CIP#18 - Incentive for providing on-chain CRV liquidity

Summary:

Following this discussion: [Discussion] Incentive for providing on-chain CRV liquidity

This proposal aims to increase on-chain liquidity for CRV and use cases of veCRV by creating a new gauge that rewards Uniswap LPs (CRV:ETH).

Creating a new gauge means governance participants would then be able to allocate their voting power to it which would then reward stakers with CRV. The gauge would be introduced at 0 allocation.

The gauge would have a 50% admin fee on Uniswap profits which means 50% of profits would be collected by the DAO and distributed to veCRV holders on withdrawal. If there were no profits, the withdrawal fee will be free.

For:

Improve on chain liquidity for CRV (will be useful when admin fees start to be converted to CRV)

Against:

Best to wait for Curve Crypto Pools// there is no need for this

Poll:

https://signal.curve.fi/#/curve/proposal/QmcR7kwEN3rPyfA9TCXyqBcXMMfPwLNVq6yxthbxS6QkaJ

4 Likes

Always good with another option to park your CRV! What exactly does “profits” mean? Is that the sum of the trading fees collected by that user in that Uniswap pool? Or do we also take IL in consideration when calculating the profit?

3 Likes

Should we really pay people to help sell CRV?

1 Like

This would be giving CRV to people holding CRV if anything.

2 Likes

If people want rewards for holding CRV, they should time-lock it.

1 Like

I think most do. This is just an alternative, what’s wrong with that?

2 Likes

You’re right people should be allowed to vote on whatever gauge they’d like.

We have a money printer (the gauges). What are the best use cases? Right now we’re incentivizing the pool LPs who provide the necessary liquidity for Curve to exist. Even though I am an LP, I can see the argument that the incentives might be too high, and veCRV holders may prefer to invest the capital in a more productive way.

However, I don’t see how paying someone to hold/sell CRV would be the optimal choice. It doesn’t seem like an investment.

If I’m thinking through this correctly, it does make sense for veCRV holders who are not Curve pool LPs to vote for this, cause they basically don’t lose anything, and they can gain from the Uniswap admin fees. That might include a lot of the founders/investors/employees. Pool LPs should just continue to vote for their own pools?

Really we should come up with a better alternative for another gauge that might persuade the Curve pool LPs.

1 Like

Wow 50% uniswap LP profits to veCRV? I thought a fee on withdrawal was mentioned in the discussion. That sounds great

Can the gauge be made to update what pool is incentivized? Say Uniswap releases V3, or some other AMM becomes more attractive to incentivize. Or how to add multiple AMM incentives? Could we accomplish this with a single gauge or would need a separate gauge for each incentive program?

1 Like

It can just be replaced I guess yes

Appreciated everyone’s point…
I am FOR this proposal.
Great.

This is a great way to incentive on-chain liquidity for $CRV and reward these LPs who are basically taking the most risk on IL.

2 Likes

Against :

Best to wait for Curve Crypto Pools// there is no need for this

I guess my vote would depend on the expected timeline for this. I noticed that the team is (purposely ?) silent about this, so I am (purposely) asking for more detail about it :stuck_out_tongue:

1 Like

counting in impermanent loss i don’t think this is a great idea. it poses a great way for people to lose money and to re-allocate CRV rewards to yet another pool in the gauge.
IL goes in both ways and CRV is incredibly volatile. the APYs Curve offers aren’t even close to high enough to cover this let alone trading fees from Uniswap.
plus, one has to also keep the other gauges in mind and APYs are falling across the board.

1 Like

Currently, Uniswap LPs earn ~$4.5k per day.

If volumes goes 2.5x from the additional liquidity, veCRV holders will be able to earn $5.5k per day. That could be 10-15% of the daily earnings.

If veCRV holders divert 10% of inflation to the gauge. That could attract $20m in capital to provide liquidity at 150% APY.