[Discussion for proposal] Add Incentivization for Mooniswap CRV pools

[jesssalomon]

Summary:

Add Incentivization for Mooniswap CRV pools

Abstract:

Some background: Mooniswap is an AMM that utilizes virtual balances to benefit Liquidity Providers. The AMM is capable of keeping most of the slippage revenue in the pool by maintaining virtual balances for different swap directions. When a swap happens, a market maker does not automatically apply the invariant algorithm and displays the new prices for upcoming trades. The AMM improves exchange rates for arbitrage traders slowly, over approximately a 5-minute time period. As a result, they will be able to collect only a portion of slippage, while the rest will remain in the pool shared among liquidity providers.

CRV Liquidity providers currently benefit from the profits from slippage revenue as well as the Mooniswap exchange fee. In the near future, they will further benefit by receiving a reward of 1inch token.

This proposal is to further incentivize CRV liquidity by rewarding CRV LPs with additional CRV rewards by the CRV DAO.

How this would work: LPs could stake CRV liquidity pool tokens and receive rewards in CRV.

Motivation:
Explain why you think this proposition is worthwhile.

The proposal will incentivize CRV holding, governance and value. The health of the CRV ecosystem is based on these three factors.

Specification:

This incentivization would increase the liquidity of the CRV token and would offer a possibility to farm out the 1inch token.

For:
Reasons why this proposal should be voted for

To increase CRV liquidity, value, and active governance.

Against:
Possible reasons why this proposal should be voted against

Some say Mooniswap AMM is competitive to the Curve AMM re: stablecoin swaps.

However the systemic pro’s outweigh this con. The two AMMs benefit each other as Curve does not swap between non stablecoins (including its own token CRV) and therefore Curve users need more than one AMM to swap their CRV and other non stabletokens. Mooniswap rewards CRV LPs through its innovative use of virtual balances as well as 1inch token rewards. Adding CRV incentivization creates a virtuous circle of value creation for CRV holders and CRV growth.

• For
• Against

[charlie_eth]

I’ve added the poll for you, noticed you couldn’t create for some reason.
Personally I think it’s a good idea to encourage liquidity providing on CRV whether on Mooniswap, Balancer or Uniswap.

It will help stabilise the price and incentivise CRV holding further and seems to be a worthwhile model adopted by quite a lot of defi tokens.

After doing a bit of research it seems that APY across liquidity pools are very very high meaning I’m not sure this is worth doing.

[jiecut]

ETH-CRV pairs already get a ton of volume, probably from all the farming and vesting going on. It’s organically attracted a lot of LPs already on uniswap/mooniswap/balancer. And they’re all earning quite a bit of fee revenue already.

[cobracore]

to what extent is liquidity a problem? I don’t feel like it is, so it probably doesn’t need to be further incentivized. Might help pump CRV short term if people need to buy to join the pool, but long term lockers suffer - we don’t get to benefit from short term increase in CRV price, but we’re “diluting” ourselves as well.

If CRV liquidity becomes an issue then exploring incentives makes sense, but as there is no problem right now I don’t feel the need to support a solution.