Request for Proposals - ARB Distribution

[BP333]

Proposal Summary

Distribute at least one-third of the $ARB as liquidity incentives to select liquidity pools on Uniswap (Arbitrum). Use Angle Merkl to distribute the rewards proportionate to the depth of liquidity provided by the LPs. All LPs who provide directly to Uniswap (LP NFT) or through an active manager like Gamma Strategies, Arrakis Finance, and DeFiEdge will be rewarded according to the same criteria. The pools selected will depend on (1) importance to the ecosystem and (2) amount of co-incentives from partners.

Why Liquidity Incentives?

Given the importance of liquidity, we believe that at least a one-third allocation of the total $ARB DAO airdrop towards liquidity incentives would be prudent. It directly benefits the Uniswap ecosystem to have more liquidity and volumes.

Facilitating more volumes towards Uniswap will encourage more builders to Arbitrum and Uniswap. More liquidity would allow other projects to build off Uniswap more easily and increase its reach within the ecosystem. Examples of projects benefitting from deeper Uniswap liquidity include lending projects using Uniswap liquidity pools for liquidations, projects leveraging the Uniswap v3 TWAP oracle which requires liquidity for safety, projects building derivatives on top of Uniswap pools.

Why Angle Merkl?

More info: https://docs.angle.money/side-products/merkl

The main benefits to using Merkl are the following:

1. Inclusivity - Anyone who provides directly to a Uniswap pool whether thru an LP NFT via the Uniswap frontend, or an active liquidity manager like Gamma Strategies, Arrakis Finance, and DeFiEdge will be included
2. Fairness - The same criteria will be used to reward all positions (LP NFTs, Gamma ERC-20 LPs, Arrakis ERC-20 LPs, etc)
3. Capital efficiency/Flexibility - Rewards will only be distributed to active liquidity providers in accordance to depth of active liquidity and trading fees accrued, and preservation of liquidity.

How does it work?

Merkl is based on an off-chain script that computes the rewards for all LPs of these pools according to specific preferences. For example, Uniswap can determine to weight rewards as 90% by fees accrued, 5% by preservation of Token A liquidity, and 5% by preservation of Token B liquidity.

The script aggregates onchain LP NFTs, Gamma LPs, Arrakis LPs, and other Uniswap LP positions and records eligible rewards based on a uniform criteria. It then compresses this information into a Merkle root and posts on-chain allowing LPs to claim their rewards.

Precisely speaking, for a given pool with two tokens (A and B), the script looks into the swaps that took place on the pool during the period for which it is ran and computes a reward score for each position according to:

• the fees earned by the position during the period, which represent the liquidity of the position used by the pool
• the amount of token A held by the position during swaps on the pool compared to the total amount of token A in the pool
• the amount of token B held by the position during swaps on the pool compared to the total amount of token B in the pool.

Which pairs to incentivize?

The pools selected should depend on (1) importance to the ecosystem and (2) amount of co-incentives from partners

For pairs important to the ecosystem:

1. WETH / USDC - 0.05%
2. WETH / USDT - 0.05%
3. WETH / ARB - 0.3%

Potential partners for co-incentives:

1. Lido Finance - wstETH pairs
2. Rocket Pool - rETH pairs
3. GMX - WETH / GMX - 0.3%
4. Radiant Capital - RDNT/WETH 0.3%
5. Treasure - MAGIC/ETH 0.3%
6. Gains Network - GNS/WETH 0.3%

About Us

Gamma is a protocol designed for non-custodial, automated, and active management of concentrated liquidity.

Gamma uses its automated infrastructure to manage over $100m in assets and 400 liquidity positions. Gamma’s vaults are deployed on six different networks and four different decentralized exchanges.

Gamma has previously worked with the Uniswap Foundation in a liquidity mining program on Optimism. The program is currently in its third phase and distributing 165,000 OP to Gamma as rewards for liquidity providers to select liquidity pools.

https://gov.uniswap.org/t/rfc-the-optimism-uniswap-protocol-liquidity-mining-program/17820

While we do aim to be active participants in this proposal, this proposal is designed to reward all LPs equally in accordance with the same criteria. The general rule is that the deeper liquidity provided, the more rewards earned.

Gamma will also reach out to its partners Lido Finance, Rocket Pool, and others for potential co-incentives.

[NelsonRodMar]

How to use the ARB allocation to bootstrap the liquidity of UNI tokens and other one on Arbitrum with the help of Bunni ?

Why ?

There is a lack of liquidity for the $UNI token on Arbitrum. For example actually, a 5 ETH swap will have an impact of 1.220% on the price pool.

Another benefit for Uniswap would be to create a diversification of the treasury by receiving oLIT token, the call option token for LIT that lets its holder purchase LIT at a discount to the market price. Unlike regular options, oLIT does not expire. oLIT is also a transferable token that could be used as POL.

What is Bunni ?

Bunni is a liquidity engine for Uniswap V3 where projects incentivize veLIT holders to vote on their gauges and direct native oLIT emissions to their LP pair.

Although the project was launched relatively recently, the smart contracts have been audited by yAudit (www.reports.yaudit.dev/reports/08-2022-Bunni/). By leveraging Uni v3 Bunni is more efficient than Curve, for example, the FRAX/USDC pool has processed 259m$ since it was created 3 months ago (Dune /bored_genius/bunni)

How ?

Create two pools on Bunni (bunni.pro), one UNI/ETH and one ARB/ETH. Then bribe this pool with the $ARB allocation token through Quest (app.warden.vote/quest/) or Hidden Hand (hiddenhand.finance).

And part of the $ARB could be also used to enter the ARB/ETH pool and gain some oLIT to diversify the treasury of Uniswap. This could be done threw the Zap option so Uniswap doesn’t need to make a swap before entering the pool.

Also, some other pair could be incentivized with the collaboration of each project.

The plan to bootstrap this liquidity :

• Step 1 ) Create the ARB/ETH and UNI/ETH pool on Bunni (bunni.pro/add)

• Step 2 ) Create the gauge for these two pools (docs.bunni.pro/docs/guides/deploy-gauge/). A TRC needs to be produced and submitted. There is a template here (gov.timelessfi .com/discussion/9947-trc-gauge-proposal-template) and the Bunni team could help with this step.

• Step 3 ) 4 days need to go by after that’s produced then anyone with 1% of veLIT can push your TRC to a snapshot vote.

• Step 4 ) Once it passes bridge $ARB token allocation to L1

• Step 5 ) Bribe the two pools through Quest or Hidden Hand with the $ARB token allocation based on the time/budget defined.

• Bonus Step) Enter the ARB/ETH pool to diversify the Uniswap treasury.
  
  

Bunni Links :

Bunni Webapp: bunni.pro

Dune analytics: /bored_genius/bunni

Twitter: /timeless_fi

Github: /timeless-fi

[Dakotah]

Hey yall this just came across my desk a few days ago. I have been thinking and I wanna make sure you are aware of what we do at Bunni.pro. We should be able to help in a few different ways.

We are a liquidity engine built on top of Uni v3. In its own rights Uni v3 is very powerful ofc! Our goal is to make LPs and projects as efficient as possible. The main two ways we do this is by lowering gas fees on L1 and adding gauges to the equation for L1 and Soon L2s! Think Curve but for your ecosystem

Before incentives, we start saving LPs right away by allowing LPs on Bunni to mint ERC20s instead of the less gas efficient Uni v3 NFTs. Providing valuing from day 1! Next we offer LPs on bunni incentives on top of Uni trading fees! Incentives are paid in oLIT which is an option to buy LIT at a discount. Rn its a 50% discount this can be changed by the community. The other 50% comes from WETH. These are transferable & do not expire. We also have an interesting feature where holders of our gov token get up to 10x boost on those incentives. This is Curve math but with a 10x boost instead of a 2.5x. (TLDR is if your % of the total supply of veLIT matches your % of the LP pool you get max boost). This is subject to change and certain folks would like to see it lowered to increase the non boosted APY (onboarding more TVL). Holders of our gov token direct these incentives via our gauges.

Protocols can bribe voters on Hiddenhand & Warden this is extremely efficient for the protocols participating! As of last epoch it was $1 in bribes = $3 in emissions!

veLIT holders also get 50% rev share including oLIT redemptions which has been pretty profitable

We have a Dune page that you can also see a lot related to us competing with Curve even with much less TVL due to Uni v3 concentrated liquidity.

So imo we could help here by using the ARB to incentivize a UNI pool on Arbitrum! We can do all this on top on Uniswap.

I am here if yall wanna do a community call or just talk shop! Hmu!

[eek637]

link that dune dash!

[Dakotah]

I dont seem to have link capabilities yet. Sorry… Maybe someone who does can stop by our discord and grab it?

[Stastny]

Hey everyone - Alastor and Web3 Studios are collaborating on an ARB Distribution proposal. Abstract below and link with the rest of the details here!

Abstract

We propose the establishment of the UNI-ARB Working Group, leveraging a substantial allocation of 2.2 million ARB tokens intended to enhance the Uniswap ecosystem within the Arbitrum Protocol. WG0 will work along two major sub-working groups focused on:

1. Protocol Delegates: Active participation in Arbitrum governance through a delegation committee
2. Ecosystem Fund: Management of grant program and research for projects fostering the Uniswap-Arbitrum ecosystem

[sogipec]

I saw some proposals by liquidity managers here, notably this one by Arrakis or the comment from Bunni above.

I expressed my support in the Gamma proposal about the use of Merkl, but I just wanted to highlight the fact that with Merkl there is no need to choose one liquidity manager over another: all of them can naturally be supported within the system. If you provide liquidity through Arrakis on Uniswap V3, then you can be rewarded without having to stake your liquidity anywhere. That’s the same as if you provide liquidity on Uniswap directly.

So rather than having liquidity managers competing here, I think Merkl provides a fairer and more inclusive way to deal with ALM competition. There will be no discrimination or no choice to make between different solutions. ALMs will just have to make a difference through the efficiency of their management algorithms, which I think will turn in a healthy and efficient way to boost the efficiency of Uniswap liquidity efficiency.

[BP333]

Hey guys, I’m seeing a few different proposals for liquidity mining with $ARB (Bunni, Arrakis, Angle Merkl). Although I proposed the Angle MERKL proposal under Gamma Strategies, it’s not proposing that Gamma be the sole distribution mechanism, but allowing all liquidity providers and managers on Uniswap v3 to be equally eligible for rewards.

How Merkl can be beneficial to Bunni

So with Merkl, those who provide to Bunni will be eligible for the same rewards based on the same criteria as every other liquidity provider (ALM or LP NFT provider).

1. Out-of-range gauges will not receive any $ARB rewards → There’s no need to kill out-of-range gauges (as mentioned here) and potentially waste $ARB rewards on out-of-range positions and no need to depend on others to initiate the process of killing a gauge. Only LPs who provide in-range gauges will be rewarded with $ARB based on the capital efficiency of their positions.

2. Dynamic incentivization → Those with the highest earning LP positions will automatically be given more rewards. It reduces the dependency on relying on veLIT voters to rationally make the decision to incentivize according to capital efficiency. Also because each Bunni epoch is 10-days long, it would be impossible to dynamically change the incentives within a 10-day epoch if some gauges perform better than others. With Angle Merkl, the rewards distribution automatically adjusts to the capital efficiency and depth of liquidity of the gauges, without having to relying on the next epoch to adjust the incentives.

How Merkl can be beneficial to Arrakis

With Arrakis’s proposal, I haven’t seen the methodology of the distribution of 500k $ARB or the pairs that will be incentivized; however, Angle Merkl would be inclusive of their positions regardless.

There’s no need to have a separate Arrakis allocation, Gamma allocation, or Bunni allocation or LP NFT allocation. Everyone is incentivized according to the same criteria.

So long as Arrakis provides the deepest liquidity for a pair, they will receive more of the $ARB distribution.

[TimeRows]

@BP333 Approach resonates with fair use of the allocated ARB. Full reasoning on Gamma’s RFC.

The main concern was the amount of ARB 1.46~million. A showcase of Merkl and Gamma would allow:

• More interested groups to be included in future ARB distributions

• Open up opportunities with more initiative co-sponsors pairs.

• Evaluate effective liquidity pair’s performance metrics

Also a more concrete timeline of how long incentives last would be helpful.

With account abstraction use cases beginning to take shape it would be advantageous to not use up the ~4.4 million ARB as quickly as possible. As additional incentive structures may emerge that would benefit from ARB distributions.

[FlashySteve]

https://gov.uniswap.org/t/rfc-flashstake-enabling-upfront-yield-for-uniswap-liquidity-v2-v3/21410

[NelsonRodMar]

Here is the link to the Bunni Dune Dashboard https://dune.com/bored_genius/bunni
And a new one will be soon available, you can jump into Discord if you have an idea of what data would help you to make your choice.

[Dakotah]

@sogipec

s, which I think will turn in a healthy and efficient way to boost the efficiency of Uniswap liquidity efficiency.

There is no liquidity manager on Bunni just an fyi. Funds flow into the UNI pool you send them to & thats it.

[Dakotah]

Thanks for posting this!

[cshg]

Here LI.FI’s proposal to add value to Uniswap and Arbitrum ecosystems on the infrastructure level:

https://gov.uniswap.org/t/rfc-li-fi-mma-infrastructure-development-for-uniswap/21444

[ilia_0x]

0xPlasma Labs Proposal [RFC] Quadrat (0xPlasma Labs) - 66% Liquidity Farming + 33% Gas Refund

[Kydo]

Greetings from Stanford Blockchain.

It is encouraging to observe the numerous concepts that various teams have proposed. Additionally, we extend a warm welcome to new participants of the Uniswap forum.

Having learned from the bridge selection process, I believe we should establish an agreed-upon decision-making protocol before deciding on individual candidates/ideas.

We would like to emphasize the point raised by @stastny and @t_norm. We also believe a grant program would be the most suitable decision-making body for the $ARB allocation.

At present, the foundation’s role is missing from the conversation. From our perspective, this grant program falls under the foundation’s current grant program ([Governance Proposal] Create the Uniswap Foundation), with the caveat of being more focused on the Arbitrum ecosystem.

Moreover, the foundation has a proven track record of successful grant funding. We believe that this success is mainly due to 1) full-time members, 2) an in-depth understanding of the ecosystem, 3) a well-resourced organization, and 4) adequately compensated personnel.

Nevertheless, we also acknowledge the merits of involving the community in the grant process. The optimal approach would be a foundation-led, community-supported grant program for the $ARB allocation.

This approach has several advantages compared to a pure foundation or community grant program:

1. Continuity and shared learning: the foundation can manage the program while sharing its knowledge with the community, thereby ensuring long-term decentralization.
2. Future working groups: the deployment accountability committee and the ARB-UNI working group could serve as ideal testing grounds to determine which working group model would be most suitable for Uniswap’s situation.

We hope the community will seriously consider this option before moving forward with any individual proposal.

With regard to individual proposals, we are not confident that liquidity mining rewards would yield the greatest benefit based on Gauntlet’s recent analysis and personal experiences with the LM world.

Gauntlet’s analysis suggests that Liquidity Mining (LM) rewards could be advantageous when there is a discernible bootstrapping opportunity. By ‘bootstrapping opportunity’, we refer to a pool with considerably lower Total Value Locked (TVL) and volume than the overall L2 activities.

However, we do not see the bootstrapping opportunity for the pools proposed.

Instead of bootstrapping individual pools, we suggest that a portion of the $ARB be allocated directly to Active Liquidity Managers (ALMs) such as Gamma, xToken, etc. This aims to raise user awareness and broaden the design space with other liquidity management solutions for retail users.

[eek637]

Hi all,

First, thanks to the teams and individuals who have submitted proposals. Having written a few of these myself, I appreciate the effort and thoughtfulness that goes into them.

With that said, the conversation around and scrutiny given to any particular proposal by the delegate community has thus far been fairly light. And that’s okay! But without that sort of engagement, sending any proposals to Snapshot seems ill-advised.

Keeping that in mind, I’d ask that Delegates take the next week to read through and comment on proposals that they believe would be value-additive. For those teams that have made proposals, I suggest looking at Delegates’ profiles on the new Uniswap Agora and DMing them on Twitter to engage. There are a bunch of new delegates and I’m hoping that they’re eager to weigh in. Please keep proposal-specific conversations in their own post.

On Wednesday, June 14, if there are proposals that have garnered conversation and community support, let’s take the next step and start sending them to Snapshot. If not - also fine - I’ve posted a backstop proposal here.

[Brincnomics]

Does this mean that new proposals can be posted or is this just giving more time to the existing proposals that were submitted by June 7? Why is editing to our RPC turned off

[OxAirboom]

Please check out the proposal by DefiEdge at:
https://gov.uniswap.org/t/rfc-defiedge-comprehensive-two-phase-liquidity-incentivization-for-long-term-growth-on-uniswap-v3-on-arbitrum/21445

Regarding the above comments, I think it’s good to have liquidity incentives and allowing the protocols to distribute accordingly.

Merkl can be beneficial, but would like to see more adoption and the opinion of other protocols on it’s choice as well.

And we definitely feel, breaking the LM Incentives into different phases is the way to go as there are some trending projects currently on ARB, but we must account for the changing landscape and incentivize newer projects down the line to give them the initial push usually needed by a growing protocol.

[eek637]

Dunno why editing of your post isn’t working - i’ll have a look.

Re new proposals - per the initial post the deadline was yesterday, and the next week is to gather feedback from delegates. Prior to today there was very little in the way of substantive commentary on any of the proposals.