MDP21.2: Uniswap v2 MTA/WETH pool EARN rewards

Summary:

In this forum post a reduction to the EARN reward going to the MTA/WETH pool on Uniswap was discussed. This has now been actioned and rewards are being reduced over an 8 month period to a flat level of 5,000 MTA per week.

The launch of Uniswap v3 introduces some opportunities and options that should be discussed by Meta Governors regarding the incentivisation of MTA/WETH on Uniswap.

Abstract:

The key questions to answer are:

  • Should we migrate the rewards to v3? If so how? Will v2 liquidity still be important to DeFi?
  • The original goal was to bolster the MTA tokens liquidity across DeFi. Do the capital efficiency improvements of v3 mean that incentivising liquidity with MTA rewards is a lower priority now?
  • How does yield farming on v3 even work? As each LP position is an NFT now, what would users actually deposit into the EARN interface? (Admitting my ignorance here)
  • Does anything change when Optimism and L2 gets rolled in?

Motivation:

Continuing to incentivise liquidity with MTA emissions on v2 does not seem like an optimal use of MTA rewards if the majority of liquidity migrates to Uniswap v3 over the short and medium term. Is there an opportunity for us to find a better strategy for incentivising MTA liquidity on Uniswap now v3 is live?

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Great discussion, and thanks for raising this @ScarceJim :+1:

I’m also only gonna be able to speak from a non-technical viewpoint, but I do have some things that come to mind regarding this:

I feel that I heard Hayden mention in a podcast that even simply migrating the v2 position to v3 without any adaptation will have benefits that are outmatching any legacy v2 position, so migrating seems an absolute necessity for us. (not sure either how pooled LP are going to work out, need a bigger brain person to chime in for this :grin: )

Feeling strongly that with the release of Uniswap v3, we could potentially use the deposited amount of MTA and concentrate it in a smaller range, so in actuality we might require a lot less MTA on Uniswap v3 in order to reach the same amount of liquidity of our token, which could go hand in hand with the reduction of mining rewards, as even with a 5K MTA distribution, we might still attract enough LP attention to maintain our current liquidity.

Personally, I’m super excited for this, and actually think this is going to remove a lot of headaches from a MTA/WETH perspective if the integration is able to be done smoothly.

On that note, perhaps an approach similar to how Visor Finance or Method Finance are deploying Liquidity Mining on Uni V3 seems to be a possible workaround, depending if that’s possible to deploy on a custom level or as a collaboration, as we could simply pool funds into individual NFTs and then have a Hypervisor farm the position? Big brain stuff once again, and it would require a more technically versed person to evaluate feasiblity etc…

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It’s an interesting take with Visor Finance and or Method Finance. There’s also Xtoken who will soon launch an fungible solution for Uni v3. It already got the attention of Hayden Adams.

I am not sure if this would be possible but i just thought about this :
it may be more interesting to intencivise a Musd/Weth pool, which would be materialized by an Ximusd position. The token holders could then use this collateral to earn additional interest in the mstable vault.

The linked xtoken article precise that pool charges a 0.05% fee on swaps, which is higher than what is proposed here by Cold_summer. The goal isn’t to have a competitive swap fee, but allow users to earn additional yield (Mta + XTK + yield from the mvault), meanwhile increasing Mstable TVL and bootstrap its liquidity.

There would be no need to add Earn reward, as the composability alone of this process should return sufficient yield.

I’m no expert and there’s too much uncertainty in what other protocols like (Xtoken, visor finance or method finance) could do with UNI V3, but it may be the occasion to start another collaboration.

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Great forward thinking ideas, I think it might be best to take somewhat of a “wait and see” approach to figure out what gets traction first before deciding what to incentivize. Tough to determine what will generate any sort of lindy at this infant stage.

Agree overall that the capital efficiency introduced by v3, only to be further improved by some of these other auxiliary solutions, means less need for liquidity rewards.

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