Should we keep only 1 incentivized stablecoin pair?

Temperature Check
1

The idea is pretty simple and came to my mind when I read all the proposals related to the continuation of UNI Liquidity Mining incentives.

Here is the initial governance post from monet-supply: [Discussion] Uniswap Liquidity Incentive Plan

Here is where we started discussing the following proposal, with lots of positive feedbacks: [Discussion] Uniswap Liquidity Incentive Plan

Instead of incentivizing several pairs of ETH/stablecoin, I propose to reduce the scope to one single pair.
This pair won’t be ETH/DAI, ETH/USDC, nor ETH/USDT.

This pair would be mUSD / ETH.

Why ? mUSD is a meta stablecoin with a lot of cool features built by our friends from mStable (https://mstable.org/):

  • mUSD is backed by a basket of whitelisted stablecoins (USDC, TUSD, USDT…),
  • 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 USDT, 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 swaps between all these stablecoins,

Here is the snapshot page

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I’m not sure if mUSD will be a good option. The constant sum market maker formula can result in certain stablecoins being out of stock, and mStable is voting to remove DAI from the pool, leaving only centralized stablecoins. Curve pools might be a better option as they never run out of liquidity and include more constituents.

More generally, I don’t see the advantage of a single stablecoin pool if it just pushes users towards other exchanges (mStable / Curve) or aggregators that can handle the wrapping/unwrapping natively. In addition to raising gas costs for small trades, I’m afraid it would commodify Uniswap’s liquidity and let other platforms own the customer experience.

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3

Hey!

Thanks for your feedback.
Having a DAI pool would still be a great option yes, I agree with you.

Regarding the other point related to User experience, I don’t see why leveraging mUSD (mStable product) is different from using wBTC (Bitgo product), DAI (Maker product), USDT (Theter product)… DeFi is about composability and being able to benefit from other projects’ innovations, especially when they build great products. As explained in the proposal, I think that incentivizing a pool with mUSD comes with a lot more benefits (including decentralization) for Uniswap’s users than incentivizing a simple USDT pool. :ok_hand:

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No. As an LP I have no interest in having exposure to Tether and would not participate in that kind of pool.

Not to mention, there is practically zero market demand for mUSD and incentivizing that pool does not help Uniswap in any way.

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