DCP-31: SushiSwap V2 Rewards Optimization and Uniswap V4 Implementation Strategy

Summary

This proposal outlines a two-pronged approach to optimize RADAR's Ethereum liquidity strategy:

1. Extend SushiSwap V2 liquidity rewards for 3 months with a 50% reduction in rewards (60,445 RADAR per day, totaling 5,440,000 RADAR)
2. Initiate and launch of an ETH-RADAR pool on Uniswap V4

Motivation

Recent data from our SushiSwap V2 pool (01/12/2024 - 15/02/2025) shows:

• Total Volume: $2.82M with an average daily volume of $36,634
• Total Transactions: 2,521 (avg. 33 daily)
• Liquidity decreased by 44.69% to $238,185 (during this period)
• Generated fees: $8,463 ($110 daily average)

In previous proposals, we discussed transitioning to Uniswap V3. However, with Uniswap V4 now live - an event we've been strategically waiting for - we believe this is the optimal time to make this transition. This approach ensures we're implementing a future-proof solution rather than an intermediate step, allowing us to take full advantage of the latest improvements in DEX tech.

The current state indicates a need to optimize our liquidity strategy while preparing for next-generation DEX infrastructure.

01 December 2024 - 15 February 2025 | Sushi V2 RADAR-ETH Pool Stats

Abstract

Current State Analysis

• Current liquidity composition:
  • ~31M RADAR
  • ~44 ETH
  • Total value: ~$238k (15/02/2025)
• Current monthly rewards: 3.6M RADAR (~$14k at $0.0039)
• Staking APR: ~120%+
• Risk assessment:
  • Top 10 LP withdrawals could reduce liquidity by 53% (~$126k)
  • Currently, SushiSwap UI only allows for unstaking LP tokens (staking is not available anymore)

Strategic Transition Plan

1. SushiSwap V2 Optimization

• Reduce daily rewards to 60,445 RADAR
• Maintain minimum viable liquidity during transition
• Target adjusted APR: 60%+

2. Work on Uniswap V4 Implementation Uniswap V4 offers significant advantages over previous versions:

• Enhanced concentrated liquidity management
• More efficient swap execution
• Customizable hooks for advanced DeFi integrations
• Improved gas optimization
• Greater flexibility in liquidity range management

Long-term Vision

Over the next 6-12 months, we aim to establish a robust ETH-RADAR pool on Uniswap V4 through:

• Organic liquidity growth
• Targeted incentive programs
• Protocol-owned liquidity implementation (raised or bridged from other chains - Polygon or BNB Chain)

This approach will maintain Ethereum's critical role as our CEX bridge while leveraging next-generation DEX capabilities.

Benefits

1. Cost optimization through reduced rewards a. Current: 3.6M RADAR/month ($14k) b. Proposed: 1.8M RADAR/month ($7k)
2. Maintained competitive APR for existing LPs a. ~60% APR is still VERY competitive
3. Strategic positioning on cutting-edge DEX infrastructure
4. Enhanced liquidity management capabilities
5. Improved capital efficiency through V4's features

Drawbacks

1. Potential short-term liquidity reduction on SushiSwap
2. Initial complexity of managing dual pools
3. Potential technical challenges and learning curve during V4 implementation

Additional Resources

For those interested in learning more about Uniswap V4's capabilities:

• Uniswap V4 vs V3 Comparison
• Uniswap V4 Technical Deep Dive

Voting Options

1. Yes - Implement reduced SushiSwap rewards and initiate Uniswap V4 development
2. No - Maintain current strategy