No, I am not trying to limit any liquidity provided to any pool, what I am saying is that we can create an ecosystem wich will benefit all UNI holders since we can be safe at providing liquidity (liquidity can be provided with just 1 Asset for example USD) and work with that liquidity (providing loans for example)
Its not overcomplicated its just a Smart contract wich will serve as a filter…
Of course governance will still be available to those who enter the smartcontract, is just a filter for unifying UNI holders in one ecosystem, governance votes can be done inside that ecosystem, not every UNI holders have to Deposit their UNIs into the contract, just the ones that are willing to participate.
Thats the Beauty of smart contracts, its just a filter, when we create an LP token those assets (the wrapped ones) go to the funds for trades, but that lead to a situation where there could be more assets at one side than another creating the perfect situation for arbitrage traders wich will take profit from it, what if besides the tokens introduced by liquidity providers when we have more at one side than another we take the liquidity from uni holders to fill that gap avoiding the arbitrage, and we will earn a small fee per se
How long have you been doing this for?
Are you referring to the main idea of this proposal? 2 weeks
Suppose that I am a liquidity provider and I want to provide liquidity to the BTC-USD pair, suppose that BTC has a price of 10k USD, in order to provide liquidity to uniswap we must wrap tokens whose value represents the same liquidity, for example I would have to wrap 1 BTC with 10k USD or 0.5BTC with 500 USD, or as best suits our needs.
Now suppose that after providing liquidity and after many trades the liquidity balance is disproportionate.
Suppose that at the beginning of our journey there were 10 bitcoin and 100,000 USD (100,000 / 10 = 10k per bitcoin) within our liquidity pool, and after several trades (and / or changes in price) the balance was disproportionate leaving 12 BTC and 90,000 USD (90,000 / 12 = 7.5k per bitcoin)
This will cause an impermanent loss on all liquidity providers since the price shown would not be the real price of the asset, this is where the arbitrage traders take profit, since they will begin to trade in that pool until the price shown in the It reflects the real market price, eating into the liquidity of suppliers.
The way to patch this up is by offering UNI holders the opportunity to be able to “offer” their assets directly to be put below the liquidity offered by liquidity providers. For example, the way to remedy the aforementioned example would be to add 30,000 USD of liquidity to the BTC-USD pair.
Since the liquidity provided by UNI holders to the riskier part will be under the liquidity provided by LP, our assets should remain risk free. For example if I am a UNI holder and I have 500 links wich I have as an investment and I want to hold them. I can join the UNIfy ecosystem and help balancing the liquidity thus reducing arbitrage, thus increasing more liquidity provided into the exchange since most people don’t offer liquidity because of this issue
Your concept of “Eliminating arbitrage traders” will never be possible. Just thought someone should say this. Where there will be profit, people will always use that, thus always correcting itself to the centralized exchanges. This is due to a simple reason, say you have coin A that you can buy for 0.10$ on this dex that you can access only by “staking uni”. However on binance, this same coin is worth 0.20$, I would definitely purchase as many as I can on the dex and sell them off on binance.
And if we are being honest, you would probably do the same too. While all well and good in theory to remove the arbitrage trading bots, you would still have the tools to analyze these markets and thus alert arbitrage traders to these opportunities.
However I must also state, arbitrage traders is not necessarily a bad thing. This is because there should be a unified price for all of the tokens, and having arbitrage traders allows all prices to correct themselves. As for the cashout token, it will eventually reach 0$ in value unfortunately, even if you pay it out in USDT or whatever, you cannot create liquidity out of thin air.
As for implementing the Aave platform onto uniswap, that is a great concept. It would allow more liquidity to flow through uniswap, and ideally increase the value of the UNI token.
Feel free to let me know if I have missed anything or if you disagree with me!
I really appreciate your reply even tho we don’t agree or at least I haven’t been clear, let me clarify some things, if you think Aave is a good thing, UNIfying all UNI will be stopless. The main idea is to convert UNI holders in universal liquidity providers, not only in LP pair tokens, but also as a single asset, so people aren’t attached to the impermanent loss situation, creating a trust environment over the ecosystem and opening the door to biggest investors that don’t want to risk their asset in a wrapped token. This way we can pull tons of BTC, ETH, USD, even paxos gold, etc, all without risking them
Of course that people will always take profit if you let them, that’s why we must stop them from taking profit, that profit doesn’t come out of thin air, is our own liquidity…
Having arbitrage traders will only benefit arbitrage traders and damage liquidity providers (our main income)
Don’t you think we can pull more people to provide liquidity when we have a fix to our weakest spot?
This might be a misunderstood, the token3 will be an intern token to measure the rewards earn by each UNI holder, this token will be issued according to the rewards of the liquidity provided at stage2 (For example if I am a bitcoin whale and I have tons of USD, I buy UNI to enter the ecosystem, and then at stage 2 (token2) I provide that liquidity to be used as a lending service, trading, or even to other dexchanges, applications are almost infinite, this activity is the one that will provide the rewards at stage3 (token3)
Thanks and if you also have something to add I am happy to keep talking with you
This is a fundamentally flawed proposal.
You want to have arbitrage traders on the platform, they pay the fees and bring a lot of value to the network. I believe the ideas of developing the Uniswap network should be centered around growing it, not shrinking.
You’re effectively offering to create a buying pressure for the token by hurting inclusivity of the ecosystem and a large group of its participants, who bring immense value to the system.
Liquidity depth is the main value Uniswap provides, you can’t trim it in any shape or form without substantially hurting its worth.
Ideally you want to have 50x+ liquidity of your next competitor, and that is only possible with total inclusivity and ease of use. Exactly as it is today. You want other protocols to build on top of you and pay the exchange fees - it brings direct value.
Another part of the proposal I don’t like other than its essence is its proposed realisation: using 3 tokens is excessive. As Occam’s razor says: “entities should not be multiplied without necessity” and this necessity is questionable to me.
In wich way does arbitrage traders bring value to the network? Despite they paying the fees actually they are extracting liquidity from our pools (wich obviously is higher than the fee’s they pay), I don’t know why you believe allowing them to take profit from the liquidity providers is a growing point for the network, in fact it scares large investors.
As I said before, the 3 tokens will always remain within the contract (they are measuring tools of growth inside the UNIfying system) This tokens won’t ever leave the contract, this tokens won’t ever be at public for sell/buy.
In fact this is a necessity since we want to grow, Imagine allowing, let say BTC whales, to provide liquidity in the biggest dexchange without having to risk their asset in a wrapped version.
I think the only ones that will oppose to this are the arbitrage traders
thanks，great idea！ 
Can agree on the fact that when someone makes a trade and pays fees it is a point of value creation for the protocol?
At this point in time the fees paid by Uniswap users exceed the fees paid by people using Bitcoin.
So far all the fees are being paid to liquidity providers. Simply adding a mechanism for UNI token holders to capture part of value of this fees would do the job for UNI token to be valueable.
Arbitrage traders make markets effective. Effective and liquid markets are by far more attractive to people who wish to make a swap. It is good that arbitrage traders make money, (which is actually a small amount in modern times), it is bad if they can’t, for everyone.
Yes we agree that whenever someone make trades on Uniswap it has to pay fees which are a point of value creation, but in the case of the arbitrage traders the fees they pay doesn’t exceed the liquidity they extract from our ecosystem.
We can add a mechanism for UNI holders to capture part of that value of the fees by allowing them to help balance the liquidity within the pool, helping the liquidity providers since they will reduce their risks and helping the global UNI ecosystem to grow since we are going to allow UNI holders to provide liquidity directly without wrapping it into a token.
Arbitrage traders don’t make markets effective and they in fact extract liquidity from our system and then add it to a central exchange.
If arbitrage trading will be benefit to exchanges, don’t you think Binance will allow it?
Can all Uniswap’s current fees be used and owned by future proposals? or some of？
First of all, arbitragers are on all exchanges.
Basically arbitraging is buying something at a certain price on an exchange and selling it at a profitable price on another exchange. So if on Binance the price of ETH is 350$ and on UniSwap the price is 345$, an arbitrager will buy ETH on UniSwap and sell it on Binance. If the price was higher on UniSwap he would’ve done the opposite thing. This is an arbitrage trade between UniSwap and Binance.
Arbitragers bring value to the exchanges because they pay fees and they help stabilize the prices.
Arbitragers have nothing to do with impermanent loss. I don’t know why you think they “extract liquidity” from our LP. Impermanent loss is due to a change in the market price of an asset. It can be calculated as:
impermanent_loss = 2 * sqrt(price_ratio) / (1+price_ratio) - 1
Where price_ratio is the ratio between the actual price for a pair and the price at which the liquidity provider added liquidity to that pair.
Yes arbitrage profit from price difference between exchanges, please let me know when you find an arbitrage opportunity taken from Binance and not from Uniswap, its different. Arbitrage traders doesn’t bring value, they extract value, the fact that they pay fees doesn’t mean they bring value, since they are actually profiting from our bad pricing.
Where do you think exactly that profit is taken from? It is taken from the liquidity providers who provided the liquidity… Either you are a arbitrage trader or you are confusing concepts…
Why opposing to improving our pricing system ? why opposing to built a better environment for our liquidity providers? why opposing to help grow the liquidity under the whole ecosystem?
I think not until October change of governance
It is important to note, however, that impermanent loss occurs both ways. You lose less when relative prices drop. This is also due to arbitrageurs. This isn’t as bad a thing as it may seem in my opinion.
This isn’t really the case. It’s a lot more complex, but impermanent loss happens symmetrically, you do lose more both ways.
Exactly, the non-permanent loss will continue to occur since we cannot control the price of the asset involved, what we can control is the symbolic amount given to the price formula, therefore we will decrease the opportunity that some arbitrage trader take the liquidity from our pools.
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