[Closed] AIP 001: Reduce the number of incentivized dex pools

[TheLiquidator]

Reply from Robertus (sent from his mobile):

"Quick reply here: Not a fan at all of the “additional” rewards on big price movents.

We are not responsible for hedging IL risk. The slightly higher rewards for liquidity pools are already the compensation for taking a riskier position. If we start hediging all IL risk of the LPs then it isn’t a “risky” position anymore and wouldn’t deserve higher rewards. See the issue with this?

I was just brainstorming with xdq for a managed vault/pool in the future.

I want your initial proposal to happen for the time being."

[ShastaKhan]

I really like the ideas brought up by xdq. Using iETH to hedge is a creative solution and even more important, I think the use of Synthetix helps build relations between both communities and is a good marketing for Akropolis due to the unique solution & interconnection that is possible in Defi.

[Asteryst]

Love the poll structure, many thanks for the initiative, @TheLiquidator!
Let me see if we can bring in some trading professionals here to chime in re hedging. Love the idea of working with Synthetix team too, @ShastaKhan

[DeptOfLabor]

Thank you I was trying to figure out how to say this and I just ended up ranting and being outraged.

Price cannot be set by anyone accurately or consistently for any length of time. Do what you want, it’s your money but insuring against losses, that’s insurance and they sell that now.

[Sidzuka]

Small update to this proposal - we are going to reduce the number of incentivized DEX pools on Wednesday.

Uniswap currently has the most liquidity, and following the internal discussion, we were thinking about continuing incentives for only 3 pools - Uniswap AKRO/ETH, AKRO/USDC & ADEL/ETH.
Decreasing the number of pools even more might come as a shock for some people (which will cause additional FUD based on my experience). Uniswap AKRO pools both have over 600k in liquidity right now, so I propose they both stays. And leaving one ADEL/ETH pool on Uniswap will also decrease friction as all LPs (power users and new to the space) will need to study documentation of only one protocol.

Call to action:

• Agree
• Disagree (tell why in the comments)

Any feedback will be appreciated - and we will continue working on this with possible follow-up proposals. Vote will go for a day.

[CornNoob]

Totally Agree, not a problem. I just want to see a reduction of ADEL rewards to AKRO free riders

[cryptokingpin92]

I think having at least one pool on Balancer in this case the ADEL/ETH would be attractive because of the fees and the additional compensation via BPT distribution. It would entice those that don’t prefer to have an LP token that’s just sitting in my wallet idly. It’s also just the current environment, it’ll provide a competitive edge

[Baaal]

I may be wrong, but excess liquidity is a double-edged sword, a more stable price, which means less volatility for price declines and increases, what’s the point in this if we have already (hopefully) touched the bottom of the price of 1 cent, let people buy a AKRO with a slippage of 2-3% I don’t want them to have liquidity at these levels, let’s get back to the discussion of transferring all liquidity to uniswap, when AKRO will cost >0.02 $

[Baaal]

Why not just teach people how to use 1inch.exchange, in this case, in the screenshot, the purchase of ADEL (same for AKRO) will be carried out simultaneously with uniswap (45%) and balancer (55%) in one transaction to ensure the lowest slippage, you want to transfer all liquidity to uniswap, but in fact 1inch unites liquidity with uniswap and balancer (and all other protocols) the only drawback is the higher transaction fee

My proposal is to increase ADEL rewards for Balancer and Uniswap and teach people to use 1inch:

1. so we will support decentralization by supporting multiple protocols: uniswap and balancer
2. using 1inch we will use liquidity from multiple protocols which will solve the liquidity problem and slippage
3. Balancer is more attractive with its 70/30 weight, which could also attract people who are bullish on AKRO/ADEL and are currently staking, compared to a 50-50 Uniswap pool. (you must leave people to choose!)
4. in the future, support for both protocols uniswap and balancer will bring more overall liquidity, since different people can give preference with one of the two protocols

[NSB_Cap]

Disagree with migrating to Uniswap because of increased IL risks in 50:50 weighted pools.
Also, LPs on Balancer would recieve BAL token rewards.(also mentioned by other posts)

[TheLiquidator]

I’m not completely against Uniswap compared to Balancer (the initial vote was quite close). But the argument for increased IL and no additional BAL token rewards is valid.

As Baaal suggested, if you use 1inch.exchange your trade will automatically choose Uniswap or Balancer or a combination of both so I would not see a great advantage for Uniswap in that regard.

If we decide for Uniswap, I would stick however to either ETH or USDC pairs (AKRO/ETH and ADEL/ETH). Or have the USDC AKRO pair with slightly lower rewards.

Removing rewards from the USDC pairs does not necessarily mean that the liquidity for that pool will disappear.

[Hallfamilyfund]

I don’t have much exposure to liquidity pools,so my openion shouldn’t matter much here, but I do agree with this post,to a point. I love 1inch,unfortunately sometimes, the transaction fee kills the deal.

[Mike]

The trouble with this is there is no gatekeeper on either uniswap or balancer that will say, “Hey, these LPers want you to use 1inch!”, and so people who don’t RTFM on Akro discord/tg or find out that “we” prefer 1inch, will just use whatever they prefer, Uni or Bal, and we will still have the same problem: fractured liquidity, big slippage.

[Aushit]

Although i have not disagreed in the voting, i believe using Balancer 70/30 pools would attract more liquidity as both AKRO/ADEL price has a lot of upward potential and people might not want to lose in IL.
So it completely depends whether incentives/rewards can offset the IL which would be higher in Uniswap pools.

[ad13]

can team explain why they prefer uniswap to balancer?
may be we should have another vote? balancer vs uniswap?

[mengmeng]

I am using Google Translate:
Why reduce swimming pool activities? Why downsize and what is the team doing? How to develop after canceling all fund pools? Other people’s swimming pool projects continue to expand, attracting more and more funds, but this project is continuously canceling swimming pools, downsizing and manufacturing machine gun swimming pools. What if there is no funding? The scale of other projects reached hundreds of millions of dollars. The project only reached 20 million US dollars, and it is still shrinking. What does the team think? Don’t want to develop anymore?

[Sidzuka]

Not sure how our development (which is ongoing at a pretty nice pace) is connected to Uniswap/Balancer discussion. As given in the discussion and topic itself, decreasing incentivised DEX pools will decrease nmber of short-term free riders who just farm tokens and move elsewhere when they see the opportunity.

[TheLiquidator]

I think the main idea from my perspective was to focus the same amount of rewards (or even a slightly increased reward) to fewer pools in order to increase the available liquidity.

If you keep the inflation at the same level, with 3 pools, each pool would then receive 33750 ADEL instead of 16875, bringing the risks of IL compared to simply staking more in line (making entering a DEX pool more attractive). With 2 pools (only ETH pairs) this would result in 50625 ADEL (if you want to keep the inflation constant).

If the idea would be to reduce the rewards below the current levels of 16875 per DEX pool, I’m pretty sure that the liquidity will drop even further.

[Afh5]

The big draw to providing liquidity to the balancer pool was the BAL rewards on top of Adel rewards. I am providing about 7% total to the balancer pools. Obviously I would want it to continue but not only from a selfish standpoint. I am weary of now moving my liquidity to the uniswap pool because who knows in 2 weeks if the rewards setup will change for those pools. I think this move will reduce liquidity as the balancer pools may move on to another coin all together.

[Baaal]

if the community wants to attract more liquidity to dex protocols, then we need to support both uniswap and balancer, in the long term, the total liquidity of both protocols will be higher than one uniswap

save pools relatively to dex pools have low risks, as this is the only place where people farm adel from stablecoins, in addition they get akro and crv

my proposal for next “epoch week” to decrease the rewards for sUSD and Y curve pools, and increase rewards for uniswap, leaving balancer rewards at the same level

1. decrease rewards for sUSD and Y curve pools to 50000 ADEL (now 78750 ADEL)

   Curve sUSD - 25000 ADEL
   Curve Y - 25000 ADEL

2. 28750 ADEL distribute among uniswap AKRO\USDC AKRO\ETH ADEL\ETH
   adding to the current 50625 ADEL - total 79375 ADEL

   Uniswap 50/50 AKRO/USDC - 26450 ADEL
   Uniswap 50/50 AKRO/with - 26450 ADEL
   Uniswap 50/50 ADEL\ETH - 26450 ADEL

3. 50625 ADEL rewards for balancer pools leave unchanged

   Balancer 70/30 AKRO/USDC - 16875 ADEL
   Balancer 70/30 AKRO/wETH - 16875 ADEL
   Balancer 70/30 ADEL/wETH - 16875 ADEL

or you can proposal your % distribution ADEL rewards between balancer and uniswap