[Discussion] Uniswap Liquidity Incentive Plan

What is the point to bribe liquidity providers for yet another 2 months? There are few proven bad actors like Alameda Research who were shorting and market dumping UNI, these whales are moving billions of dollars in a matter of few transactions from Uniswap to Sushiswap and back.

The additional 2 months won’t solve anything, this program doesn’t permanently solve the liquidity problem, but only helps whales to manipulate and short the market.

Instead, as already discussed in various topics in this forum, I think it’s better to fund UNI pools (UNI/USDC, UNI/ETH etc) to motivate liquidity providers to actually hold and add more UNIs to pools, this will also help for distribution because traders will be able to buy UNI with a lower slippage.

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good point… why this / to fund UNI pools (UNI/USDC, UNI/ETH etc) to motivate liquidity providers to actually hold and add more UNIs to pools / is not bring up to discussion? or to vote?

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This is definitely not all the data we should be looking at. The volume is also important. If the liquidity drops 2x, but the volume stays the same, there will be much higher yield from fees for the LPs and that could cause the liquidity to come back.

I think we need 1-2 weeks of data to see how is this going to unfold.

But, there is something important we need to keep in mind here: it is good for the UNI distribution to continue, because we need more UNI out there, which could be used for voting. As we see at the moment quorums can’t be reached and no proposal has even been passed. As amount of circulating UNI increases, it should be easier to reach quorum.

Edit: spelling

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Why you don’t look for UNI/USDC, UNI/ETH UNI/… etc! See the comment from drwx !!! FUND this pools UNI/ and the TVL will increase and the value of protocol / token value will increase! More users will use the protocol.

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I do like this point a lot.
Would rather have some cool real world assets on UNI then just farming more UTXO’s

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Great point. I also think that for the next phase only UNI pools should be incentivized.

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I believe this plan is very good, has maintained liquidity, bought time for the development of uniswap 3.0, and I hope to see the community growth.

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Unicorn and it’s style of governance is relatively lofty and unique but still at its cradle stage, and therefore, needs greater level of participation from a wider community of end-users/contracts to shore it up to its preferred pride-of-place. UNI being released at this nascent stage means greater level of participation and interest in Unicorn governance. I support a second round of liquidity mining with 5M UNI during the pool period.

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Good point. I participated in a liquidity mining on Argent platform using UNI/ETH pair. Liquidity providers can actually plough back UNI into the system.

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@Ezzy Id have to agree. Maybe rewarding smaller lp’s to hold would be more beneficial. I.e. 10% rewards for 100 uni provided. 12% rewards for anything above 100. My only concern is whales providing liquidity in 100 uni increments.

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I believe with the level of governance and community command Unicorn is directly/indirectly representing and the dominance it’s actively attaining towards, whale-like negative effects will have no wider ripple-effect on the ecosystem…no number of :whale2: whale can actively dominate an ocean…lol.

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Subsidizing UNI/ETH is a ponzinomics technique. It is something that degenerate farms are using to build liquidity for their shitcoins. UNI does not need such a thing, as it has enough liquidity for the token. The pools that are subsidized should be the pools that are getting a lot of trading fees, as these are the pools, which bring the most revenue.

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I don’t think creating another liquidity pool UNI distribution program would have long term benefit to the protocol. Keeping LPs that are only looking for distribution of UNI in the protocol to stay in would not benefit the protocol.

I think the better way is to use the funds to advertising, teaching, paying for supporting users, fund development of new protocol built on top of uniswap, in order to increase the trading volume in uniswap which, first, create a higher trading fees in any pools that create an incentive for LPs to provide more liquidity which can lead back to decreasing the slippage. Second, it create a long term sustainable solution and not a solution that UNI holders pay for 2 month and then the liquidity drops and we have to pay for another 2 month.

When UNI token is distributed initially there is 251,534 user addresses, now I believe there is more due to the initial launch also advertise the protocol. I think this is the main reason for the increase in volume is the increase in users.

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It can serve real purposes :

  1. Introduce a lot of UNI airdropped users to the world of LPing (education)
  2. Remove a lot of UNIs from CEX wallets

Sure, pure degen/unsustainable farms use(d) « pool 2 » techniques, as it is widely known.
But it doesn’t necessarily mean that, if UNI was to subsidize a UNI-ETH LP with a factor of 1X (and not 10X+ as seen in degen farming schemes), UNI would become a ponzi.

Anyway, as we’ve said before, UNI-ETH incentivizing isn’t very possible at this state because

  1. We already have a problem getting votes/quorum
  2. Incentivizing UNI-ETH LP would make this problem way worse, because a lot more UNI wouldn’t be able to vote (probably millions more)

A first step would be to propose a way to make LPed UNIs’ vote count. This is a good idea in any case (UNI-ETH incentives or not), because currently a lot of UNI is barred from voting (more than 8 millions as I’m typing this !) The issue here is that this is a non-trivial upgrade that will need fresh code and fresh auditing (so, probably treasury funding).

This is well out of the scope of the proposal we are discussing. What we are proposing here is merely a way to extend incentives for a while, and during the second incentives era, governance will be able to come up with truly novel ideas.

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Probably a dumb question but if I use my uni to vote , I don’t get it back right ?

Many people who have received UNI via airdrop or by buying become concerned with its price movements. They, as holders of the asset, feel dissatisfied when UNI price goes down. There is one thing to consider, though:

When UNI price gets lower due to ongoing process of distribution, it is a healthy process that is beneficial for Uniswap governance.

When LPs receive UNI rewards by providing value to the network, they can keep or sell them.

Distributing UNI rewards to LPs who keep them and become part of the governance process is a positive result.

LPs who sell the tokens self-retire themselves from Uniswap governance.

By doing so, they also bring the price down. When the price is lower, it creates a better buying opportunity for people who believe in Uniswap’s future. So present and future investors in the protocol benefit.

The same logic applies to past users who received the airdrop.

The power in the network gets decentralized and distributed towards good actors.

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You do not loose your UNI when you vote.
You are only required to pay for the blockchain transaction; both to to self delegate and vote.

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While I can understand the sentiment about incentivizing a ‘Pool2’ for UNI (aka UNI/ETH, UNI/USDC), the only token this benefit is UNI.

If we’re concerned about bad actors gaming the system to their advantage, using incentivized UNI pools will only make this 10x worse.

To further iterate my thoughts here, this more about maintaining an ongoing distribution of UNI, giving the community more tokens to work with and a more accurate market valuation. Assuming governance is going to scale and evolve, its important for the supply to be democratized for effective governance.

I’d also like to emphasize that I’m well aware of strategies farming UNI to dump, and would view this next phase as a bridge to find a stronger program around rewards that may include vesting, whitelists or something in between.

For those commenting here, please make sure to make your voice heard here!

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Well you have a point.

First of all, thanks a lot for your proposal. It’s clearly going in the right direction.

I think that we could do even better, by incentivizing only 2 pools instead of 4, thus increasing the overall liquidity of the ecosystem.

What you propose:

  • WBTC/ETH - 1.25M UNI/month
  • USDC/ETH - 1.25M UNI/month
  • USDT/ETH - 1.25M UNI/month
  • DAI/ETH - 1.25M UNI/month

What I propose:

  • WBTC/ETH - 2.5M UNI/month
  • mUSD/ETH - 2.5M UNI/month

What is mUSD ?

mUSD is backed by a basket of whitelisted stablecoins (USDC, TUSD,…). You can redeem at any time the constituents of the basket. You can also leverage the swap feature between any stablecoin of the basket to provide end users with 0 slippage between USDC and TUSD, for instance.

What are the benefits?

  • Drastically increase the liquidity to hop in and out of speculative assets in Uniswap, instead of splitting the liquidity into 3 stablecoin pools: DAI & USDC & USDT
  • Get access to a meta stablecoin, thus reducing the risk of unpeg
  • Leverage 0 slippage swap between stablecoins

Long life to Uniswap :wink:

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