V2 Liquidity Mining Brainstorming

I think what you said about deciding on a weekly basis might be the most appropriate thing to do, at least for a couple of weeks. After few weeks have passed, the committee can then decide if theres a more permanent solution/tactic.

Question

  1. Is it possible to do a mock rewards based on tiers suggested here on the last snapshot? Maybe do a comparison of the actual rewards receive vs future (v2)

Thanks.

Here’s some basic modeling on the APYs based on @followthechain & @Callum’s system + along with examples of existing pools that could qualify under each tier as described.

Two of the Tier 1 pools - BAL/ETH + WBTC/ETH - will take a hit in yields whereas returns on the primary stablecoin pool (either USDC/ETH or DAI/ETH) and the DAI/USDC/USDT will be substantial. I think this is a solid dynamic as it will drive more USD liquidity to Balancer as well as have a significant amount of BAL to bootstrap the USD-pegged stablecoin pool that’ll launch with V2.

The Tier 2 + 3 selected pools will also see some very solid returns at current liquidity and BAL price, making them competitive with Sushiswap. What’s nice about the tiered system is that governance has the ability to allocate these rewards for projects that synergies well with Balancer and can help decentralize the BAL LM allocation to better align communities.

Based on the above, I support this tiered proposal paired with an active Ballers governance committee at the above allocations! Generally, all of the yields line up as long as the Tier 2 + Tier 3 groups are managed well :slight_smile:

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Thanks for the modelling! It helps.

One thing that i still dont get with the tiered approach - i am not sure how many pools balancer has but based on the above, 28 pools have been accounted for. What will happen to the rest? No mining rewards?

Also, what is the driving factor of the tiered system - liquidity, volume, or both?

I apologize if i keep missing info. I really just want to understand how mining will work.

Thanks again.

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BAL/ETH going to 17% would be… dramatic imo compared to its current 71% but recently was in the 90’s. Rest of these, hard to really draw any conclusion because LP’s will adapt quickly when this is implemented.

Need to think long and hard about BAL/ETH going to 17% tho. We juiced it with staking - if we reverse that, some ppl won’t be happy I think.

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So as I understand it, we are currently at a rough consensus that there should be:

  1. 3 Tiers
  2. Pools Per Tier: Tier 1 = 4, Tier 2 = 10, Tier 3 = 14
  3. Reward Per Tier: Tier 1 = 60,000, Tier 2 = 50,000, Tier 3= 35,000

Current concerns expressed by community

  1. BAL/ETH reward dropping from 71% to ~17%. One counter argument is that although the BAL/ETH reward will drop, the new strategic BAL reward allocations to the other incentivized pools will greatly increase the total value locked, transaction volume, and as a result, will drive BAL price higher. Thus, the BAL/ETH pool will receive less BAL per week, but the BAL will be priced at a higher value per token. Hopefully in the end BAL holders see a greater long-term appreciation even though in the immediate term it might look like a reward cut.

What is everyone’s thoughts on the following initial selections of crypto assets? I looked at three sets of Uniswap 7 day transaction volumes, token operations, market caps, and community support. I understand that this can be very subjective, but thought it would be good to get the conversations going.

Tier 1 (4 Pools): BAL-ETH, DAI-ETH, WBTC-ETH, DAI-USDC
Tier 2 (10 Pools): USDC-ETH, UNI-ETH, LINK-ETH, AAVE-ETH, YFI-ETH, MKR-ETH, SNX-ETH, COMP-ETH, GRT-ETH, SUSHI-ETH
Tier 3 (14 Pools): 1INCH-ETH, CRV-ETH, BAT-ETH, BNT-ETH, REN-ETH, MANA-ETH, MATIC-ETH, UMA-ETH, DPI-ETH, ZRX-ETH, KNC-ETH, ENJ-ETH, RENBTC-ETH, LRC-ETH

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it’s going to be tricky because I think we want at least one index style pool. dunno about incentivizing a ton of 50/50 0.3% fee pools since that feels like we’re just copy pasting sushi and uni. but maybe don’t change what works.

I’m sure these discussions are happening… I’m patiently waiting for the info to be dropped :slight_smile:

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Sorry all as i am still trying to understand as to whats going to happen to a pool that is not part of the mentioned tier?

Thanks.

I’ve been looking all over for an answer to the following, but so far no dice.

Will the v2 liquidity mining rewards begin as soon as v2 pools are released? And will v1 liquidity mining rewards end at that time? And, so we have any clue when v2 rewards might start?

No final decision has been made. V2 liquidity mining program is still being designed, and this thread and the discord are the places for discussions about it. That being said, current consensus is for a transition period such that every week some BAL moves from the V1 liquidity mining program into V2’s. As for how long that transition period would last, a few have voiced their suggestions in the comments above, generally ranging from 4 to 6 weeks.

Current consensus is that pools that are not part of a tier won’t participate in liquidity mining

Hi, new to balancer. Does anyone have a link that can explain current liquidity mining incentives? I see above that the 80/20 BAL/ETH pool has a high APY. I currently am a LP for a 50/50 pool and want to know if I should switch. Thank you

How do i go about the 80/20 liquidity mining for Bal/Eth

Check out the docs for the full details of the current liquidity mining program.

pools.vision is an excellent resource. Keep in mind there are other things to take into account in addition to the liquidity mining incentives, like trading volume and impermanent loss.

Well… I have to say I’m very disappointed to see the standing consensus on t1 assets. I hold exclusively BAL/WETH pools because I’ve become increasingly fond of this platform over the past 7 months, yet I see absolutely no one talking about incentivising multi-asset (2+) pools. It seems to me like we’re trying to attack markets already cornered by the likes of UNI and CRV. Why are we not playing into the main advantage Balancer has over other DEXs; multi-pools?

I also find the drop from 71% to 17% extremely disagreeable and while I understand the argument that higher $USD volume = higher $BAL in the long run, I also see cause for concern of other large BAL holders dumping in the short term, which would basically make my entire investment into Balancer a loser vs just holding BTC or ETH.

I’m concerned that some of the Ballers + Devs are putting the ideal of more decentralised governance ahead of the users and LPs that actually “back” the value of BAL (if you will excuse the crude way of explaining that thought). That is to say, I would expect to see a large sell off in $BAL if you hammer the BAL/WETH APYs the way you describe here.

Balancer is a fantastic project, community and idea. Consequently, it needs to defend itself and its interests. Balancer’s interests include it’s Governance token holders.

I’m sorry to come across as “the greedy guy” on the forum twice in such a short time frame, but if I’m one thing, it’s a strategist, and this looks like a really bad strategy to me.

Look forward to getting some feedback.

Cheers

Context “Strategist” (maybe irrelevant): Long time gamer, 4800MMR Dota 2 support player. Former Service Manager in a Laboratory Automation company that went belly-up because the Directors refused to listen to my advice (stop rolling out junk products and take your time, the customer will appreciate a delayed, but GOOD product much more than one that shows up on time, but doesn’t do what the sales guy said it would), despite years of experience in the field and face to face with customers.

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Your proposal is very good! I want to vote in the snapshot, but I can’t click. Can you tell me how to vote? thank you!

In fact I’ve decided to start a new comment to address one of the points I referred to in the previous post:

higher $USD volume = higher $BAL in the long run

Not necessarily. Greater $USD volume only serves to increase the fees earned by pool LPs, with weekly BAL as a bonus. If there are 3 other pools that all yield the same BAL / Week / $Locked, there’s little incentive for people to buy AND HOLD BAL. This is a downward price mechanic. If I want to take part in Governance proposal why wouldn’t I just buy up BAL at gov time and sell it when I’m done? THAT is a gameable mechanic.

I think we should consider the present APY boost to BAL/WETH pools as a mechanism to encourage long term BAL holders who are active and involved in the community and governance, not try to dish out BAL to as many people as possible.

I’ll leave it here for now. Again, looking forward to feedback.

It seems I wrote both of my responses in ignorance of some information surrounding the intended functionality of BAL token, so my input may not be particularly useful.

@DavisRamsey , you bring up a good point. If we incentivize only one pair for a particular crypto asset, the liquidity will consolidate into the incentivized pair, and we run the risk of turning into a bunch of 50/50 pools and lose our product market fit of being the “generalized AMM”. Perhaps it may be more advantageous to not target BAL rewards to specific pools, but rewards to particular crypto assets. Then we can incentivize the crypto assets that are most beneficial to Balancer, and encourage the liquidity providers to contribute to any pool of their choosing. In summary, would it be more beneficial to change the Tier 1, 2, and 3 pools from pairs to specific crypto assets?

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Thanks @Shawman. If I understand correctly, what you propose is closer in the spectrum to the V1 liquidity mining program, and therefore has some of the same issues that we’re trying to fix in the V2 program - I might be missing something but I think assets-based tiers would have get us back to offchain calculations and adjusting liquidity to avoid gaming attempts.

I understand your concern, but I don’t think we run that risk. We’ll inevitably end up incentivizing uneven weighted pools, simply because there’s too much liquidity in that type of pool in V1 - meaning there’s demand for this type of pool on the LP side of things.

But on tier 1 pools I do think it makes sense to focus on 50/50 ETH/BTC and 50/50 ETH/stablecoin.

Because if we think of the network of pools, where each pool is connected to others by the tokens they have in common, the current state of things is such that the long tail of tokens is poorly connected to the main ones - eg someone looking to buy ZRX with USDC might have to go through a high price impact USDC/ETH trade first. But the reduced marginal cost of multihop trades in V2 means an exchange user could go from USDC to DAI to ETH to ZRX with very little price impact if those 3 pools were highly liquid. Tier 1 pools would act as the hubs that connect all the others.

A case could be made for something like a 65/35 ETH/stablecoin pool on tier 1, but it’s a bet on 50/50 LPs from other platforms being comfortable with making the switch.

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One of the key aspects for V2 must be incentivizing BAL holding/pooling. The current practice is good with many BAL/WETH and some other BAL pools. These could be consolidated for sure.

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