Proposal/discussion on next set of liquidity mining rewards

So after October the current liquidity mining program happening in the v2 uniswap pool will come to at an end.

For a variety of reasons discussed on the tokenomics workstream call and elsewhere I think it is vital to continue liquidity mining for the uniswapv2 pool (where the majority of liquidity currently reuses) as well as expand liquidity mining to other protocols to create a broader and deeper range of liquidity pools. This would also allow arb opportunities to develop across different AMM pools which would strengthen the over liquidity of the FOX ecosystem.

I am curious what the community thinks is appropriate and would like to humbly suggest some starting points to get this discussion going and make sure we are ready to go well before the current liquidity mining program ends in October. I believe this is important to keep liquidity active and farming opportunities present to help the ShapeShift DAO growing during its 1st year of existence + further decentralizing the governance of the DAO in a way that awards active contributors (LPs).

I would suggest the following:

Uniswap v2: fund an additional 9 months of liquidity mining with 1/3 of the current rewards pro-rata over the next 9 months. This would mean the same allocation as the current program (15,760,000 FOX) but spread over 9 months instead of 3. We do not need to keep as high of an APR to still have a very competitive apr and keep liquidity active in the pool over another 9 months. I think it is vital to keep this pool incentivized as it is where the majority of the liquidity for FOX is today and we do not want to risk destabilizing that at such an early stage for the DAO.

Sushiswap: I think we should also fund 9 months of this program with the same amount of the uniswap pool (15,760,000 FOX over 9 months from the start of the program, and perhaps we should start this one prior to the uniswapv2 one being renewed so there is no gap in liquidity mining). This apr will likely end up a bit higher than the uniswap pool if sushiswap adds their own sushi rewards on top. This create a deep and important 2nd pool which also lets us build a bridge to the strong sushi community and ecosystem.

Bancor: I strongly support the ability to have a deep pool and single sided liquidity mining in bancor. To this end, since bancor will provide their own BNT rewards for the pool, I think we instead incentivize the BNT holders to vote this liquidity mining in by extending the airdrop of FOX to anyone who would have qualified as a BNT holder under the current airdrop qualifications (snapshot of June 9th, $1500 threshold, 200 fox each). We would need to figure out the amount of addresses that would be eligible but this may be a great olive branch to their community that would encourage them to engage BNT rewards for the FOX pool in bancor without requiring any fox to be incentivized on direct liquidity mining (still not even sure that is possible in bancor pools or what contracts we would use as they tend to be incentivized via BNT rewards).

I also think discussion around some other protocols is also worthwhile (like cowswap, honeyswap, polygon) but don’t know enough about those to recommend liquidity mining programs in those pools at this time.

I am by no means tied to any of the above, but I think this serves as a good starting place for discussion on continuing liquidity mining programs past mid October and look forward to community feedback on which pools, length of time, and amount of fox allocation from the treasury to fund these programs.

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I think these all make sense but am extra interested in Bancor. Have felt the sting of impermanent loss in the UNI pool.
It will be interesting to see how much FOX is returned after the airdrop expires, but I think it will be in 100s of millions of FOX, so we should plan to deploy that ASAP. :rocket:

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I agree that decentralization and expansion of the LP’s would be greatly important in expanding.

I would be interested to know what % of the liquidity that is in this based off this comment. “I think it is vital to keep this pool incentivized as it is where the majority of the liquidity for FOX is today and we do not want to risk destabilizing that at such an early stage for the DAO.”

if the majority of the liquidity is here, where would the additional liquidity be coming from for these other projects? or is it coming from expanding it over 9 months vs 3 months?
I would also be interested in additional information regarding the other pools where LP’ing would be available to pursue. I have minimal exposure to them, and polygon is the only one I have heard good things about.

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I don’t know exact % but most of the current liquidity in the uniswap pool is staking, indicating most of it is there via the incentives.

In terms of where else the liquidity would come from, that is hard to know but there is plenty of capital out there in crypto land that may be interested as more opportunities arise. I think with more pools that are incentivized we will naturally attract more liquidity into the ecosystem. Doesn’t really matter where it comes from as long as the mining rewards do the trick to attract farmers and those who hear about that are interested in the project.

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Argument for HoneySwap: although the volume may be low compared to others, if members are paid in FOX on xDai, I think it makes sense to have at least some liquidity to allow members to swap for $0.0001 instead of $20+ on mainnet. That’s just my limited knowledge of how DeFi works though, please let me know if I am missing something.

Argument for a Polygon powered DEX: The sheer volume and liquidity on Matic absolutely crushes other networks (combined) at the moment, excluding ETH. If that is the case, wouldn’t it be better to provide a incentive program that would bring the most exposure to the token and the DAO, instead of only Bancor users? Although the short term tokenomics may not be as attractive as Bancor, the long-term exposure on Matic could be better.

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Very True.

There is a difference between the product and service that yearn, crv, harvest, 1inch, ect… and Shapeshit provide, and I realize that Shapeshift is working on finding it’s place in the market. Something that clicked throughout the discussions. Providing liquidity is fine, but utility is really important. Gravity DEX wallet Emeris launched in beta today., and there is a statement about multi-wallet support, something to be prioritized is the utility shapeshift provides it’s users.

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Yes, ShapeShift’s product fit as a non-custodial multi-chain wallet and path to defi protocols and anything else you want to do in the blockchain universe is too good of a concept to not have others spring up doing similar things (even though not a ton of such implementations exist yet).

And that is totally fine, we shouldn’t be afraid of that, I think we should stay focused on trying to interoperate with other projects and offer as much opportunity as we can to our users, the crypto pie is still quite small and the bet is it will still grow much larger over the coming years and there will be space for multiple such projects.

I have already posted a discussion around integrating gravity dex which I think we should totally do in the near future just like emeris.

All of this though is roundabout the point of this particular thread which I would like to keep focused on what liquidity mining rewards should look like late October and beyond. In my opinion ensuring good liquidity and farming opportunities for the ShapeShift DAO ecosystem is crucial to being able to offer the full utility that we wish to offer to our users and the ecosystem.

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Very True.

There is a difference between the product and service that yearn, crv, harvest, 1inch, ect… and Shapeshit provide, and I realize that Shapeshift is working on finding it’s place in the market.

I wasn’t sure if the integration point would be with Emris api’s or Gravity DEX, hence the screen shot high-lighting multi-wallet support as opposed to multi-chain wallet. I’m sure their multi-wallet support is for those built on Cosmos as of now, but with the Gravity DEX, I suppose one might also be able to support wallets from other chains. (Portis)

I shared the publication that brought into question the value of “governance” tokens, and I read up on something that someone else shared in discord coming from Vitalik yesterday that echo’d that same sentiment.

In the short term, yes, seeding pools is a way to have more people hold Fox.

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thanks for getting this discussion started @jonisjon and for laying out a solid potential path :fire:

:unicorn: You’ve convinced me that it makes sense to continue incentivizing liquidity on UniswapV2 for now to avoid the risk of destabilizing the strong liquidity we’ve built there. Also @Marley makes a great point that the DAO can leverage the 100s of millions of unclaimed FOX from the airdrop to fund these initiatives.

:fox_face: I’m also in favor of airdropping to Bancor holders and giving FOX holders the ability to one-sided LP, this seems like a win-win and we’ve seen some strong interest in this already from both communities.

:sushi: Something I think we should consider: if we are going to proceed with LM programs on both mainnet Univ2 and Bancor, does it make sense to also incentivize liquidity on mainnet SushiSwap? The potential SUSHI rewards from the Onsen program are very enticing, but perhaps we could partner with them on an LM program on Polygon instead and incentivize some liquidity there. Just a thought, and possible we decide to do both.

:honeybee: To @LPX’s point, I would be in favor of an LM program on Honeyswap as well to drive liquidity to xDAI, and think we could target a smaller amount of liquidity (ie. $500k-1M) and therefore allocate a smaller amount of FOX.

:cow2: CowSwap doesn’t have any AMM/LPs of its own, so no LM opportunities there, but I do think the DAO should consider integrating CowSwap for trading separately

:pancakes: Another one that hasn’t been brought up yet but that is worthy of consideration is PancakeSwap on BSC. I haven’t talked with anyone there yet, but imagine they’d be interested in partnering with us on an LM program too. Anyone have any good contacts?

Thanks and looking forward to continuing the discussion!

P.S. I think I was overestimating how much of a budget we would need to allocate for creating these LM specs. The original program was harder to design, but now that we have much more data and fewer unknowns, your post and the discussion so far has helped me realize that these next programs should be much easier to design. Heading to the $tipout channel now to reward everyone that has contributed to the discussion so far :raised_hands:

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BurgerSwap might also be worth a look for a small allocation. They seem trustworthy enough, and have a direct ERC20 <> BEP20 token bridge (?) as well. I have no idea if it’s an actual bridge bridge to BSC or some kind of bridged token that you can use only on BurgerSwap, but I thought it was interesting. Also, I like rooting for underdogs. More financial rewarding in the long run, and they seem to be growing pretty fast.

Keep in mind, I’m still trying to 100% fully grasp the whole DeFi lingo, concepts, and mumbo jumbo, so take everything I say with a huge grain of salt :sweat_smile:

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Sounds good, I think I misunderstood the exact meaning of liquidity. I was referring to the allocation from the treasury, which is why the statement was one of concern. I realize now you were discussing the exchanges liquidity is mostly in the pools, which makes a lot more sense.

Is there a way to see how much of that liquidity that we have captured? is there anything that can be done in order to capture more of those %'s other than increasing rewards?

Thanks @willy, btw!

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For me, continuing UniSwap v2 is a no-brainer. Because it has done so well for us thus far, and will be super easy to implement from a coding perspective. Just copy-pasta and change some variables. Currently we are at 178% rewards for staking. If we do 1/3 the amount as proposed, that lowers to about 60%. I think that is still plenty attractive. And to make the rewards good for 9 months sounds great. I would even be okay to lower the total amount more, and be in the 30%-40% APR range.

I would want to know more about the LOE for Bancor integration and Sushiswap before deciding priority between those two. If they were equal, I would put Bancor at a higher priority, because it is unique. But I’m pretty sure Sushiswap will be easier, knowing it should be quite similar to Uniswap. I just don’t know by how much.

@elmutt would love some opinions from you on this. I know you are pretty heads down on the open source work. When do you think it would be reasonable to take a few hours and dig into this a bit and provide some early guidance? Maybe next week? I’m also curious your opinion on making any of this into bounties / grants for community devs to work on. Our current staking contract is already open source. We would need to review it well and be in charge of the audit process ourselves if this were the case.

HoneySwap and PancakeSwap - can anyone provide liquidity on these platforms today, and do they also then give you an LP token? And the ask would be to have a staking contract that they pays rewards - similar to how UniSwap and SushiSwap would work?

CowSwap - that is an altogether different matter, and I’d prefer to leave that out of this discussion. There are enough factors in here already, IMO.

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Another thing to consider is if we want to have a nice UI for interacting with more than one staking contract. That would add complexity.

It may be easiest to copy the existing fox.shapeshift.com/airdrop page onto another URL and users manage their different pools on different URLs. Like /bancor, /uniswap, and /sushiswap. Combining it all into one slick interface I think will take too long and not be worth the UX. We would want some product involvement in how this would look.

I don’t know it would be worth creating abstraction layers in the code either - for now, just copy/paste and modify for the different staking contracts. Also, for any pools beyond Uniswap v2, I think we can send the user to the pool UI to contribute to the pool, and then come back and then all we need is an interface to the staking contract. That would also reduce effort and make it much easier to support more staking contracts.

Curious what others think of that - would maybe add a little bit of user friction to the process, but not beyond industry standards, but allow us to support more options.

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Re: LOE for Sushiswap and Honeyswap - those are both forks of uniswap, so I think our existing liquidity mining contract would work for these if we just tweaked some variables. Honeyswap is on xDAI though so would need to be deployed there, and I imagine we’d want to at least support xDAI on fox.shapeshift.com/fox-farming, which should be low LOE.

I will ask their teams for more info too, because both of the above can be partner LM programs and i think they both have their own liquidity mining contracts and processes. Will find out more and share findings with you and @elmutt.

I will confirm with Bancor too, but like @jonisjon said I think this would actually not require an LM contract of our own, but rather an airdrop to the Bancor community and then they will handle the LM contract.

Re: UI/UX - you’re right that any of these will require UI/UX and some front end dev to include on FOX Token Benefits | ShapeShift or mobile. I like the idea of adding an additional page to the liquidity mining flow that shows all of the pools, and then if a user clicks the UniswapV2 pool for example they would see the current flow, and then we could add top-level cards to the new page and flows for each LM program. I think product workstream could provide UX this and the LOE would be worthwhile. For mobile, we can consider either doing the work to support it natively, or if we get Wallet Connect support in mobile, we could consider just adding cards to the mobile earn screen that point to FOX Token Benefits | ShapeShift ; just a thought

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My thought is once the community aligns on what the funded LM programs should be, the proposal to enable that should also have various bounties attached to get the dev work done to provide as great a UX as the community is willing to fund. That work of course will depend on what the community wants to focus on though.

@willy has lots of good ideas above, and I personally would love to see something similar to our current mobile flow for these opportunities too as it’s such a great experience right now.

Some of this may be getting built out more anyway such as for the osmosis work and anything related to yearn if that passes governance. Perhaps that provides some framework that at least could fit these farming opportunities as well.

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What I stated here addresses things being discussed on this thread too.

I am aware of the value of the suggestions being provided and the time I’ve spent learning these things, and it simplifies the complexity of your tasks measured in magnitudes of order.

You need another top-level route for different chains. :wink:

This is where I thought development would be centered , Shapeshift, not on the landing page, but the quoted comment is in scope.

@jonisjon The above proposal conveys funding FOX on BOTH Uniswap and SushiSwap? On the call you said you were in favor of funding same amount of LP reward that we’ve done for this first three month period, but cutting it by 1/3 and extending it for 9 months instead of 3. I thought that meant just for Uniswap.

I hesitate to subsidize liquidity in multiple venues. I see huge value in subsidizing liquidity in one venue. I get that multiple venues breed arbitrage trading, which is valuable, but is it valuable enough to double our costs over?

And if we were to subsidize a second pool, I’d recommend we wait for Thorchain to be live again, and subsidize the FOX/RUNE pool there.

tldr - I def support 15.76m FOX over 9 months in Uniswapv2. Uncertain with everything else.

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Yea @Beorn great question and sorry if I wasn’t clear on the call.

I am currently suggesting 15.7 mil fox per pool for both uniswap and sushiswap over 9 months each (so around 31.4 mil fox total). I would personally be okay with this as I think it is valuable to have 2 highly incentivized pools to build further liquidity, help further distribute and decentralIze the token, and help pull in more DeFi communities into interest in the ShapeShift DAO (and I think the sushi community will be far more interested getting involved with us if we have a deep pool there).

This is of course debatable, and I could be convinced we should lower the amounts per pool in this case and/or should only incentivize one of the pools, but right now I would support that amount for both uniswap and sushi.

Also in regards to thorchain, my understanding is you can only incentivize thorchain pools with rune right now, and to do so with fox would effectively sell fox for rune which I would not personally support.

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Good point on Thorchain. If anyone can clarify/validate that, pls do.

You didn’t convince me on the value of an additional 15.7m for Sushi, but I wouldn’t necessary vote no either. Unsure.

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