8IP#8 - new liquidity mining & POL program

Author: 0xmcfly.eth

This proposal is available on Snapshot for voting between April 18 and April 21 2021 5:00 PM CET. Only xMPH holders are allowed to vote.

Specification

This document proposes a new program to incentivize more liquidity for $MPH trading pairs on Ethereum Mainnet and Fantom over 12 weeks. It also covers some ideas to kickstart our POL (Protocol Owned Liquidity).

Bancor v2 POL and Bancor v3 LM rewards

We propose to provide 30k MPH in our Bancor v2 MPH/BNT pool as POL and allocate 5k MPH over the first 30 days as liquidity mining rewards to the upcoming Bancor v3 pool. We'll reevaluate the next two allocations according to initial results and publish a new proposal for the second wave of rewards on Bancor v3 with a max cap of 3k MPH/monthly.

Argument for

• This action could quickly offer some fresh air to our trading activities on mainnet while waiting for Bancor v3 LM program (dependant of Bancor release).
• Liquidity migrated from Bancor v2 to Bancor v3 will see its Impermanent Loss Protection go from x% to 100%, as IL Protection on Bancor v3 is Instant.
• LM rewards committed on Bancor v3 will become instantly part of the liquidity in the pool, and can be used for trading.

Argument against

• No complete impermanent loss protection until Bancor v3 release.

Required actions

1. Publish this proposal on Snapshot and organize a vote.
2. Create a transaction to send 30k MPH via the governance treasury multisig.
3. Migrate the pool to Bancor v3 when available and create a transaction to send 5k MPH via the governance treasury multisig.

BeethovenX pool and bribes

We propose to create an MPH/WFTM 80/20 pool on BeethovenX with an initial target of liquidity at $2.5m after the first round of bribes.

Bribes budget proposal:

• round 1: 1,750 MPH.
• round 2: 1,750 MPH.
• round 3: 1,750 MPH.

We also propose to invest $200k worth of MPH as POL positions on BeethovenX over this 3-round period.

The following rounds (4, 5, 6, ...) will be subject to a new governance vote. We'll reevaluate the next allocations according to initial results with a max cap of 1,750 MPH/round.

PS: As a community, we should look for partners that could be interested to create a liquidity pool with WFTM/MPH/XXX/XXX and provide a wider set of bribes. Please comment below if you have some projects in mind (LiquidDriver?).

Argument for

• BeethovenX is a friendly fork of Balancer. As far as we know, they are the most advanced DEX on Fantom, and they have probably one of the most friendly teams out there.
• Offering bribes to their community of voters could trigger a long-lasting relationship if we can sustain decent trading volumes and fees.
• BeethovenX allows custom pool fees. We should offer a generous variable fee of 1% by default to incentivize liquidity providers in the long term. Please advise if you have a different opinion on that topic.
• The creation of this pool and the associated bribes could incentivize a substantial demand for MPH in the short term by farming it directly in the Fantom fixed rate pools or by bridging it from mainnet.

Argument against

• The bribes approach isn't sustainable in the long term without a defined POL strategy on Fantom.
• Someone is probably working on concentrated liquidity on Fantom, so does the investment is worth it?

Required actions

1. Publish this proposal on Snapshot and organize a vote.
2. Create a transaction to send 5,250 MPH worth of bribes to BeethovenX protocol via the governance treasury multisig.
3. Create at least three transactions to build up our POL positions on Beethoven MPH/WFTM pool via the governance treasury multisig over the 3-round period.

Uniswap v2 LM rewards

Alongside our Bancor proposal, we propose to strengthen MPH/ETH liquidity on Ethereum Mainnet by rewarding Uniswap v2 liquidity providers with 5k MPH over 30 days. Our existing Uniswap v2 farm can be used to launch this new LM program. We'll reevaluate the next two allocations according to initial results and publish a new proposal for the second wave of rewards on Uniswap v2 with a max cap of 3k MPH/monthly.

Argument for

• Uniswap is the defacto trading venue for the majority of 88mph community. This generous LM program could probably attract a significant amount of liquidity for our MPH/ETH pair there.
• A trade of $10k to buy MPH on Uniswap v2 has a price impact close to 10%. This situation isn't sustainable if we want to continue to be an attractive DeFi community on Ethereum.

Argument against

• Generous LM programs aren't sustainable without a defined POL strategy on Ethereum. Over the coming weeks, we'll work with our partners to close some OTC deals and inject a portion of it to sustain our POL strategy via the governance treasury and developer wallet.

Required action

• Allocate 5k MPH to our existing Uni v2 farm via the governance treasury multisig.