribution processes not from the point of view of how profitable they are for liquidity providers, I’d like to first and foremost address who do we invite to govern Uniswap ?
@JokerTheBond says that WBTC-ETH rewards are exaggerated, I believe they are not.
People who lock their funds in WBTC-ETH pair for the most part are people who believe in these coins more than they believe in Dollar. I believe inclusion of Bitcoin community into governance decisions of Uniswap is an unequivocally good thing for the future of the protocol. I don’t Bitcoin community should be discriminated on the volume basis, especially given the fact that it’s taking only 1/4 of the distribution, and yearly APYs for being an LP are quite negligible for this pair.