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My latest research @TheBlockRes (open for everyone to read).
A proposal to do nothing with Uniswap liquidity incentives — where I make the case for not extending $UNI rewards to liquidity providers.
Read here & highlights in thread
(1/x) https://www.theblockcrypto.com/post/86082/uniswap-liquidity-incentives-proposal
A proposal to do nothing with Uniswap liquidity incentives — where I make the case for not extending $UNI rewards to liquidity providers.
Read here & highlights in thread
(1/x) https://www.theblockcrypto.com/post/86082/uniswap-liquidity-incentives-proposal
In case you're not aware, Uniswap's liquidity mining rewards were 10M $UNI per month & ended on Nov 18th.
There's a proposal in the community to halve the rewards, but continue extending them.
At current market price, ~$18M per month subsidy to LPs. Still substantial.
(2/x)
There's a proposal in the community to halve the rewards, but continue extending them.
At current market price, ~$18M per month subsidy to LPs. Still substantial.
(2/x)
First, Uniswap's trade volume haven't been impacted by ~$36M per month $UNI rewards.
Uniswap's market share has stayed constant both before & after.
(3/x)
Uniswap's market share has stayed constant both before & after.
(3/x)
Lots of more data like this in the piece but e.g.:
Share Uniswap's of trade volume from subsidized pairs grew only slightly. However, liquidity on those pair obviously increased massively.
== A minor reward for a massive subsidy.
(4/x)
Share Uniswap's of trade volume from subsidized pairs grew only slightly. However, liquidity on those pair obviously increased massively.
== A minor reward for a massive subsidy.
(4/x)
More importantly, rewards don't produce defensible NFX.
Uniswap treasury could pay out $1M per month in grants & spending would still be cut down by >90%.
Additionally, we don't even know what the protocol will look like when v3 launches.
(5/x)
Uniswap treasury could pay out $1M per month in grants & spending would still be cut down by >90%.
Additionally, we don't even know what the protocol will look like when v3 launches.
(5/x)
Counterargument is that $UNI rewards decentralizes the protocol by distributing to users.
==> DeFi community is extremely small group of enthusiasts. Even this goal is better served waiting for more mainstream adoption.
(6/x)
==> DeFi community is extremely small group of enthusiasts. Even this goal is better served waiting for more mainstream adoption.
(6/x)
Compared to sensible investing, LP rewards are an expensive spend.
If Uniswap is successful, it will be a decade-long journey — plenty of parasitic competition to thwart & opportunities to fund.
If rewards are turned on, reason should be data-driven.
(7/fin)
If Uniswap is successful, it will be a decade-long journey — plenty of parasitic competition to thwart & opportunities to fund.
If rewards are turned on, reason should be data-driven.
(7/fin)
