I propose to launch a Merkl campaign to incentivize liquidity for the wDBX/ETH pool on Uniswap v3 on Base. The goal is to increase visibility for dexie and to diversify overall liquidity for DBX beyond just XCH.
Rationale
Liquidity providers of the wDBX/ETH pool currently earn the standard 1% pool fee. With this campaign, they will also receive a share of 200 wDBX/day distributed via Merkl. These additional incentives should attract more capital to the pool which provides multiple benefits:
Strengthens the DBX price in ETH terms (not just XCH)
Improves eligibility for listings on aggregators (CoinMarketCap, DefiLlama, etc.)
Enables ETH/XCH arbitrage flows via wDBX
Lowers slippage for users swapping in/out wDBX on Base
Potentially increases awareness of dexie among new (non-chia) users
I propose to run the campaign for 6 months, after which the results will be evaluated to determine whether to continue, adjust, or sunset the campaign.
Budget Summary
Duration: 6 months (with evaluation after completion)
Budget: 6,000 DBX/month bridged to Base via warp.green, totaling 36,000 DBX plus 0.3% bridging fees (resulting in an increased DBX inflation for the proposed duration of 5.75%)
Merkl is a tool developed by Angle Labs to enable efficient and customizable liquidity incentives for Uniswap v3 and similar AMMs. It distributes rewards based on LP position parameters (e.g., active liquidity range, volume contribution), making it well-suited for sustainable incentive programs. More about Merkl at https://merkl.xyz.
Request for Comments
This proposal is currently in Request for Comments (RFC) stage. Feedback from the community is welcome. If no major objections are made and there is rough consensus, it will be formalized as a DIP and moved to a governance vote by DBX holders.
Is the choice for Uniswap predicated on the customizable merkl vs setting it up on Aerodrome? Only reason I ask is that aerodrome is a greater overall source of liquidity on Base.
I believe it’s a great idea to incentivize liquidity providers on other chains. This can help increase the visibility of the token beyond the Chia ecosystem.
It would also be interesting to include a note indicating the address from which the incentive originates. I assume it comes from the same source as the incentives from the “Liquidity Incentive Program.”
It is a good experiment to see how such incentives can help the dexie bucks token and bring more attention to the platform.
Fundamentally, both Uniswap and Aerodrome support concentrated liquidity, and as far as I know, Merkl can incentivize both, so there’s no technical limitation. Aerodrome also has its own incentive system based around AERO.
I suggest Uniswap mainly because a wDBX/ETH pool with some liquidity already exists, and I prefer Uniswap’s more straightforward approach, unlike Aerodrome, which pushes you to stake your LP tokens to participate in the AERO ecosystem. Uniswap is also well integrated in aggregators (Uniswap Wallet, etc.). However, I’m open to running the campaign on Aerodrome if it makes more sense.
That said, in practice it mostly doesn’t matter for end users, since most swap aggregators (and most wallet UIs) will automatically route through the most liquid pool anyway, whether that’s on Uniswap, Aerodrome, or elsewhere.
By the way, something else I have been thinking about is using cbETH instead of ETH, so ETH staking yield would flow into the pool as well. But that would mean creating a new pool and maybe comes with some drawbacks.
I think the already present existence of liquidity on Uniswap is a strong argument for incentivizing on there. Also, to your point, appears to be a bit more straightforward than getting whitelisted and jumping through all the hoops on Aerodrome.
I have no objection to this proposal, but in parallel it would be nice to see a wXCH pool get created on Aerodrome as well, whether or not it is incentivized.
Makes sense, I will look into whitelisting dexie and creating a pool on Aerodrome.
Also some good news: dexie just got whitelisted on Merkl. A formal proposal will follow in the next few days and will be open for a one-week vote by dexie’s members.
The DIP has been approved, and the campaign has been created to begin on August 1st. Thanks to everyone who voted!
Note that due to the recent drop in XCH (and therefore DBX) price, the monthly distribution amount had to be increased slightly from 6,000 to 7,500 DBX to meet Merkl’s minimum thresholds. The total allocation remains at 36,000 DBX, but if the XCH/DBX price stays low, we may have to shorten the campaign by about a month.
To account for that, I’ve created the campaign for the first three months only. I’ll provide an update as soon as the first renewal that is coming up.
Liquidity providers don’t need to take any extra steps to earn incentives, they can simply go to the Merkl Campaign Page to regularly claim rewards. Based on current liquidity, the estimated APR is around 50% plus trading fees.
Official announcements will follow once the campaign starts. dexie’s docs will be updated to include details about this new incentive program as well.
