[GIP-36] GEAR/WETH Liquidity Mining

EDIT 12.6 - shorten LM to 4 months, double monthly emissions to 3.33m GEAR/month.

Proposal

Commit 3.33m GEAR/month to liquidity mining the GEAR/ETH Curve V2 pool created by the Cider’d Liquidity Bootstrap, beginning when the fair trade period begins. Liquidity mining program is to last for 4 months, OR until modified by another governance proposal.

Context:

LPers for Cider’d liquidity and beyond likely will want some assurance that they will get liquidity mining rewards, given there is no guarantee of fees for LMing from the Cider’d approach.

3.33m GEAR at $0.015 at $3m of liquidity amounts to an extra 20% of APR on top of Cider’d fees. $3m of liquidity would be reasonable enough, especially some initial sell pressure absorbed by Cider’d. This would amount to 0.0333% of supply per month or 0.133% of supply over 4 months.

Once Cider’d is over and liquidity mining is live, the DAO can evaluate additional liquidity pools on Balancer, and/or paired with the Frax Base Pool. The DAO could also pursue gauges for these pools, which would make bribing an option. This process will also come with better liquidity data (since the token and liquidity mining will be live), thus a future proposal may wish to modify the liquidity mining program. This proposal encourages that option while still giving LPers confidence that LM will remain in place for a reasonable amount of time if progress is slow or if these additional options aren’t pursued.

Voting

Vote is simple For or Against (HUZZAH):

  1. FOR - Liquidity mine with 0.133% of supply over 4 months (3.33m GEAR/month)
  2. AGAINST - Do not liquidity mine with 0.13% of supply over 4 months
5 Likes

I’m a bit concerned that 10% APR will fail to attract meaningful liquidity over time. Given the nature of impermanent loss (which occurs when the spot price of pool assets diverge from the price of the pool at the time of entry for LPs), I think 10% APR would not be a strong enough incentive for GEAR holders or ETH LPs to enter this pool.

I think expecting LPs to risk IL for 10% apr for risk assets, while some stablecoin yields are comparable to that, is a bit unrealistic. Unless creating liquidity for GEAR is not really a primary objective, in which case 10% is sufficient. Although I doubt it will attract $3M in liquidity because the market will not accept this APR and will result in liquidity withdrawing until the APR sits somewhere between 30% and 50%.

It’s not suuuuper attractive, but it’s actually not to “attract” but rather to “retent” - it’s the liquidity after 0xcidder that should stay for some time (or for a long time). W/o anything at all, it would leave slowly. With this, some participants might be like “mkay, IL will be subsidized by the rewards, I’ll stay”.

that’s the thing, I doubt 10% will subsidize the IL in a meaningful way. A 20% price fluctuation on ETH from the entry price of any LP will be enough to eclipse the Gear rewards, even if the GEAR price does not fluctuate for one year.

yeah I mean to be clear, I don’t think the APR will be 10% for long even in the current example. I think LPs will simply withdraw once the subsidies drop below 30% annually. If the goal is to want most of the Cider’d liquidity to remain for 6 months, then the target APR on that liquidity should be something closer to 30%.

If the DAO doesn’t think that all of the Cider’d liquidity remaining for 6months is even of significance then 1.67M GEAR is fine as well.

1 Like

for a couple quick references
GMX has $22m liquidity at 420m (nice) circ mcap.
YFI about $10m at 220m
DPX $9m at 60m circ mcap
ALCX $6m at 30m mcap

GEAR circ approximately 1b tokens, if we hit the avg of cider’d ($0.0225) that’s $22.5m circ mcap. It’s not a linear ratio, but I think DPX and ALCX both have too much liquidity (but also both are more emissive than GEAR), so that was part of where the $3m liquidity target came from. Ie, we don’t expect everyone to stay. The 10% is also on top of fees earned from cider’d, so it will be more. But I agree it’s hard to know what that will be. Also if price goes up, mcap goes up, but so does APR.

Perhaps just going to 20% makes sense (target $3m liquidity), shorten period for Cider and this LM to 4 months, still plenty of time to figure out if it needs adjustment. I’m going to make that revision.

To be clear, we don’t set the APR, we just set a target TVL value and approx how much APR we think the ppl will want, but the market sets the APR.

2 Likes

4 months is too short ser. hope to have it increased later. voting anyway “for”

1 Like

4 months just meant to give governance enough time to gather data, pursue gauges, and figure out whatever the long-term plan is, as mentioned in the later part of the proposal.

2 Likes
  1. FOR - Liquidity mine with 0.133% of supply over 4 months (3.33m GEAR/month)

I feel CRV and GEAR are 2 DeFi dapps which we can all agree is best for both sides to be working together… I would dare to extend commitment to 6 or 12 months LFG

He guys, Figue from Paladin here.

Catching up on the proposal. Might be worth tracking the figures since 3.33M GEAR is currently worth 730k$, which means we’re now talking about ~73% extra APR for LPs.

It might also be relevant to add that at the current moment, doing liquidity mining on Curve is ~20% less efficient than creating vote incentives (even more with a FRAX-BP)

  1. I believe some dashboard should be reflecting that ye.
  2. Hmm but the DAO isn’t considering the bribes yet, so I am not sure that is relevant - or maybe I misunderstood. These are just GEAR rewards in its own LM, not bribes. Please elaborate?
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https://dao.curve.fi/vote/ownership/244 VOTE!

Clarification: this GIP-36 + GIP-37 50% = LM rewards for 4+ months.

The total number APY will be for now shown in:

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If I understood correctly, you are going to deposit GEAR in the Curve LM contract on a weekly basis to incentivize liquidity.
I was suggesting the DAO should start considering vote incentives instead of direct LM as it will be a more efficient way to use the aforementioned budget for the same end.
It’s not just about the efficiency of the emissions. You also have to consider you will be distributing GEAR to veCRV / vlCVX holders instead of GEAR/ETH LPs. This is an interesting twist because these holders are new potential gearbox users that you are aligning by doing so.

Ah I understood what you mean! Me not so big brain, cc @ov3rkoalafied who knows this well.

Yes, definitely want to consider bribes over direct LM - once we get a gauge passed (might be passed, need to verify).

Yes you can get more holders, but also as the voters are not directly LPing GEAR/WETH, they are also more likely to simply dump (no skin in the game / no allegiance to GEAR).

1 Like