Summary
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Remove 3 Balancer pools from the LP rewards program. Allocate all rewards to the one pool (Uniswap) starting from block10908502. Rewards will remain the same at 91,000 CVP weekly (2 per block).
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Apply vesting to all rewards for week 2 onwards with a 12 week release schedule. An exception should be made for week 3 rewards released to the BPT/UniV2 LP staking contract from block 10868783 up to a block number that will be defined at a later date, taking into account the time that is needed to discuss and and implement the changes of the proposal.
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Weeks to be defined by the following blocks:
1. Week 2: From block 10794752 to block10840252
2. Week 3: From block 10840253 to block 10868782
3. Weeks 4-6: From block 10908502 to block 11045002
Motivation
The part 1 of the proposal
Since Proposal 1 passed, LP rewards have increased 10x from 9,100 CVP per week up to 91,000 CVP per week. Despite this, pool statistics demonstrate that the 3 Balancer pools process significantly lesser trading volumes than the sole Uniswap pool. Over the last 24 hrs, the Uniswap Pool handled ~$730k worth of trades, while the three Balancer pools accounted for a mere ~$130k of volume cumulatively according to Coingecko. Such a discrepancy can be attributed to:
- Very high commissions in Balancer pools: 5% in the 90/10 and 50/50 Pool, and 3% in the 95/5 Pool.
- Inefficient composition of these pools for facilitating trading. For example, the 95/5 Pool is more about holding CVP than exchanging them.
In fact, the 95/5 pool handled a mere $30k trading volume, the 90/10 pool did $52k, and the 50/50 pool accounted for $65k in volume.
Based on these facts, it is completely inefficient to distribute rewards to these pools as each of them has less than 10% of the cumulative DEX trading volumes for CVP (~3.5%, ~6%, ~7.5% for the 95/5, 90/10, 50/50 pools respectively). Despite this they are rewarded with 25% of overall rewards.
Volumes can be verified here:
- Uniswap: /pair/0x12d4444f96c644385d8ab355f6ddf801315b6254 25
- Balancer pool: /pool/0xbd7a8f648262b6cb29d38b575df9f27e6cdecde1/
- Balancer pool: /pool/0x10d9b57f769fbb355cdc2f3c076a65a288ddc78e/
- Balancer pool: /pool/0x1af23b311f203844108137d6ee399109e4981401/shares
The community is not satisfied with this rewards distribution.
The part 2 of the proposal
Last week CVP token significantly declined in value from ~$5 to ~$2.7. No doubts, it is not only connected with the LPs selling rewards, but also an overall market situation. Taking into consideration that the token price of CVP is an important metric of project success, affecting LM APYs for example, it will be good to offer more a long-term oriented strategy for LPs.
Applying vesting to LPs will not only support token price and the project itself, but also change LP orientation from a short-term farming strategy to a longer-term and more supportive one. The project definitely needs more long-term supporters right now.
Specifications
Part 1 of the proposal
Remove the following pools from the LP rewards program:
- Balancer pool: /pool/0xbd7a8f648262b6cb29d38b575df9f27e6cdecde1/
- Balancer pool: /pool/0x10d9b57f769fbb355cdc2f3c076a65a288ddc78e/
- Balancer pool: /pool/0x1af23b311f203844108137d6ee399109e4981401/shares
Allocate all LP rewards to the Uniswap Pool:
- Uniswap: /pair/0x12d4444f96c644385d8ab355f6ddf801315b6254
This would reward LPs of the pool which is used for CVP trading by the majority of the community members according to the statistics presented above. Rewards remain the same:
- Rewards: 2 CVP per block, or ~91,000 CVP/weekly
Implement these changes from the block 10908502 (22-23 September) up to block 11045002 (~13 October). Should the proposal pass, a special topic on the Power Forum will be created to review the results of the proposal’s implementation.
Part 2 of the proposal
As per the previously passed proposal, past rewards should be distributed at a rate of 2 CVP per block to the vesting contract. The contract should linearly release 1/12 of the CVP weekly. An exception is to be made for all tokens which are in the BPT/LP staking contract as they can already be freely claimed.
Apply a similar rule for the week 4 to week 6 rewards, allocating all rewards to the single Uniswap pool.
Note: Weeks are defined by the following blocks:
- Week 2: From block 10794752 to block10840252
- Week 3: From block 10840253 to block 10868782
- Weeks 4-6: From block 10908502 to block 11045002
Conclusion
If this proposal passes, it will dramatically improve CVP liquidity, decrease slippage, turn LPs from short-term farmers into long-term supporters of the token price. I appreciate community feedback here on the Power Forum. Let’s solve these problems together.