Liquidity mining program changes

Hey everyone. First of all, great to have my first post here! Looking forward for this forum to become a hub for Loopring community discussion and engagement.

I want to kick it off with a topic many people have good and strong opinions on: liquidity mining. More specifically, extending the duration of a round beyond 14 days. And other changes as well.

As you know, the current liquidity mining framework on Loopring L2 is rather new, and we’ve been tweaking some parameters as we go, learning. As an example for those unaware, here is the current round, round 4.

Proposed changes

  1. Liquidity mining campaigns (i.e., any incentivized AMM pool or orderbook pair) can last longer than a 14 day round. They can last up to 6 months (can be extended beyond 6 months once that time is up).
  2. 14 days are still the main ‘unit of time’ for liquidity mining purposes. It is the smallest unit. A liquidity mining campaign must be for at least 14 days.
  3. Regardless of length of full liquidity mining campaign, rewards are paid out every 14 days. (With the same 1-3 day leeway for actually double checking the calculation & sending the rewards on L2 to all LPs/market makers). So if a liquidity mining campaign is for 2 months, (or 4 x 14 day periods), payouts would happen 4 times, in equal amounts per time. This is so you are not waiting for a long time to receive your rewards for longer campaigns.
  4. Liquidity mining campaigns can start every Wednesday. Not waiting until the end of a prior ‘round’ anymore. Instead, any campaign, for however long, can start on any Wednesday. We choose Wednesday because we need some specific time to be able to configure the relayer for the mining programs, and if needed, list the new asset or pools or pairs. It is a manual process to do this, so best to be done in weekly chunks. Currently, Wednesday is indeed the day we try to process all new listings. So Wednesdays will become a ‘big day’ for Loopring and Loopringers! New assets/pools/pairs, new liquidity mining campaigns launching, and some old ones could of course be elapsing on Wednesdays, meaning payment is due right around then, or the day or so after.

We feel like this is a good format to better satisfy LPs, L2 users at large, project/reward sponsors, and the team.

Curious everyone’s thoughts. Please jump in whether you like it as is, or have some different ideas. Thanks!

9 Likes

Nice changes. The increased predictability will help attract more users to consider LPing with loopring.

1 Like

I really like all these proposed changes. One minor thing I would like, which might already be part of the plan, is if campaigns could easily be extended in advance. Say there’s a 3-cycle (3 times the 14 days) liquidity mining campaign, and it’s in the final week. Whoever is incentivizing should be able to tack on additional cycles at any time, instead of just waiting until the end of the whole campaign to renew. This would allow for a little more leeway in knowing what to expect for people providing liquidity.

2 Likes

I think this is a solid idea, especially for projects which are in the early stages of incentivizing liquidity and may still be on a learning curve about best practices or what works best for their community. That level of flexibility will be a boon and definitely more attractive to projects vs a structure that is too unforgiving.

1 Like

I like this framework and excited to see it put into practice! :slight_smile:

1 Like

For sure. That is indeed part of the plan, sorry wasn’t stated explicitly. Basically, as long as they signal this intent with enough advance warning, it’s perfect. As if they were any other ‘new’ campaign planning to start on that Wednesday as well.

1 Like

These changes all sound great! Looking forward to implementation, and maybe some stable AMM pools in the future too :grin:

1 Like

I see the changes as a great way to bootstrap the liquidity and to increase the pool sizes. This will in effect help reduce the spreads and slippage impacts of swaps.

I know that every Wednesday something new is coming out so the timeframes are a bit short and prior notification may be challenging. However, would it be possible to have some sort of calendar of events especially for those larger forward planned incentives.

This provides some time for promotion to allow people to join the pools rather than just finding out on the day what is coming.

Maybe even a channel for the latest or upcoming incentives.

3 Likes

I just wanted know if we can expect this to take effect with round 5, if they aren’t any major concerns? Or is this planned for later?

hey B. as you may know, the reason we do stablecoin to stablecoin orderbooks instead of AMMs is because our AMM curves are not so “pegged asset to pegged asset friendly” right now. i.e., we are more Balancer/Uniswap vs Curve.

so it is much more capital efficient to allow people to quote USD stablecoins vs USD stablecoins on the book, rather than a pool, which would take tons of assets to provide deep liquidity/protect against slippage for those swap types.

if you are saying hopefully this changes in future, then yes, perhaps!

1 Like

Great points Ben.

We would like to give more advanced notice. And we would like to have new pools up for some time before LM campaigns begin. But in practice, as you said, we may not be able to in all cases, as things move fast.

I think a Discord channel would be smart! Maybe “liquidity mining”, where we discuss all things on that topic, including trying to give a headsup whenever we can. Please go ahead and make that channel if you wish, you have the power as a mod :slight_smile:

1 Like

Good propositions Matt, this wil prevent liquidity flowing in / out Loopring every time a liquidity mining stops after 14 days like it is now… Looking forward to it!

Im liking the idea of longer campaigns but still confused by having to hold both currency pairs at the risk of impermanent loss.

Why not have LPs stake to one pool on each side of the currency pair and then arbritage the pools in the background after every trade? In this way everybody wins, the trader is made whole and the pools are reconciled after each trade, the book stays balanced, LPs collect their rewards and risk is minimized.

I think LP would be attractive to a certain demographic if providing liquidity were a painless, riskless process with ample reward.

Hey loc. Sorry I missed this one. Truth is I was waiting to find out the same myself! I believe it won’t be beginning this week. But in some ways, it will, since some projects have already signalled to doing multiple month campaigns, so it is effectively that some outcome. But the operating/marketing of it may take effect after this week. We will discuss this more on the call today :).