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CFP-2207-17: Liquidity mining reward for DFI ERC20 pairs at Uniswap (1 000 000 DFI) #186

@uzyn

Description

@uzyn

Overview

  1. Requester(s): @uzyn
  2. Amount requested in DFI: 1 000 000 DFI
  3. Receiving address: df1qlj5agfkr6vp3awqjff5agz42uazg923kec007u
  4. Reddit discussion thread: Reddit thread
  5. Proposal fee (10 DFI) txid: 119ac74e5ffd68de67cf713ef0258c60c8c376fcb7b36bff13b8ff17da911984

Funding Proposal

With Bybit and Kucoin now supporting DFI in ERC20 (Ethereum), it would be crucial to increase more utility of DFI in the ERC20 format.

DFI ERC20 Uniswap pairs plays a pivotal role around ERC20 version of DFI.

This proposal requests for 1 million DFI to incentivize liquidity mining for Uniswap DFI pairs, namely:

  1. DFI-ETH
  2. DFI-USDT
  3. DFI-USDC (new)

Rewards distribution

LM reward on Uniswap is proposed to be distributed as follows:

  1. DFI-ETH pair at 0.5 DFI per Ethereum block
  2. DFI-USDT pair at 0.25 DFI per Ethereum block
  3. DFI-USDC pair at 0.25 DFI per Ethereum block

Total: 1 DFI per Ethereum block.

Just like DFI emission rate on DeFiChain mainnet, block reward is scheduled to reduce by 4% every 7 days (in blocks).

Based on the following estimations:

  • Desired liquidity: $15 000 000 (currently < $2 000 000)
  • Blocks per day: 6 400
  • DFI price: $1.00

This would allow the reward to sustain well over 1 year (52 weeks), with initial APR at 15% – if desired liquidity of $15 million is hit immediately, or more if it's below the target, e.g. if liquidity is at $7.5 million, APR is at 30%. With trading commission of 0.2%, APR would be considerably higher.

For detailed working, see Google Spreadsheet.

A smart contract will be published on Ethereum mainnet that allows the rewards to be paid out in accordance to the schedule.

Upon publishing of the smart contract, DFI will be placed in the smart contract in tranches, for safety reasons; The goal is to have all 100% of it in the smart contract. My team or I will be taking nothing from the amount asked in this CFP.

How does this CFP benefit the DeFiChain community?

This should help DFI achieve the following:

  1. Increase the trading volume of DFI ERC20, alongside increasing the visibility and awareness of DFI in the wider DeFi ecosystem.
  2. Increase the utility of DFI ERC20
  3. With the increased trading volume, it should also encourage more adoption of DFI by other exchanges and services.

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