Edit: this is my original stance, I have reconsidered it since. The explanation is in the subsequent post.
I will vote against the proposal to restart the liquidity mining program for the top-4 pairs with 50% of the rewards. I have posted a lot of thoughts and metrics in the topic, I’ll copy my conclusion here::
Overall, I have found no convincing argument to restart the program for the top-4 pairs.
Initially, the proposal seemed like a good idea to me, as I thought it represented the middle ground between the interests of different parts of the Uniswap Community. I have reconsidered my stance since.
Now it seems to me that there’s not much to gain here for all the major groups: LPs, Users, UNI holders.
It also doesn’t look like a good investment in isolation. The targeted markets are the ones where Uniswap either already has dominance or has no chance for dominance.
The program is likely to be inefficient in its primary purposes.
The increase in the liquidity retention effect is expected to be considerably lower than after the previous two programs.
We also know that increased liquidity doesn’t increase the volume or the average trade size, so excessive liquidity is not needed.
As for the community-building perspective, for the most part, we just invite LPs who left to come back temporarily.
The improvements to the user experience will be quite negligible and not worth the cost. If my estimations are correct, more than 87% of the trades on top-4 pairs happen with a <0.01% slippage already. For reference, the UI doesn’t show if the slippage is 0.001% or 0.009%.
Current liquidity providers on the top-4 pairs don’t get much from this program either: their APYs are likely to stay the same. Except they’re rewarded in respective coins now, and with the program, they’ll receive UNI instead.
The primary beneficiaries of this program are large LPs who left Uniswap after the program finished.
UNI holders pay for this program, and it sounds like a bad investment.
Sushiswap is not a competitor to Uniswap on these pairs, and the numbers there are not sustainable and likely have signaling purposes.
I also find it a bit questionable to view the restart of the initial program as maintaining the status quo. If someone proposed to repeat the original airdrop with a smaller size, it certainly wouldn’t be viewed as such.
I will vote against the proposal.
I think the modified version leads to less decentralized distribution than the original, but I would vote against the original version too.
Even though I’m pro-distribution overall, and I think it’s ok if a distribution is somewhat inefficient, the inefficiency of this one is a bit too high for my taste.
We can do better, and nothing is pressing us to restart the liquidity incentives immediately.