DIP-2 - Add liquidity incentives for wUSDC and wUSDC.b

Proposals (DIPs)
1

This proposal aims to enhance the liquidity for both XCH/wUSDC and XCH/wUSDC.b by incentivizing each side of the order book with 100 DBX/day. This adjustment will increase the total daily DBX emissions for incentives from the current 400 DBX/day to 800 DBX/day.

I propose to initially set to the following parameters:

Requested Offered Qualifying Range Reward Rate Maximum Spread
XCH wUSDC 50 wUSDC ā€” 5000 wUSDC 100 DBX/day 5% within market price
wUSDC XCH 1 XCH ā€” 100 XCH 100 DBX/day 5% within market price
XCH wUSDC.b 50 wUSDC.b ā€” 5000 wUSDC.b 100 DBX/day 5% within market price
wUSDC.b XCH 1 XCH ā€” 100 XCH 100 DBX/day 5% within market price

For more details about the parameters and current incentives visit the Liquidity Incentive Program docs.

Whats changing

If this proposal passes, the daily total DBX community emissions will increase from 400 DBX to 800 DBX.

Next steps

This proposal is now open for discussion and will likely move to a snapshot vote after DIP-1 has passed.

5 Likes
2

I agree with the proposal. Increased stability in stable coin liquidity will likely lead to more frequent trading activity, which could help promote Chia ecosystem adoption.

3

This is a great idea!
The activity over at Base clearly shows that liquidity incentives drive liquidity, and therefore enable big swaps without much price impact.

One idea:
Maybe stable coin pair should pay more liquidity incentives compared to other tokens?

1 Like
4

The spread of 5% seems to be too small for human traders. Only bots can support it.

10% seems like a more reasonable spread for people to trade with. 10% HOA incentives seem to work well.

2 Likes
5

I support adding incentives to these pairs in principle. Do we think the ecosystem would benefit more from concentrating rewards on a single stablecoin instead of spreading it across both wUSDC and wUSDC.b?

This can also optionally be supplemented by incentivizing the wUSDC / wUSDC.b pair, which is itself an important pair to allow flexibility for users.

3 Likes
6

I am considering to couple the incentives to the trade volume of a pair. For example, every three months, we would measure the trade volume for wUSDC.b or wUSDC for the past three months, and adjust the incentives accordingly. More trade volume results in more fees for dexie, so incentivizing a high-volume pair more would make sense.

However, more incentives will likely lead to more volume as well, so incentivizing a low-volume pair actually has its advantages too.

Combined Swap for CAT-CAT pairs may solve this problem, as it would be able to combine a path from both order books, such as wUSDC.b->XCH->wUSDC.

Overall, liquidity plays a role here too. A 5% spread for an XCH/stablecoin pair traded on an external liquid marketplace is different from a CAT/XCH pair mainly traded on dexie, such as DBX/XCH or SBX/XCH. If we incentivize liquidity up to a 10% spread, users will experience higher slippage.

If the 5% spread is an issue for DBX and SBX, then I would rather increase it for those pairs but use a lower spread for XCH/stablecoin.

2 Likes
7

Iā€™m agree. I think this is a good idea

8

This proposal is now open for voting in dexies Governance UI at DIP-2 - Add liquidity incentives for wUSDC and wUSDC.b

Closes approximately 10:28am UTC on Fri 26th July.

As always, we will reassess and adjust the incentives on an ongoing basis, with each adjustment being voted on.

1 Like