AIP 21: Switch to a new Uniswap V3 incentives system

This is a vote to switch 3 gauges (G-Uni agEUR/ETH LP, G-Uni agEUR/USDC LP, Polygon agEUR/USDC LP) to a new system.

Context

We need to change the way we incentivize Uniswap V3 LPs as currently we only support a fix range and our system is not flexible enough. Therefore I propose to switch to an off-chain computation, and merkle root based distribution of ANGLE to have a more flexible and hopefully more efficient setup.

Proposal

The new system, described in the forum post would work as followed:

There are 4 ways to be eligible for the rewards:

• LP directly on Uniswap through the NonfungiblePositionManager
• LP through Arrakis and hold Arrakis LP token
• LP through Arrakis and stake the Arrakis LP token on the Angle gauge (for backward compatibility)
• LP through Gamma once they’ve deployed the pool

Then the computation would be as follow:

• The weekly distribution is split against every swap that happened during the week proportionally to their volume.
• For each swap, the rewards are split between all LPs position in range, proportionally to: (0.4 * (fees earned by the position)/(fees of the swap) + 0.4 * (agEUR in the position)/(agEUR in the pool)+ 0.2 * (other token in the position)/(other token in the pool)) * veANGLE boost The first factor is in favor of more concentrated positions as they’ll earn more fees, but less risky positions still get a decent share of rewards.

The script I’ve made to compute rewards is here.

Finally the reward amounts would be brought on-chain using a merkle root.

The smart contract code would be this one.

Implementation

If successful, the switch would happen the epoch following the result of this vote. As the new system computes the rewards once a week, there would be a one week delay before rewards are claimable.

Risks

The main risk of this new system is that it would require a centralized party to act faithfully to do the computations and send them on-chain. However, the extractable value should remain low, and the computation script can be run by anyone to check the results.

I propose 3 options for this vote, and it'll be implemented only if the Yes option is above the 2 No options combined.