Index

Status: Proposed

Author: @overanalyser

Created: 30th July 2021

Discussion: https://gov.indexcoop.com/t/iip-65-dpi-liquidity-migration-to-uniswap-v3-with-staking/2184

Quorum: 96,149.7 [1,922,994*0.05]

Simple Summary

To encourage LP’s to migrate DPI:ETH liquidity from Uniswap v2 to v3 using a short term v3 staking contract.

Liquidity mining incentives for DPI:ETH on Uniswap v2 are due to end on the 13th August. This proposal will allocate 2,000 INDEX to incentivise LP’s to move into the v3 pool.

Abstract

Use a new Uniswap v3 staking contract and add 2,000 INDEX to be used over 15 days. Start date TBC, but anticipated ~20th August to allow LP’s time to migrate.

Motivation

The Uniswap v2 pool was the first on-chain liquidity for DPI, and with extensive liquidity mining by INDEXcoop it has been the largest and highest volume pool. However, continued liquidity mining for DPI has been our largest discretionary cost since the end of the initial 60 day campaign in December 2020. As such it has always been the goal to stop INDEXcoop liquidity mining of DPI and allow trading volume to sustain the desired liquidity.

A recent review found that there are 3 other pools with over $2 m AUM and sufficient depth to allow $15,000 trades with less than 1% price impact. These are either supported by DEX rewards ($SUSHI / $BAL) or concentrated liquidity and trading volume (Uniswap v3). In addition there is further liquidity available via trade aggregators.

With the availability of the Uniswap v3 pool since May 2021, trade volume has partially migrated with recent activity capturing an average of 26% annualised income for LP’s.

The availability of audited Uniswap v3 staking contracts (Developed by Uniswap labs) means that we have the tools available to encourage migration to v3 (as recommended by the INDEXcoop research group) and for LP’s to become more capital efficient if they wish.

A single v3 liquidity mining campaign is proposed running for a short duration (15 days) and starting ~ 1 week after the end of v2 Liquidity mining. This should allow LP’s to collect all the potential rewards and then reposition.

This was the recommended option during the liquidity mining community call on the 29th July 2021.

Specification

To use a uniswap v3 staking contract to encourage migration of liquidity to Uniswap v3 DPI:ETH (0.3% free).

2,000 INDEX to be rewarded over 15 days starting ~20th August 2021.

LP’s will need to take action to receive the rewards.

FOR

• To reward Uniswap v3 DPI:ETH LP’s using the specified method.

AGAINST

• No liquidity rewards on Uniswap v3.