Incentivize FOX/ETH Uniswap v3 Liquidity with G-UNI

Hey everyone! My name is Dave Liebowitz and I lead growth at Gelato. Today, I saw a tweet from Erik Voorhees about the current landscape of the FOX liquidity mining program in addition to reading that the first round of liquidity mining rewards for Uniswap v2 will end in October. In lei of this, I want to make the ShapeShift community aware of what G-UNI is and how it can improve liquidity concentration for the FOX token.

For those who are not familiar, G-UNI is an easy-to-use, unopinionated framework for Uniswap v3 LPing. From a user-perspective, G-UNI turns Uniswap v3 into v2 again, a G-UNI pool will collectively aggregate everyone’s position into one pool and make it both fungible for those who provide liquidity as well as automatically reinvest trading fees earned from said position back into it which compounds returns over time. This will allow pools to be used in traditional farming contracts like those found in v2 and make managing positions easier for the average user.

What I am proposing is a FOX/ETH G-UNI pool to be incentivized in ShapeShift’s liquidity mining program

G-UNI is audited and used by projects such as Instadapp and Float for their own liquidity mining schemes which has proven both it’s utility and resiliency. Gelato only takes a 1% fee from fees claimed and a transaction fee to recoup the Gelato executor for gas costs on every automated transaction (such as a pool rebalance).

The ShapeShift community can decide how much or how little they want to manage the pool and can decide what ranges they want to incentivize liquidity, under what conditions rebalances occur, what party has control of the G-UNI pool, etc. For example, the community can decide to delegate the “Manager” functionality to a specific smart contract that enables “rebalances” (changing the range of the pool on Uniswap v3) to happen automatically based on any conditions managers deem appropriate.

Recently, Gelato has devised a novel rebalancing mechanism that will likely be utilized for GEL’s own liquidity mining program. Essentially, two G-UNI pools of a pair are incentivized and liquidity for each pool expands and contracts based on demand. For example, if there are two FOX/ETH G-UNI pools and FOX moons, the “FOX tracking” pool will automatically expand the tick range of FOX/ETH while the “ETH tracking” pool acts as a backstop in case the price drops again. In theory in the situation mentioned, the liquidity mining program can be built in such a way to incentivize more liquidity to the “FOX tracking” pool which ultimately promotes more capital efficiency. The goal of this G-UNI rebalancing system is to always maintain deep liquidity for a given pair. For more details on this, I encourage everyone to read our developer’s technical explanation of G-UNI rebalancing.

The Gelato team will be there to help with the process each step of the way and assist with setting everything up. If the ShapeShift community has any questions or feedback, we would love to hear from you!

This sounds like an interesting way for the DAO to run a uniswapv3 LM program if it wishes to incentivize liquidity there.

Would be curious to hear other community members thoughts as the DAO already passed a proposal to continue LM on the uniswapv2 pool, but that doesn’t mean we couldn’t also incentivize a V3 pool and/or consider this when the V2 pool incentives end in early 2022.

I actually don’t see any reason why the two pools can’t run concurrently. It just means more liquidity for FOX overall for several months. In addition, if the community is happy with G-UNI, we can migrate Uni v2 liquidity to it.

I agree with that, especially if we start with a smaller program to start I would probably support something along those lines to get some better uniswapv3 liquidity going!

What are the current emissions for the liquidity mining program now? How does ShapeShift decide what those emission are?

Current liquidity emissions are approximately 15.7 M fox over 3 months.

The new program will be about 1/3 less per day and stretched over 4.5 months, this was decided by community discussions and was voted on in a formal proposal here: Snapshot

Okay I would be open to do something similar, we can have less emissions overall and less time but have equal emmisions per day as well as end it on the same day as the v2 program. The goal here would to see them side by side a compare.

Overall, I think its important for any project to strongly consider v3 because eventually that is where all the oracles will be getting data from.

Actually, I was talking to someone working at ShapeShift and it may be better just to plan G-UNI liquidity rewards for after the current v2 liquidity mining program. I get the sense ShapeShift is dead set on moving to v3 on G-UNI is the ideal solution. Also will give us more time to figure out which strategy works best (fixed ranges, passive rebalancing, etc.)

  • Hey so some other things I’ve been thinking about for liquidity mining with G-UNI

    I believe it would be best to keep it simple and have an infinite range. The point of this LM program is to allow normal LPs to participate without having to worry about managing their position.

  • For emissions and duration, I am thinking we do the same emissions rate as what it is currently and have the duration be the same amount of time as well.

What does everyone think?

I still like the idea of incentivizing a v3 uniswap pool, but if we do the infinite range what advantage would that bring the DAO? Wouldn’t that be no different from the current v2 pool at that point?

It would make sense to me when the v2 program ends, but not before?

We could have a tighter range based on historical price, depends on what the community is looking for. I would recommend being conservative because of the volatile nature of price action. For example, we could have a range between $.01 lower tick and $50 upper tick. As the manager, you can always adjust the ranges as well.

That makes sense, I would support this moving forward and whatever range the community wants to see on this to start.

Perfect! I will write up a snapshot and post it here.

Okay, the proposal is live. Go vote! Snapshot

I specifically made sure that the proposal concerned G-UNI and nothing else.

So I note that the proposal you put up is lacking a “No” option. Looks like you’ve already taken it down, but just for reference, that’s not OK. You also need to put this through the Ideation process first, which will enable it to be discussed in our weekly governance call.

Yes, I have started the Ideation process and posted the proposal here [SCP-26] Utilize G-UNI For Future Uniswap v3 Liquidity Mining Program