[RFC] Uniswap Unichain - USDS and sUSDS Co-Incentives Growth Management Plan

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Summary

Unichain is currently the main focus of Uniswap’s growth strategy, presenting a significant opportunity for collaborative growth. The launch of USDS and sUSDS opens doors for close collaboration among two of the premier DeFi protocols Uniswap and Sky Ecosystem.

Following the launch of USDS and sUSDS on Unichain, this proposal aims to boost growth on Unichain through a combination of partnerships and matched incentives, driven by aligned KPIs related to USDS and sUSDS growth on Unichain.

Motivation

Unichain is currently growing almost exclusively in Uniswap pools. Growth in other DeFi protocols on Unichain is growing but still behind. The introduction of USDS and sUSDS creates opportunities for enhanced collaboration among DeFi protocols.

sUSDS provides yield, which itself is paid for by the Sky ecosystem. For example, if Unichain sUSDS TVL grows to 100 million, and at the current 4.5% of sUSDS yield, that would cost Sky 4.5 million USD per year. sUSDS can be a crucial part of the growth of the Unichain DeFi ecosystem, as it allows a stable and scalable yield source. For example, just examining Euler, removing Euler’s extra incentive, the lending APY is 3.19% for USDC and 2.05% for USDT as of June 4th 2025. However, if Euler were to integrate sUSDS yield and also provide its own incentive on top of incentive from Unichain, it could make it much more competitive yield compared to all other chains.

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Source: DeFillama - Unichain May 16,2025

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Source: DeFillama - Unichain June 4,2025

In addition, we strongly believe in Uniswap DAO having guidance and decision over the incentives distribution. Once per month, the strategy will be suggested to UniswapDAO where they can vote via snapshot to support the monthly incentive distribution or not.

Goal / Growth Strategy

The strategy involves coordinating with key protocols to expand the Unichain ecosystem such as by utilizing Sky ecosystem’s competitive base savings rate, which with the incentive from Uniswap DAO along with relevant DeFi partner can amplify it further. This can be done via three main ways:

  1. Collaboration with protocols to Increase TVL and Users

StableLab will onboard protocols and, where applicable, negotiate co-incentive plans. For example, it could be that co-incentives are discussed with Euler and/or Compound to provide even additional incentives on top of sUSDS yield and co-incentives from Unichain.

  1. Focus on optimizing incentive programs

All co-incentive programs will be data-driven to ensure effective growth. Co-incentives will be spent with strategic reasoning and analytical support. The program update will be shared once per month to communicate with the community.

  1. Continuous improvement and optimization

In addition to the monthly program updates, we’ll refine the strategy in real-time, allowing for continuous improvement and optimization. KPI-driven growth will enable ongoing adjustment of both partnership targets and co-incentives distribution to ensure maximum ROI on spending.

Budget and Duration

As mentioned above, sUSDS provides yield, paid for by the Sky ecosystem. For example, if sUSDS grows to 100 million, at the current yield rate of 4.5%, that would cost Sky 4.5 million USD cost per year. And various DeFi protocols’ contributions would be added to further grow Unichain.

We believe in Uniswap DAO having guidance and decision over the incentives distribution. Once per month, the strategy will be suggested to UniswapDAO where they can vote via snapshot to support the monthly incentive distribution or not.

We also strongly believe the majority of the budget that Uniswap DAO provides should be tied to objective KPIs like USDS and sUSDS supply on Unichain, which is inherently tied to TVL on Unichain.

Therefore, we propose a $1,000,000 USD budget over the course of a year with an additional $3,000,000 USD based on KPIs. In other words, only one fourth of the budget will be fixed, while the remaining part will be performance-based. The initial fixed payment will be paid in monthly installments while the performance based part will be paid at a time when the agreed upon KPIs are reached and we request the unlock by submitting on-chain proof.

In addition, 80% of the budget will be directly spent on co-incentives that focus on USDS and sUSDS growth to boost Unichain TVL and usage. For instance, additional yield for sUSDS to make sUSDS yield on Unichain more attractive or an incentivized USDS and/or sUSDS pool such as UNI-USDS on Unichain.

The remaining 20% of the budget, would be used for operations and logistics - such as coordinating with partners and also optimizing and reporting on the incentive program

KPIs

KPIs are intentionally set high to align with the DAO’s interests. Currently stablecoin market in Unichain is 279.4 million, with around 60% being USDC. The aim is to grow USDS / sUSDS to at least 100 million, which will help to increase Stablecoin market by close to 35%.

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Source: DeFillama - Unichain June 4,2025

Out of $3,000,000 USD potential incentive based payment:

  1. USDS and sUSDS combined supply grow its TVL above 20 million USD on Unichain
  • $1,000,000 USD Unlock. 80% will be used for co-incentives.
  1. USDS and sUSDS combined supply grow its TVL above 50 million USD on Unichain
  • Additional $1,000,000 USD Unlock. 80% will be used for co-incentives.
  1. USDS and sUSDS combined supply grow its TVL above 100 million USD on Unichain

-Additional $1,000,000 USD Unlock. 80% will be used for co-incentives. But for this specifically, the 20% will be able to claim only in case of 90-day TVL retention after the incentives from Unichain with the 40% or above compared to the peak.

Additional Accountability and Alignment regarding KPIs

  1. We will share monthly updates on the distribution and use of co-incentives and relevant metrics such as:

-90-day TVL retention, with the goal of 40 % each of peak

-Net new liquidity provider addresses, with the goal of more than 1200 addresses by the end of the program

-Δ TVL / $ incentive (ROI), ≥ $12 TVL gain per $1 variable spend, measured 30 d after each unlock

  1. The total payment will first go to UAC, with the fixed payment disbursed monthly. Co-incentives will be distributed based on the monthly snapshot voting.
  2. Once a KPI is achieved in terms of reaching KPI, we will submit a request to UAC with proof.
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Hi Doo, Bunni would be happy to add coincentives to USDS/sUSDS pools depending liquidity on Unichain. We can also rehypothecate these idle assets to erc4626 standard vaults like Spark, Euler and Morpho to allow users to earn lending fees on top of swap fees. Bunni rehypothecation has the added benefit of deepening TVL for protocols hosting these rehypothecation vaults.

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We are open to various ideas to best utilize the co-incentives for Unichain growth. And we do believe some of methods to better use of idle assets could be beneficial, which we have seen growth in usage on Solana ecosystem as well.

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While at SEEDGov we have several concerns regarding the effectiveness of incentive campaigns — particularly given how TVL often leaves once the incentives end — we understand that in this specific case, given it involves Unichain and Sky, the initiative could have a positive impact. Therefore, we are willing to support the proposal.

That said, we would like to request more details and breakdown costs regarding the portion of the budget allocated to operations and logistics, as 20% seems like a significant share. Thanks.

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Thanks for raising this, it’s a fair question. On the surface, 20% for operations might seem high, but we’d argue this proposal is actually extremely cost-effective when you look at what’s included and what the DAO gets out of it.

The vast majority of the budget goes directly to incentive programs that are designed, negotiated, and optimized in partnership with top DeFi protocols, and only unlocked if we hit specific, on-chain KPIs tied to USDS and sUSDS growth on Unichain.

The operations budget is spread across a full year and covers all of the strategic work behind the scenes:

  • Sourcing and negotiating co-incentives with top protocols
  • Designing and optimizing incentive programs based on data and performance
  • Building dashboards and transparency infrastructure for KPIs like retention, user growth, and ROI per $ spent
  • Coordinating with the Uniswap DAO on monthly distribution decisions via Snapshot

It’s an actively managed program, not just a one-time grant with no follow-up, and we’re keeping the fixed cost lean to ensure that value flows back to the Uniswap ecosystem.

We are effectively covering an entire growth and incentive optimization team focused on Unichain in a highly aligned and results-driven structure. And the total operations budget is only if we succeed in hitting our targets, this would represent over $100M in new stablecoin-based TVL with long-term benefits to Uniswap’s ecosystem.

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Hi @Doo_StableLab I’m posting here on a personal basis, not on behalf of SEED Gov.

Regarding the incentive campaign, I have a question:

Do you already have a clear idea of how the incentives will be allocated? Specifically, are you planning to direct them toward boosting the SSR yield and/or incentivizing pools like USDS/sUSDS?
And do you have an estimated breakdown of how much would go to each product?

We’ve seen that on Gnosis, sDAI (aka sexyDAI lol) has attracted strong interest—even Spark ended up adopting it. I believe Unichain could lead a similar initiative, potentially in an even stronger way, by offering a temporary incentive-based product with a higher yield than the Sky SSR.

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Both are potentially in the plan but it wouldn’t just be boosting SSR yield as we strongly believe in leveraging it for extra yield and firepower. So for example, it would be SSR yield + Unichain Incentive + Relevant DeFi protocol yield. The case will be the same for USDS/sUSDS but the focus would be for one that is able to provide better higher and more sustainable yield.

We agree and also believe it’s important to focus on retention and sustainability as well, which is also the reason why we will be sharing following metrics.

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Thank you for putting together this comprehensive proposal and for outlining a collaborative vision for Unichain’s growth. We appreciate the focus on leveraging sUSDS yields and co-incentives to attract both users and protocols, as well as the commitment to DAO-led decision-making for incentive distribution.

First, we would love to know if you have already communicated with UF, and if so, what their response was. This is mainly because UF has a significant budget for Unichain growth, and it seems straightforward to use that budget for this kind of proposal.

Along with that, we have several questions and concerns about the sustainability and execution of the plan.

The proposal notes that if sUSDS TVL reaches $100 million, Sky would pay $4.5 million per year at the current 4.5% yield.
Does Sky intend to keep doing it even with incentives from Uniswap? This seems to be so after the name of the proposal includes “co-incentives”, but we needed some clarity.

Another concern is ensuring that growth driven by initial incentives translates into sustained, long-term ecosystem health. Historically, incentive-driven strategies in DeFi have seen rapid TVL growth followed by equally rapid declines once incentives taper off. Thus, we request further detail on Sky’s long-term strategic commitment beyond the initial year. Specifically, after the first year of co-incentives from Uniswap concludes, what are Sky’s explicit plans or conditions for continuing yield support and maintaining competitive rates?

Overall, while we see the potential for co-incentivized growth, we urge the team to provide more granular details on sustainability, and partnership structure before proceeding to a formal vote.

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Nice proposal!

If the TVL growth targets for USDS and sUSDS (the $20M, $50M, or $100M unlocks) are not met within the expected timelines, what specific next steps or contingencies are planned to re-evaluate the strategy, the use of funds, or the partnership approach, before considering a potential cessation of the program?

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I generally support this proposal because it’s a smart move to grow USDS and sUSDS liquidity on Unichain, which can make Uniswap’s L2 a go-to place for trading stables. The monthly reviews and KPI focus show the team learned from past incentive programs, and working with Circle could bring more trust to the ecosystem.

Is there room in this plan to encourage developers to build new v4 hooks or apps that use USDS/sUSDS, not just LPs?

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Contingency Planning if KPIs Are Not Met
One of the core strengths of this proposal is that it does not commit the DAO to a fixed, year-long plan. We plan to enable continuous optimization of strategy and incentive design based on live data and on-the-ground feedback. With visibility into key metrics like cohort retention, pool-level TVL shifts, and incentive ROI, we can detect underperformance early and make timely adjustments.

The DAO also retains direct control over the program’s direction through monthly snapshot votes on the incentive plan. If a strategy is not delivering results, the DAO can vote it down. In that case, we will gather further feedback and present a revised plan that better aligns with the DAO’s priorities the following month.

Additionally, StableLab’s strong DeFi network allows us to bring in new partners, renegotiate co-incentives, and reallocate resources to more effective opportunities. We are not limited to a predefined set of collaborators or tactics.

If KPI milestones are not reached, we have the infrastructure, flexibility, and expertise to adapt quickly. This structure ensures that DAO funds are deployed responsibly and only when the strategy is on track.

Retention Beyond Initial Incentives
We agree that retention is a core challenge in any incentive-driven strategy. Many programs in DeFi suffer from an influx of mercenary capital that quickly exits once incentives dry up. This is precisely the type of issue we want to address. A key part of our approach is identifying patterns of mercenary behavior early and optimizing the incentive structure to attract users who are more likely to stay and contribute long-term value.

Over time, and through working on other incentive programs, including several involving USDS growth, we’ve developed a strong understanding of what kinds of incentive designs lead to stickier users. These insights inform how we target, structure, and scale incentives throughout the program. We will be measuring user retention continuously, not just by tracking TVL but also by analyzing cohort behavior, wallet activity, and cost-efficiency metrics, and adjusting the strategy accordingly. This helps ensure that incentives are attracting users who are more likely to stay engaged even after the program concludes.

It is also important to note that the core yield offered through sUSDS is not dependent on Uniswap incentives. That yield will remain available even after this program ends, giving users an ongoing reason to keep funds deployed and continue participating in the Unichain ecosystem.

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There could be rooms for new v4 hooks or apps that use USDS and sUSDS. But preference would go to those that have shown to be able to contribute to Unichain 's growth. So unless there’s strong sentiment from Uniswap DAO, tested and growing protocols, hooks, and apps will have priorities.

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The proposal is now live. Thanks for all the feedback.

We have also made the following edit following many want some part of incentive to be based on retention rate.

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Unichain is in a growth stage but how does it grow when L2s aren’t much different from each other?

App and user diversity is key. Currently, Unichain is growing thanks to incentives that are focused on Uniswap itself (and hooks).

Thus, attracting established DeFi players like Sky makes sense.

True, incentives are costly but if Unichain wants to grow, they can’t stop mid-journey anymore and more dApps must be supported.

So, even when incentives are gone, diversity of dApps and users gives a higher chance of stickier users and TVL.

Thus I support this proposal and vote For.

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Thanks for this proposal. We have a few questions, most of which should be fairly straightforward and just weren’t in the initial proposal text.

  1. How does this spending plan interact with the substantial grant Spark just got from the Optimism Grants Council? We want to make sure there’s not overlapping spend, since they have a large amount of OP that may be partly deployed on Unchain. Coordinating to avoid spending incentives on the same targets would strengthen this proposal.

  2. How does this spending plan interact with the current Unchain incentives program? Same concern about number 1.

  3. What proportion of this would go to USDS vs sUSDS? It’s hard to understand the value of subsidizing USDS liquidity on Unchain with the Spark PSM now operational. For those who are unaware, the PSM provides liquidity between USDS, sUSDS, and USDC, with zero slippage or fees. Trying to get Uniswap to compete with the PSM on USDS or sUSDS liquidity doesn’t seem like a good use of resources - Spark is already providing Unichain users with infinite liquidity for free. However, incentivizing sUSDS more generally across DeFi on Unichain while excluding DEX liquidity does seem like a good use of funds, since sUSDS on Unichain creates a passive capital flow into the chain.

  4. Can you add a commitment that incentives (inclusive from other sources) will never be > the native yield on sUSDS? Then there’s at least an easy sanity check on how much is being paid for $1 of asset.

Overall, we mostly want to make sure this spending plan is taking into consideration the two other major sources of potential incentives on these assets + explicitly not trying to challenge the Sky/Spark PSM in liquidity for USDS and sUSDS, with a focus on other parts of DeFi.

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The following reflects the views of L2BEAT’s governance team, composed of @krst, @Sinkas, and @Manugotsuka, and it’s based on their combined research, fact-checking, and ideation.

We are voting FOR.

Collaborating with the Sky ecosystem through this proposal feels like an opportunity for Unichain. Sky already offers a 4–5% base yield on sUSDS; layering targeted UNI incentives on top could broaden Unichain’s stablecoin mix, increase TVL, and provide builders with a reliable “risk-free” rate to embed in money-markets and other DeFi primitives.

One open question, though: why launch these co-incentives through a standalone proposal rather than adding them to the incentive framework that delegates approved? It would be interesting to have some clarification on how the two tracks interact—or why they need to remain separate—to make the roadmap clearer.

At the temperature-check stage, we see nothing that blocks our support, but a bit more context on that governance choice would be helpful. Once clarified, we’re glad to see the experiment proceed and will keep a close eye on the monthly KPI updates.

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404 voted FOR the USDS/sUSDS co-incentive Snapshot proposal. Given the need to accelerate adoption of Unichain and our belief that Sky is well-positioned to support that growth, we are generally supportive at this stage. However, we believe the proposal requires additional clarity before advancing to a Tally vote.

Specifically, the current incentive structure lacks detail around how rewards will be allocated, leaving too much uncertainty. For instance, if incentives are used to boost sUSDS yield, then net of operating costs, the structure guarantees a minimum 4% APR on the first $20M in TVL on top of sUSDS base yields. This yield declines to 3.2% for the first $50M and 2.4% for first $100M in TVL. We would like to see more explicit modeling and documentation on how these rewards would be distributed under various scenarios.

Additionally, we do not believe governance should be asked to vote on incentive allocations on a monthly basis. Delegates often lack the resources and bandwidth to oversee and manage dynamic incentive programs effectively. We would prefer this responsibility be delegated to existing incentive managers or committees.

To benchmark expectations, we reviewed Gauntlet’s reporting on the current Unichain incentive program, which has achieved approximately $59 in TVL per $1 spent. For the USDC/USDT0 pool, which is currently the only incentivized stablepair pool, TVL per $1 spent is $53. With $800K in incentives, this would result in $42.4M in TVL and if the full $3.2M proposed here were deployed at similar efficiency, it could drive ~$170M in TVL.

Based on these reference points, we suggest tying KPI unlocks to targets that reflect a 50% increase over the current proposed KPIs. Specifically, we recommend a performance-based structure of 37.5M / 75M / 150M TVL targets per $1M additional incentive unlock.

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Hi everyone,

Thank you for the discussion so far and for the broad support you’ve shown for the USDS / sUSDS Growth Management Plan.

Our goal is to have this revision live well before the on chain vote, giving delegates ample time to review and comment. We will also address various questions as well.

2 Likes