[Temp Check] Saga Uniswap v3 Liquidity Incentives

TLDR:

This proposal requests $250k in UNI from the DAO for six months to support five pools on Saga.

Saga is:

• Funding the Oku integration ($45k) and maintenance ($5k monthly) directly.
• Allocating 2m $SAGA tokens monthly ($700k/month at current prices, $4.2m $SAGA over 6 months at current prices) from the Saga Foundation

Saga:

Saga is launching its Liquidity Integration Layer (LIL), an innovative solution for liquidity fragmentation in horizontally scalable infrastructures. Uniswap V3 will serve as our canonical DEX. A meaningful, long-term partnership with Uniswap DAO will help cement Uniswap as a key player in the greenfield DeFi ecosystem in Saga.

Uniswap on Saga has already been optimistically canonicalized by the DAO in December 2024. The initial proposal and its associated contracts can be viewed here. Oku is presently serving as the only front-end for this deployment and will go live soon. The Saga team paid for the front-end integration and maintenance costs.

Independently from the Uniswap proposal, working with the Uniswap Growth Program, Saga Foundation will contribute 2mm SAGA tokens per month (~$1.0mm USD per month as of Feb 27, 2024) to the Uniswap V3 pools to bootstrap Uniswap liquidity on Saga. This proposal of additional UNI incentives will deepen liquidity and attract diverse LPs to expand Uniswap’s reach into the Saga ecosystem.

This proposal is presented in concert with the Uniswap Ecosystem Incentives Initiative (UEII)—the team will work in concert with the Saga team to evaluate the strategy and operations of the incentive program, as well as assist in reporting the process and results of the initiative to the DAO. The snapshot and possible later on-chain vote will be sponsored by @PGov.

Background on Uniswap v3 on Saga:

To prepare for Saga’s LIL launch, Saga Foundation has partnered with GFX Labs to deploy a canonical Uniswap v3 deployment on Saga. Since the deployment in December, the Saga team has been busy finalizing all the infrastructure needed to enable LIL with Uniswap v3 and Oku. The Saga deployment marks the first canonical appchain instance of the Uniswap v3.

The Saga team would like to partner with the Uniswap community to test the bounds of horizontal scalability with existing AMM designs. Existing AMM deployments are hamstrung by the limits of existing blockchain infrastructure. In an ideal setting, a protocol like Uniswap wants to maximize transaction volume from traders and arbitrageurs. However in practice, any significant increase in transaction volume on existing infrastructure leads to significant increase in gas costs. This counteracts any efforts to scale volume.

On Saga’s Uniswap chainlet, there are no gas costs and no variable infrastructure costs dependent on transaction volume. Also, launching a new fully decentralized chainlet and deploying a parallel Uniswap instance/shard can be fully automated. This means Saga is uniquely positioned to target a go-to-market plan that maximizes volume over all other metrics.

Here’s a series of tests we would like to run to gather data on creating horizontally shardable Uniswap instances on Saga:

Phase 1: Volume/Cost optimizations. Begin with maximizing volume on the first Uniswap Chainlet. A few easy levers are setting low swap fees (0.01%) and implementing intent solutions to lower costs of onboarding assets onto the Uniswap Chainlet from Ethereum and other ecosystems.

Phase 2: Horizontal Scaleout. Begin sharding into multiple Uniswap chainlet instances. There are engineering efforts required on Saga’s infrastructure to support sharding Uniswap instances across multiple chainlets while keeping the same front-end Oku experience. Once these are implemented, we can start experimenting with dedicated asset pairs in separate chainlets and even multiple chainlets for a single asset pair.

Creating a horizontally scalable Uniswap instance on Saga will ensure Uniswap and AMMs will continue to play a pivotal role in decentralized finance.

Proposed Plan:

The requested $250k in UNI incentives will target five key Uniswap v3 pools: SAGA / USDC (0.01%) — 30% ETH / USDC (0.01%) — 25% SAGA / ETH (0.01%) — 25% USDC / USDT (0.01%) — 15% SAGA / UNI (0.01%) — 5%

The above breakdown will be solely in relation to the $UNI incentives. SAGA-based distributions to pools may differ in weight and pair type depending on month-to-month KPIs. These will be reported to the DAO monthly by the UEII team.

Distribution:

Saga utilizes an in-house airdrop claims and distribution portal to distribute regular airdrops to recipients via vaults. The $SAGA incentives will utilize this method, but the Saga foundation will work directly with the Growth Program and UAC for determining the exact distribution methodology for the $UNI incentives.

Timing:

The $SAGA and $UNI incentives will commence after Oku completes integration with Uniswap v3 on Saga and opens up access to end users. The next Saga vault after opening Oku will see the first set of UNI incentives distributed.

Request:

$250K in UNI incentives for six months. The Oku integration ($45k) and maintenance ($5k monthly) will be paid by the Saga Foundation directly. Saga Foundation will also be allocating 2mm SAGA tokens monthly.

Overall Timeline:

Below is the proposed timeline for delegates’ consideration. The timeline is an estimate and may be extended as needed: Request for Comment (RFC) ends March 6, 2025 Temperature check March 12, 2025 Onchain vote: March 19, 2025 Oku to go live Feb 27, 2025 Incentives to go live: Depends on the methodology finalized with the Accountability Committee. Saga rewards will be distributed along the first vault after Oku go live (vault 10). Vaults will be distributed approximately monthly so $UNI incentives can align with any future vault schedules. Looking forward to the collaboration with Uniswap DAO to support the first appchain instance of Uniswap v3.

More Details on Saga

Saga is a Layer 1 to launch L1s, or “Chainlets,” that provide applications with infinite horizontal scalability. Each Chainlet is a replica of the Saga Mainnet, with the same validator set and security model. Saga’s mission is to enable the next 1000 chains in gaming and entertainment as part of the growing Saga Multiverse. Through Saga’s Liquidity Integration Layer, all Chainlets can freely transfer assets between themselves and with ecosystems outside of Saga as unified liquidity rails—the first solution for liquidity fragmentation in a natively multichain environment. In 2.5 years, Saga grew from 0 to 450 projects building on its protocol, 80% of which are gaming, 10% related to NFTs and entertainment, and 10% DeFi. In March 2024, Saga unveiled Saga Origins, a game publishing division devoted to bringing provocative, expansive and uncompromising games to market. Saga is the first and only web3 chain to establish a dedicated game publishing arm for developers to partner with to release their projects.

As of February 2025, Saga has the highest staking ratio among all chains at 78%.

Benefits of Chainlet-powered Dapps

• High performance and elastic scalability
  • Snappier applications with peak performance and speed with infinite horizontal scalability
• Fully Interoperable
  • Users can freely and quickly transfer assets between ecosystems using Saga’s Liquidity Integration Layer (LIL)
• Sovereignty and Flexibility
  • Better apps with optimal flexibility and customizability of the blockchain
• Revolutionary Token Economics Powers Costless transactions
  • More affordable transactions with commoditized blockspace
• Fully Decentralized
  • No single sequencer; no multisigs. All chainlets fully secured with a decentralized set of validators

Launch Chainlets as easily as deploying a smart contract

Launching Chainlets is simply a transaction on-chain and takes only a minute. The Saga platform automates the launching of Chainlets.

Traditionally, deploying an application on its own appchain takes multiple months of development, coordination and significant UX challenges in bridging and routing. On Saga, launching an appchain is table stakes.

Many projects have attempted appchain automation but have ultimately failed to gain significant traction. This is because simply automating the deployment of the blockchain is not enough. A successful appchain launch requires so much more: security provisioning, service on boarding, and bridging/liquidity.

Solve Liquidity Fragmentation with Saga Liquidity Integration Layer

Fragmented liquidity across chains leaves users frustrated and protocols struggling to grow. Enter the Liquidity Integration Layer (LIL) – Saga’s answer to fixing the mess. LIL is liquidity without borders.

With the Liquidity Integration Layer:

• Every chainlet is connected to every other chainlet automatically
• Every chainlet is connected to every other ecosystem automatically
• No need for manual bridges - infrastructure is all automatic and operated by our validators
• Automatic routing simplifies user flows

With Saga’s LIL, we’re building the backbone of the next-gen blockchain ecosystem with composable liquidity, simplified UX and true scalability.