MGP-2 | Migrate PAR liquidity incentives from Curve to Uniswap v3 on Ethereum mainnet

Summary:

We propose to migrate the PAR liquidity from Curve to Uniswap v3 using Gelato/Sorbet to improve the efficiency of the liquidity and price of PAR on Ethereum.

Context:

Uniswap has introduced trading bands with their v3, allowing users to deposit liquidity in a selected band, increasing the relative liquidity within the band instead of providing liquidity for the entire price spectrum. When providing liquidity, users receive NFT tokens corresponding to their stake in the pool.

Gelato and Sorbet provide tools to simplify the process of adding liquidity and trading on Uniswap v3 by delivering a “classic” LP token structure, making it simple for protocols like Mimo to leverage these pools.

The governance has recently voted for Curve over Uniswap v3, assuming that their algorithm would provide comparable prices and that would not impact users enough to care, but this strategy has proven unsuccessful and needs to be corrected immediately.

Rationale:

In our setup, Uniswap v3 is up to 12 times more efficient than Curve for trading PAR and USDC. Therefore, we suggest moving the MIMO incentives from the Curve PAR/USDC pool to a Uniswap v3 PAR/USDC pool managed by Gelato.

At time of writing, on Mainnet, with a $2.4m Curve pool, you get a 1% price impact when trading 10,000 PAR for USDC.

On Polygon, with $600k in the Uni V3 (through Sorbet) pool, selling 10,000 PAR for USDC is only a 0.17% price impact, despite the 4 times smaller pool size.

The following simulations were also run using a $1200 Curve pool and a $1200 Uni V3 pool:

| Dex | Amount | Price Impact | |---|---|---| | Uni | 10 PAR | 0.03% | | Curve | 10 PAR | 0.01% | | Uni | 100 PAR | 0.12% | | Curve | 100 PAR | 11.42% | | Uni | 10 USDC | 0.01% | | Curve | 10 USDC | 0.01% | | Uni | 100 USDC | 0.11% | | Curve | 100 USDC | 7.96% |

Incentives Overview:

| Dex | Pool | Incentives | |---|---|---| | | | Before => After | | Curve | PAR/USDC | 35 => 0 | | Uniswap v3 | PAR/USDC | 0 => 35 |

Means:

This pool is already live. There is no cost change for the treasury.

Technical Implementation:

None needed.

Voting Options:

• Yes
• No
• Abstain