GHIP 3: Sushi LP Incentives

Over the past week, many community members have come forward asking for a proposal to allocate DAO funds to LP incentives to encourage $GAS holders to stake liquidity on DEXs such as Sushi or Uniswap. The team explicitly did not want to launch an LP without getting the consent of the DAO and the various pools set up on Uniswap and Sushiswap were done so by community members. You can find our heatcheck for this proposal here. We are proposing sending 30B Gas Tokens (10% of treasury) to the Sushi reward contract with an initial reward period of 6 months. We can send more Gas Tokens in the future if we decide to.

Rationale: Our primary reason for supporting LP Incentives is that it will reward users who forfeit their governance rights with Gas Tokens that they can acquire for voting purposes while they are providing liquidity. It will also attract new users to Gas and help stabilize some activity that is coming from airdrop claims. Successful projects have deep liquidity pools which we currently do not have. We chose Sushi because they make it easy to integrate rewards into their system, have already set up the GasRewarder contract for us, and will likely also contribute $Sushi rewards to the contract. The proposal is for 10% of the treasury (3% of the total supply) for a period of 6M to coincide with the end of the airdrop claim to encourage a deeper liquidity pool during the Airdrop period.

Execution: Sushi has already set up the GasRewarder contract, the transaction to initiate this can be found here. The onchain proposal is below:

Proposal arguments to fund the Sushi Onsen GasRewarder contract: Targets = [0x6Bba316c48b49BD1eAc44573c5c871ff02958469] Values = [0] Calldatas = [0xa9059cbb000000000000000000000000256e23dbcd898da965cfb5d90e0123fd4475d308000000000000000000000000000000000000000060ef6b1aba6f072330000000]

We will also communicate to Sushi to set the rewards per second to exhaust 30B gas over six months. We can add to this reward contract in the future if the program is successful.

Pros: This will help stabilize Gas Tokens and reduce the volatility from airdrop claim activity and those holders who chose to exit the community while attracting new members who have not claimed by giving them confidence in the DAO. It will also attract new members who will want to provide liquidity and further incentivize community members who are already doing so. It also does this in a decentralized way so that the DAO is not initializing a liquidity pool nor owning its own liquidity. It also allows the Dev team to concentrate on 2.0 without the overhang of having to set up our own liquidity incentivizing contract and leverages the Sushi ecosystem to take care of instructions. Successful protocols that have bootstrapped without previous funding have previously relied on this primitive of LP incentives and we are following that model.

Cons: 10% of the treasury is a large investment to make and it will also concentrate liquidity on Sushi, meaning that community members who have provided liquidity on Uniswap will likely have to migrate. The timing of this is also coinciding with the release of 2.0, which might take some attention away from our great initiatives that we have planned.