Thanks to the @Gauntlet team for writing such thorough post! It provides valuable insights that will help support the UniswapDAO’s decision-making process.
Regarding the sustainability of the Uniswap Foundation’s incentive programs, I would like to propose a potential solution which I previously introduced here. I believe there is a way to fund liquidity mining campaigns indefinitely by tying them to turning on the fee switch:
- Turn on the Fee Switch for the incentivized pools: This would be applied only to the incentivized pools, and it would collect a 1/10 protocol fee from all swaps.
- Redistribution of Fees: The protocol fees collected from the incentivized pools and UNI tokens would then be redistributed amongst participating Liquidity Providers (LPs). The distribution of protocol fees and UNI tokens from the inventive program would be proportional to the amount of fees each qualifying LP position has collected.
However, the redistribution of fees wouldn’t be a blanket approach: LPs would need to adhere to certain guidelines to qualify for redistribution, such as no just-in-time (JIT), no full-range, no single-tick positions, no single-sided liquidity, etc.
Implementing such a strategy would create a self-sustaining loop that not only rewards LPs but also provides a continuous source of funding for the Uniswap Foundation’s (or any protocol’s) incentive program.