It may be a huge waste of resources at the moment to subsidize most of the current liquidity pools.
The best thing for SOV holders and the protocol could be to minimize the SOV inflation as much as possible except for those that accrue to stakers so that if you stake you essentially do not get inflated away.
We need to see some organic growth first and see where that organic growth is coming from and then perhaps subsidies can be allocated to boost that organic growth.
The only subsidized pool should be made in order to provide adequate liquidity for the SOV/BTC pool.
Compensating for impermanent loss generally might not be the right way to go. We could instead focus on one or two pools and get the liquidity in that pool to the point where trading is the most competitive in terms of price slippage/price impact against any other dex. We should be aiming to get BTC/XUSD cheaper to trade than it is on curve.
Is providing liquidity rewards the only way to achieve this?
This seems like an extreme solution to this problem. Wouldn’t it be prudent to carry on down the path that has been laid out before scrapping for something this extreme?
I fear there could be unintended consequences of this action, but i’m willing to be proven wrong. One of the often discussed obstacles to protocol growth is adoption, do we want to limit the ways in which people can interact with the protocol? Especially now?
I also wonder what happens to the liquidity currently in the pools if you eliminate their ability to participate in the pools. We run the risk of all of that SOV being sold into the market at once, and/or having all/some of it getting staked, exacerbating our staking problems.
(full disclosure, i’ve been in the SOV/rBTC pool since day 1) This also would feel a little like pulling the rug out from under the liquidity providers. Maybe not a full rug, perhaps just a welcome mat, but still. Thank you for providing liquidity while we worked through all the rough times, thanks for taking it on the chin with the IL, now we’re going to pull it out from under you before you have an opportunity for it to come back around. And yes, I do understand both sides of the IL argument, its a risk you accept when you deposit into the pools. I just wonder how alienating this could be for existing LP providers if we just turn all of it off all at once.
My point is, basically, seems like experimenting with adjusting the rewards in the pools, which we’re already doing, is a more prudent path than starting to turn features off altogether, especially now when adoption is the biggest concern.
btw when I was an LP, the biggest problem was that I had to discount the rewards by a huge amount due to the expected inflation rate and decline of SOV. I only had a limited amount of liquid SOV vested that I could use to hedge the SOV I was earning from providing liquidity. Eventually this was no longer worthwhile doing because it wasn’t scalable and the only pool that was worth it was the BTC/ETH pool.
As a former power user of Sovryn and one who sees the future potential, I sincerely think that if the protocol can do one thing and that one thing was the best way to do that one thing across the entire defi, then that would bring me back. And I think it has to come down to the cost of doing that one thing because that is the only objective thing that people can agree on vs whether something is more user friendly or secure etc.
I understand your point, and this conversation is probably best explored elsewhere than in this thread, but i don’t think the vision of Sovryn was ever to identify one simple functionality and keep the focus super narrow. Quite the opposite, perhaps to the detriment of adoption at times.
What would that one thing even be? Specifically?
I’m a current power user of Sovryn, and i’m most excited about the some of the new features on the horizon, and one reason is because it broadens the ways in which i can interact with the protocol.
How much liquidity do we need to target per pool? For example, if we want trades up to X size be under Y slippage, what amount of liquidity do we need? That will likely dictate some of our our rent vs buy decisions.
I’m a fan of any sort of PoL, but would it be difficult to set-up the dutch auction? Do you have an estimate on how much dev time? Could you walk through a more detailed example of how you see this working in practice?
Are you implying we borrow DLLR against rBTC…or SOV? If latter, I’m extremely hesitant until the token gains consistent stability.
Perhaps a trivial point, but what happens if we go down this path, make all the necessary announcements to draw attention, and then the demand doesn’t show up for the auction? $7m is a pretty big ask right now. What does that do for confidence in the project? What is plan b?