Uniswap Liquidity Incentives Part 1
TLDR: Snapshot vote for incentiving uniswap LP’s of $IDLE. If this passes, more to follow.
Link: Snapshot Poll
This post is intended to help facilitate a focused discussion for plans regarding a uniswap liquidity incentive program, my previous post Link mentioned this as a key factor in bootstrapping the protocol.
There are a number of reasons to encourage liquidity to uniswap, first and foremost it serves to give legitimacy to the project, new users may be discouraged when they see the low liquidity levels of $IDLE, as this is typically a red flag! In addition to this point, I feel that it doesn’t really make sense to say that providing liquidity to idle returns some crazy APY, in $IDLE, but at the same time selling $100 worth impacts the price by > 7%. (Not that I would be selling my $IDLE, I plan to be a long term holder) This is a use case that needs to be considered, and new users might find themselves disappointed when the returns that are claimed, don’t reflect reality.
There a number of different mechanisms to incentivise liquidity providers, the most basic would be to use the $IDLE community treasury to fund a uniswap liquidity mining campaign to reach a certain goal level. A second approach could be some other benefit within the idle protocol itself, such as reduced performance fees. A third approach could be a bonus $IDLE reward, similar to how curve offers boosts for users who lock up $CRV.
The target which we should aim for with this proposal is to reach a satisfactory level of liquidity where a user can purchase $X on uniswap for less than 1% slippage. I’ve suggested this level could be $1000 as an initial target. If you feel that this is not ambitious enough please share your opinion.
With that said, I want to start a series of community sentiment polls to gauge how the community feels about this, and what the best approach the community feels regarding liquidity mining.
I plan on creating a total of three snapshot votes, each one dependent on the previous one in the following order
- Should liquidity providers of $IDLE be incentivised? Link: Snapshot Poll
- What mechanism should be used to incentive $IDLE LP’s
- (Optional) Mechanism parameters
If the first snapshot poll looks promising, I would like to hear back from the community on suggestions for a mechanism to incentive LP’s.