Summary
Use part of the the 5M tokens previously reserved for flash loans to incentivize ADX liquidity providers.
Liquidity providers are taking an additional inventory risk to help develop ADX markets. They are also getting fees but it'd be better if there was an additional incentive.
This was previously discussed in AIP 48.
Quick vs slow distribution
We can distribute the incentive quickly over a few weeks, or slower over months.
The quick distribution will lead to ultra high APY which might help publicity, especially since most farms are running dry.
The slow distribution will hold LPs on for longer, but in this case it becomes a competitor to normal staking pools like Tom and Loyalty. So we are leaning towards quick distribution.
Incentivized pools
- ADX-yUSD on balancer
- ADX-ETH on uniswap
- ADX-ETH on sushiswap* - if sushiswap adds ADX to their weekly menu
- ADX-LOYALTY-yUSD on balancer* - when that pool is created and ADX-LOYALTY is whitelisted
- this pool would gain rewards from 5 places: ADX from ADX-LOYALTY, interest from yUSD, BAL from Balancer, swap fees and ADX incentives
- LINK-ETH on uniswap* - only in implementation B
- BAL-ETH on balancer* - only in implementation B
- UNI-ETH on uniswap* - only in implementation B
The ADX pools should receive a reward at least 5x higher than the non-ADX pools.
Why include non-ADX pools?
To improve ADX distribution by involving the communities of projects we use or collaborate with.
Implementation A: off-chain
The originally planned implementation, partially implemented in AmbireTech/adex-validator#326
Create a payment channel on OUTPACE and distribute ADX to LPs using a script that detects when those users aquired/parted with the LP tokens.
The UI would just be one card and modal, see #60.
Implementation B: on-chain
Use the MasterChef contract with two modifications:
- no minting, ADX would be pre-transferred to it
- no migration
Use a traditional farm UI (like sushiswap/sake/etc.) under a new page "Farm": multiple cards for various LP pools.
If the LP tokens are held by the identity, you can still seamlessly utilize your funds (by doing unstake, utilize, stake in one TX).
Implementation A vs implementation B
Advantages of B:
- Might increase the number of ADX holders
- Can allocate some ADX to non-ADX LP tokens too to involve other communities such as LINK; if we do that with A, a lot of rewards may end up unclaimed
- Transparency: rewards are guaranteed on chain
- Easier to market is like a farm, piggybacks on the momentum of all the sushi clones; may be a bit late for that but from another PoV it will be high APY; just copying what works is sometimes better than innovating
- Less complex/bug prone
Disadvantages of B:
- Unable to reward Loopring LPs
- this is negated by the fact Loopring has it's own liquidity mining system - we can distribute more ADX there
- Cannot change distribution logic
- but we can adjust reward % per pool dynamically
- Requires one additional on chain tx
- Cannot play with the distribution mechanism (eg curve it in favor of early LPs)
- Have to audit and deploy a smart contract
Encourage usage of liquidity pools
Implement a "Get ADX" page in the staking portal that allows the user to buy ADX with ETH or a stablecoin and auto-route this to Balancer/Uniswap pools.
UX
We can link to zapper.fi or uniswap.info to help users aquire LP tokens: zapper has a particularly nice one-tx tool to get LP tokens but it's costly in terms of gas.
Before launching, make sure it's localized to Chinese and Korean too.
Make sure the UI has proper disclaimers regarding the risks, impermanent loss and the fact that distribution will end quickly.
Launch
Tease that farming will start before it actually starts: allow at least a week for marketing.
Make sure to raise awareness in channels where LP farms are traditionally promoted, and in the channels of the involved projects
Disclaimers
There should be a large disclaimer addressing two questions
- What are the risks?
- Impermanent loss / inventory risk
- smart contract risk
- Why are you doing this?
- to improve ADX distribution/community