Proposal 15: Add Uniswap MCB/USDC pool to incentivize, stop rewarding AMM LP

As mentioned in the proposal 14(Proposal 14: Reduce mining reward to 0.2MCB/Block), we have dramatically decrease the MCB rewards for liquidity providers.

For the next round, I propose that we suspend incentivizing AMM liquidity providers on MCDEX, and add MCB/USDC pool on uniswap, for the following reasons:

  1. The principle of distributing MCB rewards should be allocated to those who have contribution to MCDEX. Because of the high gas fee, the liquidity in AMM has little use. We can suspend for now and restart when upcoming product is ready when liquidity can be used for traders.

  2. Currently, since we only have MCB/ETH pool in uniswap, price of MCB is closely related to ETH price. Adding a MCB/USDC pool can help make MCB price stable.
    The allocation of rewards will be based on the number of MCB across two pools.

For example, MCB/ETH pool has 50000MCB, MCB/USDC pool has 20000MCB, if a user provides 3000 MCB liquidity on uniswap, you will enjoy 3000/70000 share of rewards.

For - 0.2 MCB / Block rewards, distributed to two pools on uniswap: MCB / USDC pool, MCB / ETH pool.

Against - 0.2 MCB / Block rewards, distributed to two parts: 1. AMM liquidity providers 2. Uniswap LPs for MCB / ETH pool

Vote Quorum: 10,000 MCB.

3 Likes

I agree this is a good proposal, then when we have a finished product on layer 2 or other gas efficient product we can resume the trader/AAM rewards.

1 Like

just running some basic math.

LP provision: 10 000 MCB
Current MCB in MCB/USDC and MCB/ETH: 380 000 MCB
Share of all LP’d MCB: 10 000 / 380 000 = 0.0263
Blocks per day: seconds in a day / 15 second per block = 5 760
MCB released per day: 1 152 MCB (0.2/block)

LP daily reward: 1 152 * 0.0263 = 30.29 MCB (~$65)
LP daily return (ex fees): 0.15%

How long will this liquidity mining run for with MCB/USDC?

If this was to only run for a few months, it is very possible that impermanent loss will negate all gains.

If AMM is suspended, the gas cost for removing liquidity is too high. For small users, the tokens mined may not be able to offset the gas cost. It would be nice if there is some compensation.