KIP-46: Trial Liquidity Mining on Velodrome  

Author
bangrygoose
StatusImplemented
Created2022-11-27

Summary

This KIP proposes to run a month long trial of Velodrome AMM incentives for a KWENTA/ETH pool.

Abstract

Kwenta is currently running a month long Liquidity Mining programme using Arrakis (Uni V3) with the aim of creating liquidity for $KWENTA. This proposal would allow a trial on Velodrome for comparison.

Motivation

Liquidity mining is an essential part of the token launch. Ensuring capital efficiency when inflation is at its highest would be prudent, and could free up $KWENTA for other future uses.

Specification

Kwenta should divert 50% of the current LM allocation (391.71625 KWENTA) towards bribing a Velodrome vAMM KWENTA/ETH pool. Velodrome also currently matches bribes using their OP allocation which has recently been renewed. LPs would receive an amount of VELO which is boosted by the voters, and voters of the pool would receive liquid KWENTA & OP. After the 1 month period performance of the different platforms should be compared and liquidity mining rewards adjusted accordingly.

Other ecosystem protocols including Thales & Aelin currently use Velodrome for Liquidity Mining successfully so there is reason to believe it may be the optimal solution. In Thales’ case obtaining TVL has been 4.4x cheaper, and 7x more volume per $1 of incentive in comparison to Uniswap.

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