[DCP-9] Sushi Liquidity Program 3 Months Extension

[dragos]

Summary

With a liquidity of $1.43M on Ethereum, primarily concentrated on Sushi, this proposal aims to extend the LP rewards to preserve robust liquidity on decentralized exchanges within the Ethereum network.

This proposal suggests extending the current Sushi LP staking program at the existing rewards rate of 284,445 RADAR per day, totaling 25,600,000 RADAR over a period of 3 months. This proposal maintains the same parameters as the previous extension proposal (DCP-7).

Motivation

Sushi remains the primary platform for trading RADAR in a decentralized manner on Ethereum, ensuring reduced slippage and substantial liquidity depth. Although RADAR is available on centralized exchanges, Sushi plays a crucial role in allowing anyone to easily participate in the DappRadar ecosystem, bypassing centralized players. To maintain and potentially increase the current liquidity on Sushi, the rewards offered to Liquidity Providers (LPs) who stake their LP tokens must be sustained. Therefore, we propose continuing to reward LPs and preserving a healthy ecosystem.

Abstract

Since the last proposal focused on extending the Sushi LP rewards (DCP-7), numerous positive developments have emerged within the ecosystem. The product has evolved, the 2023 roadmap was published, valuable partnerships were formed, and RADAR was listed on significant centralized exchanges. However, the importance of liquidity on decentralized exchanges remains high.

Presently, the RADAR-ETH pool TVL on Sushi is $1.43M, which facilitates efficient trades given the average trade size in the pool. This was demonstrated in February when over $4.20M in trade volume was achieved in a single day on Sushi alone. This indicates that the current liquidity maintains a stable position and readies us for future growth.

As mentioned in previous proposals, we will continue exploring various alternatives to attract and maintain liquidity in RADAR pools across all chains. There has been some progress in researching potential solutions to decrease liquidity costs and transition from Rented Liquidity (e.g. Sushi - Ethereum) to Protocol Owned Liquidity (e.g. ApeSwap - BNB Chain).

For this 90-day (3-month) LP rewards extension, we propose allocating ~25,600,000 RADAR tokens at a daily rate of ~284,445 RADAR, sourced from the unused Airdrop pool.

Benefits

• Extending rewards for committed RADAR holders and LPs on the Ethereum network
• Upholding our cross-chain narrative by ensuring Ethereum users have access to provide liquidity to DappRadar
• Preserving and potentially increasing liquidity in the RADAR-ETH pool, enabling low slippage for DEX trades

Drawbacks

• Distributing a substantial portion of RADAR tokens that could be allocated to other initiatives

Vote

• FOR - Extend Sushi liquidity program for 3 months
• AGAINST - Do not extend Sushi liquidity program for 3 months

[sidneyakpaso]

Okay. Thank you for the timely updates.

[dragos]

Snapshot Vote Results

The Snapshot vote for this proposal concluded with 62.97% AGAINST and 37.03% FOR. This outcome may be due to the late feedback and comments within the Discord community and a lack of reaction from our side. It’s unfortunate that some highly invested community members did not participate in the forum phase of the proposal, where feedback is essential for a smooth Snapshot phase. As a community, I am confident we will improve and see more involvement during the Forum phase.

Quick Recap on Liquidity Provision

LP stakers assume certain risks when providing liquidity on Sushi (e.g., impermanent loss). To keep LPs incentivized, rewards should be consistent enough to balance the risks and make it profitable. For those unfamiliar with the concept, if LPs withdraw their liquidity and the ETH/RADAR liquidity pool decreases, RADAR holders will experience significant losses (slippage) when swapping for ETH. Therefore, it’s in the interest of every RADAR holder to maintain a healthy liquidity market on a DEX like Sushi.

Thought Process on the Initial Proposal Terms

The original proposal aimed to keep the Sushi LP Staking APR slightly higher than the RADAR single staking APR for the reasons mentioned above. If LPs withdraw liquidity because single RADAR staking is more attractive in terms of rewards and carries lower risk, the ETH/RADAR liquidity will decrease. As a result, the initial proposal did not include a reduction in rewards for Sushi LP staking.

Next Steps - [DCP-9 v2]

Acknowledging the importance of Sushi liquidity and taking community feedback into account, we will propose to extend the Sushi LP rewards with a 25% decrease in RADAR rewards per day, alongside the termination of RADAR single staking (V2).

A new proposal will be submitted to Snapshot with the same 90-day (3-month) period, but with an allocation of 213,333 RADAR per day and a total of ~19,200,000 RADAR (~6.4M less than the initial proposal). With these reductions, the Sushi LP Staking APR will be around 50%.

[dragos]

Snapshot vote results [DCP-9 v2]

Vote passed
You can see all the vote details of the proposal on the Snapshot page.

FOR: 52M RADAR
AGAINST: 758k RADAR

Total voters: 111

Sushi LP Rewards

This proposal was a bit controversial, but this how we evolve and learn. Community feedback and token holders shared their view and now we are happy to see we’ve reached an agreement.

We’re going to move forward and continue the Sushi LP Rewards campaign for the next 3 months while we’ll keep investigating alternatives for this rented liquidity program. There will surely be more discussions in our channels about the next steps and how this can be improved in the future.