SGP 1 : Liquidity Migration

Voting ended about 2 years agoSucceeded

Summary

Incentivise the ETH/APW 1% Uniswap V3 Pool via Merkl on Ethereum to encourage migration of APWs liquidity from Sushiswap and compensate for Tokemak reactor retirement.

Context

Over the past years, Uniswap V3 Pools have demonstrated to be much more efficient than the V2 Pools used by Sushiswap. Most of the liquidity was directed by Tokemak reactor on the ETH/APW Sushi pair.

With the launch of the V2 approaching, we also assume that the volatility of the token might increase. Following internal discussions, the Spectra team thinks a migration should benefit APW’s liquidity providers and traders.

Rationale

The current liquidity on Sushiswap ($725K at the time of writing) is not sufficient to provide a good trading experience for Ethereum users.

On top of this, the Tokemak team informed us that they will retire the reactor progressively in the coming weeks, presenting a good opportunity for the LPs to migrate over UniV3.

Distributing liquidity over APW's historical price range on Uniswap V3 would improve the capital efficiency of the liquidity. This improvement would reduce the slippage incurred by traders. The 1% fee taken would thus be offset by the reduced slippage, making the pool highly profitable for LPs. This, in turn, would result in higher liquidity inflow, which would reduce slippage even further.

The allocation of APWs to incentivize liquidity on the UNI V3 pool for a short period would help to quickly bootstrap it while avoiding the need of a continuous incentives distribution as the volume on the pair and the fee should then compensate.

Proposal

The treasury should initiate a reward distribution to the APW/ETH 1% UNIV3 pool on Ethereum. A total of 40 000 APW will be distributed uniformly over the 28 days incentivised period.

These rewards will be distributed to owners of in-range liquidity in proportion to the volume they facilitate, using Angle Labs’ Merkl rewards distributor.

Additionally, the current distribution of APW to Comethswap LPs will be terminated (it was left stale for a while. Other network’s incentives could be considered after achieving enough liquidity on mainnet).