Co-authored by: the Tokenomics Workstream @dragos @SkirmantasJ @bayar @vandynathan

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Summary

In alignment with RADAR's evolving liquidity context and the dynamic cryptocurrency market, this proposal seeks to adapt and enhance RADAR's liquidity management strategy on SushiSwap V2. Considering the successful execution of prior proposals that significantly improved liquidity depth, and amidst a bullish market trend, we recognize the need for a strategic adjustment in liquidity rewards. This proposal aims to:

(1) remain on SushiSwap V2 and continue optimizing liquidity incentives by reducing the V2 rewards by 15% to 120,889 RADAR per day and a total of 10,879,983 RADAR over a period of three (3) months and

(2) shorten the rewards timeframe of rewards to allow us to act quickly within more volatile bull-market conditions

(3) to continue to review the feasibility of moving from V2 to V3, and/or utilizing protocol-owned-liquidity on Ethereum.

Motivation

This proposal is motivated by the objective to balance enhancing RADAR's liquidity and addressing the challenges of liquidity incentivization, including impermanent loss risks to Liquidity Providers (LPs). By refining the reward structure on SushiSwap V2, we aim to sustain appealing APRs for LPs, thus supporting RADAR's price stability and mitigating inflationary pressures on the RADAR token.

Abstract

Introduction

Our previous successful liquidity initiatives, combined with the market's bullish trajectory, call for a careful redistribution of rewards, ensuring sustained support for RADAR's liquidity without jeopardizing market stability.

With other continued liquidity initiatives such as the current rewards on Quickswap through our partnership with Gamma and future initiatives with Apebond which have raised the volume of protocol-owned-liquidity under management, we are adding more rewards onto the market whilst balancing growing in liquidity and the number of RADAR holders and PRO members. This data shows belief in our vision and confidence in our execution over the last months.

Optimization of RADAR liquidity incentives

That being said, balancing costs of liquidity with liquidity growth is important for our token, and also product growth. Given the potential complexities of new pool launches and the risk of impermanent loss, our proposal emphasizes the importance of maintaining our stance on SushiSwap V2 while sustainably reducing rewards.

Over the past six months, the increase price of RADAR has meant that the LPs are being duly rewarded and the team has more value to distribute. We therefore propose to balance the rewards with a 15% reduction and reducing the reward duration to three (3) months. This will provide us more flexibility in a very dynamic market, whilst still maintaining significant APR rewards to current and new LPs.

The current APR is somewhere around 46.2% (comprised of fees and rewards), and by reducing the RADAR rewards by 15%, we will only see a ~6% decrease in APR fo our LPs. Despite this reduction, our rewards remain competitive, reflecting our dedication to achieving our mission, broadening the RADAR holder base, and increasing the number of PRO users. Overall, the savings stand to be 1,919,997 RADAR.

Future liquidity improvements

To strengthen our Ethereum liquidity further, the Tokenomics Workstream will continue to review the feasibility of moving from V2 to V3, and/or utilizing protocol-owned-liquidity on Ethereum, when the market dynamics is in better conditions and liquidity is consolidated on the other chains.

We invite community feedback and engagement to refine how to execute this Proposal.

Benefits

• Liquidity Optimization and Cost Reduction: Maintain sticky liquidity on SushiSwap V2 and optimize liquidity incentives for liquidity providers (LPs) while transitioning to a more cost-efficient strategy.

Drawbacks

• Reduced Rewards: Lowering rewards on SushiSwap V2 may discourage some LPs, especially those who were attracted by the high APRs. This could result in a reduction in liquidity on the platform, but based on our analysis and the resilience of the pool, this should not have a material impact as the rewards are still competitive industry-wide.