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Proposal to add STAKE incentives (matched) to the SushiSwap deployment on xDai

Sushiswap is now live on xDai, however liquidity is too low to support trading volume. Sushiswap is a premier DEX on Ethereum and has recently added a multi-chain component. To provide trading incentives on xDai we propose adding $1M worth of STAKE liquidity into the protocol from the Ecosystem Fund. Sushiswap has indicated a desire to match this incentive resulting in 2M total liquidity added to the protocol.

We propose a 70/30 split in allocation with 70% allocated to liquidity for swaps and 30% allocated to the Kashi lending protocol. This will serve to promote both decentralized trading and lending on xDai. Additional liquidity will create pools with less slippage and promote DEX usage on xDai. Cross-chain arbitrage opportunities, as well as low, stable fees, will incentivize new traders and increase participation within the xDai DeFi ecosystem.

We propose allocating points to the following pairs:

STAKE-WXDAI
SUSHI-WXDAI

Community feedback on this allocation, suggested pairs or other comments are welcome below. This proposal is time-sensitive, and we are adding a concurrent 2-day snapshot vote to assess community sentiment and expedite the process.

  • Expected duration or delivery date

Once passed by governance processes, the xDai team will provide the corresponding amount of STAKE tokens from the ecosystem fund.

Ongoing snapshot vote can be found here.

1 Like

Just some questions:

  1. How much liquidity do other dexes on the xdai chain have?
  2. Where do you get the WXDAI tokens from? Do you have to sell STAKE for it?
  3. Where do you get the SUSHI tokens from? Do you have to sell STAKE for it?
  4. What about other token pairs? Nobody will use a DEX just for STAKE / WXDAI & SUSHI / WXDAI pairs.
  1. There are multiple DEX protocols running on xDai and this proposal is following the Ecosystem Fund roadmap meaning that these funds can be used to support multiple DEX, lending etc. protocols on xDai.

  2. Taken from the above link: " When providing liquidity to DEXs in the ecosystem it is necessary to provide 2 different assets. To prevent the sale of STAKE to acquire these assets, we will leverage protocols such as Unit Protocol and MakerDAO to lock in STAKE and acquire additional collateral to support liquidity. Any positions we open will be with a high collateral to debt ratio to prevent unexpected liquidation and unnecessary risk."

  3. STAKE incentive is matching incentive. SushiSwap will match with SUSHI tokens: Snapshot

  4. You are free to suggest other trading pairs. The SushiSwap is already deployed on xDai and this proposal is trying to incentivize new traders, bringing additional liquidity to the whole xDai ecosystem.

1 Like

Got it, thanks for clarifying Mojmir! :+1:

1 Like

Hi men, it’s graet idea.

To clarify on the presented proposal, $1M worth of STAKE is provided as liquidity rewards for the LP providers.

This proposal is time-sensitive, and we are adding a concurrent 2-day snapshot vote to assess community sentiment and expedite the process.

I don’t see the reason for such a proposals of this magnitude to be rushed through, as far as I’m aware this is by far the largest grant from the ecosystem fund, and 48 hours to research, discuss, and make an informed vote on the the proposal doesn’t seem sufficient.

Why is this time-sensitive?

To provide trading incentives on xDai we propose adding $1M worth of STAKE liquidity into the protocol from the Ecosystem Fund.

This is a bit ambiguous, is the STAKE from the Ecosystem fund being added to the protocol as liquidity, or is it being distributed to liquidity providers as an incentive?

Inferring from the Sushi snapshot proposal and the discussion about allocation points, I suspect it is the latter… In which case over what time period will this STAKE be distributed?

resulting in 2M total liquidity added to the protocol.

If the 2M is used to as liquidity incentives it is not being used to provide liquidity on the protocol, the expectation would be that this would subsidize liquidity providers and attract liquidity in the pairs incentivized pairs, but it is an important difference because when that subsidy ends the liquidity will not necessarily remain.

It would be great if this could be clarified as the duration of incentives and specific pairs are relevant to the question of whether or not this would be beneficial or result in significant stake liquidity on DEXes (as I understand, that is the goal here?)

7 Likes

If the roadmap is trying to avoid selling STAKE, isn’t an incentive that gives STAKE to Sushiswap LPs just going to result in them selling STAKE to realize the yield incentive?

7 Likes

I also think this is rushed and as a member of 1hive DAO which supported 1hive and xdai community in the last 6 months and Honeyswap as a main Dex i am surprised that this decision is rushed and I think we need to be given a fair chance and similar amount of Stake to subsidize on our upcoming Farms to be able to keep being competitive. I hope the xDai team will understand this problem @igorbarinov @Mojmir and consider our concerns.

4 Likes

I totally agree with @lkngtn
I also don’t understand why, when Igor posted this proposal: Allocation of HNY and STAKE tokens to the HNY/STAKE liquidity pool on Honeyswap - 🌿 Proposals - 1Hive on the 1Hive forum and received all positive replies to that proposal, no one from xDAi Stake replied at all. We only wanted to know how it would actually be done. We also suggested that suggested that Liquidity Incentives were a better approach due to the issue of who would hold the LP and that it would be a better solution overall but no one even replied at all. Why? But now they actually give Sushi a priority pass for some random reason when they never cared about xdai at all!

It is very sad that you the team guys from xdai network treat the 1Hive DAO like this, which was the first decentralized exchange to deploy on xdai network. In my opinion you should value what we did and treat in accordance, what you are doing is just the opposite.

3 Likes

I think this is a opportunity fo XDAi chain to have some spotlight and some well needed marketing, I can understand the opposition form the 1Hive DAO but at the end what good for Xdai is good for them. Sushiswap will bring liquidity and user to the chain that what we need now is more user more liquidity more exposure…

To provide trading incentives on xDai we propose adding $1M worth of STAKE liquidity into the protocol from the Ecosystem Fund.

Adding STAKE as liquidity is not the same as providing STAKE as liquidity incentives aka liquidity mining. If STAKE is to be added as liquidity incentives, it means that STAKE will be part of some liquidity mining program which implies that the miners will sell STAKE as they are farming them… Please help to clarify @Mojmir .

Moreover, 1M is a lot of money. You could a lot of things with 1M. For reference, Yearn, which is a much bigger project, gave away 150k worth of grants in Q1 2021. yearn-pm/2021Q1-yearn-quarterly-report.pdf at 4bcc5f0bdf8cfbf69c7276ef61f810be0bf65234 · yearn/yearn-pm · GitHub pg 11.

I think competition is good but IMO, if you’re doing this, you should also support your own local projects.

A few related points:

  • Proposal adds incentives and opportunities for trading on xDai - the community has expressed a consistent desire to increase incentives, reduce slippage, and bring in more users to the DeFi ecosystem on the xDai chain.

  • Matching incentive proposal initiated by Sushiswap community - proposed incentives of 1M on xDai & 15M on Matic. xDai snapshot proposal is designed to gauge community interest in receiving a 1 million dollar match to ecosystem funds and provide additional options and liquidity for users (liquidity concerns have been brought up regularly as a blocker for DEX adoption).

  • Re: Time frame. Signaling vote expedited based on Sushiswap proposal timeline to contribute 1M to xDai in matching funds. If their community votes it in, they need to know about ecosystem fund availability to proceed with the match.

  • Ecosystem fund is available to any existing project or projects looking to deploy on xDai. It opened March 31, 2021 and any project can make a proposal regarding usage of this fund to support the growth and usage of xDai. Ecosystem Fund Roadmap - xDai

There is a communication / expectations gap here. From my perspective xDai network has shown interest in providing increased DEX support with STAKE for some time: The proposal initiated Jan 18 by xDai team on the HNY forum to provide additional liquidity to increase the HNY/STAKE pool on Honeyswap. There was no resolution from HNY group re: vote, next steps etc.

It appeared the proposal died on the vine. Some follow-up/vote/coordination from the HNY side would be expected if there was genuine interest in proceeding.

Agave and Honeyswap Farms are about to launch – and have allocated a significant proportion of tokens for the purposes of liquidity incentivizaiton.

This to me, indicates the follow up - voting and coordination on the 1hive side if that is your criticism – both HNY and AGVE, since both have required votes and shipping code, and audits and now testnet to move the projects to where they are now.

This also means that it is possible that HNY and AGVE could match STAKE funds as well.

If the interest is simply to bring TVL and borrowing and Lending and another Swap into xdai - then I don’t see why the ecosystem token - STAKE – ought to be distributed to incentivize sushiswap, and not honeyswap or agave as well.

.:.

Another thing to consider is that there is really no reason to assume that Sushiswap would attract additional TVL into Xdai, since their L2 attraction has all been focused [right now] on polygon.

I mean, they basically opened a chain with a shotgun strat:

And value has flowed into Polygon.

This means that the desire would basically be capturing xdai farm and borrowing and lending, prior to the soon™ release of Agave and Honeyswap Farms.

Seems like a 1M kickback to sushi, to help them front run agave and honeyswap farms – while 100% of effort and resources of 1hive are contributed to xdai – and sushi’s focus is more of a shotgun capture strat.

Seems like effort and value goes a lot farther when it’s concentrated in its focus.

And if it’s an ecosystem based move – then, why is it focused on sushiswap.

[Insert boyfriend with wandering eyes meme – where boyfriend - stake - is looking at sushiswap, and 1hive is like – what?!!] – except at the same time the other woman in this scenario is having 300M TVL relations with another sidechain. ]

2 Likes

I can see no reason why this will add value to the xDAI ecosystem rather add to the selling pressure of STAKE. This proposal lacks the fine details so when you say “This proposal is time-sensitive” means nothing without putting in more effort to clarify how you seek to meet the objectives you claim here and how the funds are delegated and over what period of time? Why is this proposal time sensitive? I believe such decisions should take longer than usual as rushed decisions are usually bad ones. A proposal like this that is requesting a mammoth amount of funds needs more due diligence. The rush factor makes me hesitant to review. Perhaps if the Sushiswap protocol were able to prove it’s value to the xDAI chain by providing it’s own liquidity and marketing to increase the trading volume AND included a detailed report of exactly how the funds will be used then maybe just maybe something like this could be considered at a later date. My final statement would be add value to the ecosystem before asking for support.

3 Likes

I do not hold much STAKE but i an an xDAI community member. I have been using xDAI for over a year and recently helped launch https://agave.finance, already one of the biggest DAO on the chain and set to provide huge value to all the projects that call xDAI there home.

From the perspective of Agave, All new volume is good. we will directly benefit from the fresh capital bridged and i have no doubt that sushiswap will bring some liquidity. However the way the proposal is structured (giving 5% of available funds to mercenary farmers who will defo dump on STAKE holders) is a bit poor. Again I dont hold much stake so this is not my bone of contention.

My issue is the optics around this proposal. Rushing through what looks like a backroom deal proposal at the expense of the community who are actually building out our ecosystem is a straight up dick move. We are building here because of the ecosystem of communities that are here. Its these communities that make xDAI valuable.

IMHO these optics need to be fixed with some concrete steps or the damage could be significant

3 Likes

I really didn’t expect this to be my first post to this community.

I am an active 1Hive member as well as Honeyswap LP provider and general community supporter.

I have owned and provided STAKE-wxDAI LP on Honeyswap.

My problem with this proposal is that is it unfair towards the other players on xDAI and due to the rushed nature of the snapshot did not allow for LP stakers to vote. I would urge this community. If you are going to provide rewards for liquidity that you do it fairly across the ecosystem and hold a vote that allows the entire community to speak (not just a select few).

Reading the following I have come to believe that this 1M was a done deal before governance even voted.

https://snapshot.org/#/sushi/proposal/QmPuCGmPXv1UFqQPk9UF6WhRssHv5qMGKj5HU3wDqbugua

“We were also able to secure 1m$ in incentives from xDai which is another network where we are currently deployed fostering more liquidity and users on these various networks are key in establishing Sushi a go-to DEX on various locations with all the revenues accruing to xSushi holders.”

Lets put together a better proposal with some real discussion for the entire community about a larger stake than $1M for a better goal.

  1. Like a 2-5M fund to drive hack-a-thon or bounty reward to bring xDAI to L2 shard with L1 security (we all want that right?).

Why spend $1M on single LP provider when you can buy something important to everyone on the network? We can try to build liquidity here, or we can try to build for liquidity on a L1 secure shard which is more important? Do we want to further fractionate liquidity and use our rewards to kill one of the primary supports of our community Honeyswap/1Hive. or do we want to encourage a thriving ecosystem with multiple players.

I am not against SUSHIswap coming or xDAI putting up matching funding. 1Hive and rest of commuity fairly ask if we can also count on xDAI for putting up matching funding for something we as a community to do together.

I can say lastly as a past and current STAKE owner that could not vote that the STAKE community fairly consider the entire ecosystem first before randomly throwing money at new partipants.

I would urge STAKE holders to change their vote and turn this proposal down and allow all STAKE holders and community to speak on this.

4 Likes

I support the proposal in general, I among others feel this got pushed through way too quickly with no discussion. I among others have LP and I am unable to vote with my LP because of how quickly this was pushed through. We should at least give the community 10 days for alternate proposal. If we are going to incentivize $1M in stake maybe we should be looking at the larger picture and do a proposal that includes the scope of the entire community.

5 Likes

Did Honey.swap get a similar grant when they started up?

After chatting with some of the Cartel members we are wondering if there is a history of giving these grants to other DeFi protocols to help them with liquidity in the beginning or if this is unique to Sushiswap?