[IMPLEMENTED] Incentives to increase pDEX liquidity

Hey, folks! We’ve been thinking about how to incentivize liquidity providers to stake their assets on pDEX.

In the same way validators stake PRV to earn block rewards, maybe liquidity providers can stake assets to earn liquidity rewards!

Goals for ‘pDEX mining’

  • Incentivize more holders to stake their PRV
  • Increase liquidity pools to 1M+ PRV
  • increase trading volume

What’s pDEX mining?

You probably know that 10% of block rewards goes to Incognito DAO. The DAO fund is used for:

  • Protocol development
  • Ecosystem development
  • Community initiatives

It makes sense that the DAO should also support pDEX – with a percentage of DAO funds going straight to liquidity providers.

We are thinking of dedicating 20% of DAO funds to incentivize staking PRV on pDEX. This increased liquidity will also increase trading volume, which is good for both the community and the network.

Monthly DAO funds 72,933 PRV
Monthly pDEX mining rewards (20%) 14,587 PRV

This initiative will run for next 12 months. After this period, the community will decide whether to stop it or continue it, or whether to increase or decrease incentives.

To start, I suggest focusing on these two major pairs to maximize liquidity on the pDEX and bring on board more PRV holders.

pUSDC <> PRV
pUSDT <> PRV

Projections

This month (March), the combined liquidity of the pUSDT <> PRV pool + the pUSDC <> PRV pool = 185,000 PRV. Let’s say the initiative works, and April sees doubled liquidity, and grows steadily from there.

PRV staked in pDEX pools Current pool 185,000 400,000 500,000 600,000
Total PRV Reward (mining + trading fee ) 15,336.62 16,086.62 17,086.62 17,086.62
Interest for every PRV staked 0.083 0.036 0.029 0.024
Monthly ROI 8.29% 3.65% 2.92% 2.43%
Annual ROI (APR) 99.48% 43.76% 35.01% 29.17%
Trading fee earnings (0.25% fee) 750 1,500 2,500 2,500

I suggest focusing on these two major pairs to maximize liquidity on the pDEX and bring on board more PRV holders:

USDC <> PRV
USDT <> PRV

Liquidity providers will still have to supply both sides of the pair, but will earn from the PRV side.

Everyone, please give me your feedback. Share your opinions, suggestions – should we do this?


UPD: this idea is on execution Increase Incognito pDEX volume and liquidity pools (Finished)

Liquidity rewards program v2 (Live)

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:clap: Elegant solution! Think it will work.

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BUSD is growing so fast (https://twitter.com/ICO_Analytics/status/1240351809815957511). I would suggest to prefer BUSD (BEP2 token, not ERC20) instead of USDC. If you think that USDC is a must, all of USDT, USDC, BUSD may be rewarded.

Besides, CZ an Binance would advertise this step. Please see examples:


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Btw, I tried to contact Aave Protocol but up to now, no return. We may think a cooperation with it to reward the bridge custodians. To me, such cooperation may be a win-win deal.

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we are in chat with Aave, do you mean to cooperate with them to provide enough liquidity for trading, right ?

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I’m interested in this but have a lot of questions.

  1. trading fees would now be in PRV only?
  2. what is the payout schedule? (Both fees and mining)
  3. have you considered paying interest on both sides of the pair? I would take lower ROI on PRV if it came with a decent interest rate on the USDC side. Nexo makes it attractive with 8% on stablecoin and 30% on their own token as an example.

(FWIW I haven’t done any liquidity providing myself because you have to pull it to get a return. )

I will definitely consider this as an option though

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I meant the bridge custodians and didn’t think liquidity for pDEX. However, you may be right. Since the assets in the custodians will increase, some of these assets may prefer providing liquidity for pDEX.

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Yes, a solution not requiring removal of liquidity would be better. Such a solution would be beneficial for both provider and pDEX.
Benefit for pDEX: Provider does not need to remove liquidity to get fees and liquidity remains in pDEX longer.
Benefit for provider: Provider earns rewards passively so that other provider candidates are encouraged.

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Hi Josh,
thanks for the questions, let me try to answer on all of them.

  1. trading fee pays in the currently trades happen (PRV, pBTC, pETH, pUSDT…) as you can see right now, when you trade (fee calculates for you after every trade)

  2. what we try to achieve is when the fees are being paid in real-time and built on chain (Ideally),
    but if we decide to start now, it will be paid on a monthly basis until we build an on-chain solution.

  3. that’s very good question. It would be really cool to give to liquidity providers more, but on this moment we have in DAO only PRV so we can be giving away what we have only :sweat_smile:
    at the same time, we still thinking about numbers, what kind of incentives would be interesting for liquidity providers. so we should go deper into this topc. The tool should work economically, for the long term and ideally on-chain.

  1. Confirming that trading fees would remain as-is in this proposal?

  2. I think monthly is ok as a start, weekly or daily would be better until it’s on chain.

  3. Maybe incentivizing both sides is a V2 feature but definitely something you’ll need long term.

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actually user define the trading fee, it can be higher, based on the demand.

Hey guys! Thank you everyone for comments and participation on bringing this Idea to LIVE (@abduraman, @OhDonPiano @Josh_Hamon)

We started execution of this program. On the first stage we took only two pairs pBTC <> PRV , pXMR <> PRV

@Josh_Hamon additional APR rates as you suggested added to the pBTC & pXMR.

Read more here: Increase Incognito pDEX volume and liquidity pools

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