[DCP-13] Extending Sushi LP rewards in preparation for V3 migration

[vandynathan]

Co-Authored by: DappRadar (@dragos, @SkirmantasJ and @vandynathan)

Summary

With a liquidity volume of $1M on Ethereum, primarily concentrated on Sushi, by extending liquidity provider (LP) rewards and migrating to Sushi V3, we aim to optimize liquidity provision in line with industry best practices. This proposal aims to extend the LP rewards for the Sushi Liquidity Pool and discuss the migration of RADAR liquidity to Sushi V3.

It suggests extending the current Sushi V2 LP staking program at the existing rewards rate of 213,333 RADAR per day and a total of ~19,200,000 RADAR over a period of 3 months. This proposal maintains the same parameters as the previous extension proposal (DCP-9 v2).

During the next 3 months, there will also be a switch of rewards from Sushi V2 pools to V3, details which will be expanded further in the proposal.

Motivation

The motivation behind this proposal is to extend the Sushi LP rewards and continue with the preparation for a V3 migration that will help to optimize liquidity provision, improve user experience, and align with industry trends. By continuing to plan the migration of the liquidity to Sushi V3, it will have benefits like concentrated liquidity leading to lower slippage. This strategic move will position us to optimize the RADAR rewards necessary to incentivize, ensure alignment with the latest liquidity solutions, and reduce dilution towards the RADAR token.

Abstract

Evolving from rented to sustainable RADAR liquidity

For the past year, we have been steadily decreasing the liquidity rewards on Sushi to ensure that we are incentivizing the right volume of liquidity to match the volume of trades in the RADAR ecosystem. This optimization is one of the important features of sustainable liquidity.

Incentivizing liquidity is one of the highest costs sinks in for our DAO, based on our latest Proposal on Liquidity [DCP-9]. There is already progress on improving this matter with the BNB liquidity program that implements Treasury Bills to develop protocol-owned liquidity (POL). The recently published report shows that the program has generated around $400,000 worth of POL, resulting in spending less RADAR for liquidity incentives.

We are at the next crossroads of improving our liquidity programs, decreasing the cost for incentivizing LPs, increasing the volume of protocol-owned liquidity, while ensuring that we remain decentralized and have an effective market for the current and future trading volume of RADAR. Taking this into consideration, this proposal comes in preparation of the next step for increasing the liquidity efficiency for RADAR by migrating to Sushi V3.

Migrating RADAR liquidity to V3

The latest version of Sushi’s decentralized exchange, V3, has been launched recently. It’s comparable to the renowned Uniswap V3. The new version brings enhanced features in the management of LP funds, particularly in terms of concentrated liquidity. Learn more about V2 vs V3 differences.

This feature empowers liquidity providers to choose the exact price ranges where they offer liquidity. This ensures a more efficient liquidity provision process with reduced price slippage and minimized impermanent loss. Consequently, transitioning RADAR to Sushi V3 from V2 leads to a higher concentration of liquidity around the market’s average prices, thereby offering traders less price slippage.

We will actively work with V3 liquidity managers to create an effective strategy and target liquidity volume that takes into consideration our average trading volume, price volatility, and ancillary costs such as LP incentives and management fees.

The V3 rewards structure will be different and will be structured around the new V3 mechanic and it can include native V3 Sushi rewards but also an auto-pool (for automatic rebalancing - What is this?). The gas fees for rebalancing the auto-pool will have to be covered by the DAO, but it will enable an efficient market, even during volatile periods.

We’re currently in touch with several V3 liquidity managers and assessing the best strategies for the RADAR pools, learning about the cost management of the pool balancing, and working out the right parameters like the average trading volume, price volatility, and ancillary costs (e.g.: LP incentives and management fees).

A new proposal for Sushi V3 migration will be shared with everyone as soon as the strategies are developed and ready to be shared with the DAO community.

Strategic Liquidity Optimization

This migration presents an opportunity to optimize liquidity provision over time. The goal is to migrate from V2 to V3 on all the existing and upcoming chains to ensure an efficient market for RADAR. This strategic approach ensures the seamless integration of liquidity management and standardizes the mechanism across the chains, therefore the V2 LP rewards will be reduced over time as we transition to V3.

Summary

For the next extension of LP rewards, the proposal suggests using the remaining unclaimed Airdrop tokens and maintain the rewards for Sushi to extend liquidity farming rewards on Sushi for 90 days (3 months) with a rate of 213,333 RADAR per day and a total of ~19,200,000 RADAR.

Benefits

• Extending the rewards for loyal LPs on Sushi V2 (Ethereum)
• Maintaining our cross-chain narrative by ensuring exposure to Ethereum users to gain access to providing liquidity to DappRadar
• Maintaining and potentially increasing liquidity in the RADAR-ETH pool and enabling low slippage for DEX trades

Drawbacks

• Distributing a large proportion of RADAR tokens that could be used for other initiatives

Vote

• FOR Extend liquidity rewards on Sushi V2 for 90 days (3 months) with a total of ~19,200,000 RADAR at a rate of 213,333 RADAR per day
• AGAINST - Do not extend liquidity rewards on Sushi V2

[nederob]

For now Sushi is still one of our biggest liquidity pools, and therefore it adds value to the ecosystem. As RADAR integrates more into our product (read the whitepaper) we can expect developers, publishers and Web3 enthusiasts to become PRO or get RADAR. Therefore, having RADAR accessible for all on a DEX such as Sushi remains very important.

Long story short: Yes. I voted in favor.

[vandynathan]

Thanks community for the active voting and feedback.

As the DAO Forum Proposal for [DCP-13] passed our 20-vote quorum, we’re officially live on Snapshot.

You’ve got 72 hours to vote - let’s get busy.

[vandynathan]

As an update, the Snapshot has passed and the rewards for SushiSwap LPers have been extended.

Looking forward to future conversations on ensuring sustainable RADAR liquidity across chains.

[madeafterdeath]

we need to have em and find a solution cuz bnb side even tho i dont hold any on that side at moment when there is a pump it seems to all be on ETH side. How can we make it so that liquidity across all pools is as equal as we can make it?

[vandynathan]

Agreed @madeafterdeath. Having price parity across chains is all connected to us having an effective ETH <> BNB bridge.

The team is actually in the process of assessing and testing potential bridges which we’ll share with the community soon.

[jojo]

Some important things i would like to draw the team’s attention:

1. For some of thF sushiswap stakers, the constant dropping RADAR token price has made a big impermanent loss.

2. It seems you have to first unstake from V2, and then you can migrate to V3.

3. And i shall lead to big actual loss for those stakers.

I would really like to see the team’s consideration for that.

[vandynathan]

We fully understand the potential impact of impermanent loss on our valued RADAR holders during the possible transition of LP tokens from V2 to V3. It’s an important factor in our decision-making process.

1. Our initial strategy is to ensure that liquidity remains more cost-effective in V3 compared to V2. This approach would result in fewer RADAR emissions and reduced long-term selling pressure.

2. Moreover, we’re actively introducing new RADAR and PRO-related features and products that will contribute to a sustained shift in demand, counterbalancing the current selling pressure.

Considering these points, alongside other factors, we work with the community to assess whether the present price is sufficient for our LPers to execute this transition in the next RADAR Liquidity Proposal.

We appreciate the valuable input of LPers like yourself @jojo. Together, we’re shaping the future of RADAR’s liquidity strategy.

[jojo]

thanks for the consideration

[madeafterdeath]

here i mentioned this in 2023 and yet i find my self bringing it up now. >.> We need to fix liquidity…

Proposal for Migration of BNB/RADAR Liquidity from ApeSwap/ApeBond to PancakeSwap

Summary

Context:

• Current Liquidity: BNB/RADAR liquidity is currently hosted on ApeSwap/ApeBond.
• Objective: Migrate this liquidity to PancakeSwap for enhanced market exposure and better marketing incentives.

Proposal:

1. Migration of Liquidity: Move BNB/RADAR liquidity from ApeSwap/ApeBond to PancakeSwap.
2. APR Structure: Implement a simple and attractive APR reward structure to incentivize liquidity providers.

Motivation

• Market Exposure: PancakeSwap is one of the largest decentralized exchanges (DEXs) on Binance Smart Chain (BSC), offering significantly higher visibility and trading volume compared to ApeSwap.
• Marketing Incentives: PancakeSwap’s larger user base and established reputation provide better marketing opportunities and potential collaborations.
• Enhanced Liquidity: Improved liquidity depth on PancakeSwap can attract larger trades and reduce slippage, benefiting RADAR traders and holders.
• Simplified Rewards: A straightforward and attractive reward structure will encourage liquidity providers to participate and sustain the BNB/RADAR pool.

Benefits of Migration

1. Increased Market Exposure:

• PancakeSwap’s larger user base will increase the visibility of the BNB/RADAR pair, attracting more traders and investors.
• Higher trading volumes on PancakeSwap will enhance RADAR’s price discovery and market efficiency.

2. Better Marketing Opportunities:

• Leverage PancakeSwap’s marketing campaigns and community outreach to promote RADAR.
• Potential for collaborations with PancakeSwap’s various programs, such as yield farming and staking, to further incentivize liquidity providers.

3. Improved Liquidity Depth:

• Higher liquidity on PancakeSwap will reduce slippage and improve the trading experience for large orders.
• Attract institutional investors and large traders due to better liquidity conditions.

4. Simplified Reward Structure:

• Implement a straightforward APR reward system, similar to the one proposed for the SushiSwap V2 ETH/RADAR pool.
• Daily Distribution: Set a fixed amount of RADAR distributed daily to liquidity providers.
• Total Distribution: Define a total distribution amount over a specified period (e.g., three months).

Abstract

Introduction:

• Current Liquidity Location: The BNB/RADAR liquidity is currently on ApeSwap/ApeBond.
• Proposed Change: Migrate this liquidity to PancakeSwap to take advantage of its larger user base and better marketing potential.

Details of Migration:

• Migration Process: Seamlessly move the liquidity from ApeSwap/ApeBond to PancakeSwap.
• Reward Structure: Implement a simple APR reward system to incentivize liquidity providers.

Optimization of Liquidity Incentives:

• Market Exposure: Increase RADAR’s visibility and trading volume by leveraging PancakeSwap’s platform.
• Marketing Campaigns: Utilize PancakeSwap’s established marketing channels for promoting RADAR.
• Liquidity Depth: Improve liquidity conditions to attract larger trades and institutional investors.

Future Improvements:

• Ongoing Review: Continuously assess the performance of the BNB/RADAR pair on PancakeSwap and make necessary adjustments to the reward structure and liquidity incentives.
• Community Engagement: Encourage feedback from the community to ensure the migration aligns with the interests of RADAR holders and traders.

Community Engagement

• Feedback Invitation: Solicit feedback and engagement from the community before executing the proposal to ensure broad support and alignment with community interests.

Conclusion

The proposed migration of BNB/RADAR liquidity from ApeSwap/ApeBond to PancakeSwap aims to:

• Enhance RADAR’s market exposure and trading volume.
• Leverage PancakeSwap’s marketing opportunities for better promotion.
• Improve liquidity depth and trading conditions.
• Implement a simplified and attractive reward structure for liquidity providers.
• Engage the community in the decision-making process to ensure alignment and support.

Make a V3 BNB pool on Pancakeswap this would fix the bnb liquidity.

As for the costs for doing this i think they will be worth it.
imma propose this after eth rewards one is done.