DOUGHpamine Incentives Program

SUMMARY

This proposal introduces a new design of the PieDAO incentives program proposed for both DOUGH & PIEs’ liquidity provision.

The proposal will touch the following 3 topics:
1) “PIE”/DOUGH + DOUGH/ETH pools construction on Sushiswap
2) Introduction of a per-block distribution of DOUGH incentives
3) Proposed launch of this program for PLAY/DOUGH & DOUGH/ETH

RATIONALE
The current incentivization of liquidity pools doesn’t seem to effectively boost growth in TVL for the Pies, or streamline the role of DOUGH at the heart of the PieDAO ecosystem.
Today’s proposal marks the start of a brand new approach to liquidity incentives, putting DOUGH at the center of all PieDAO products.

SPECIFICATIONS

1) “PIE”/DOUGH + DOUGH/ETH pools on Sushiswap
The construction of liquidity pools for PIEs as “PIE”/DOUGH pairs, in conjunction with the promotion of a deep DOUGH/ETH pool where most trades would eventually get routed through, could bring a number of benefits vs the current fragmented solutions thanks to Sushiswap’s multi-hops feature for the routing of swap orders across different pools. Primarily:

  • Drastic improvement of liquidity across multiple PieDAO products on a unique AMM. All PIE/DOUGH pools would in fact synergically leverage on a common DOUGH/ETH pool, that could be further incentivized for deeper liquidity.
  • Building of a whole new use case for DOUGH, on top of the current governance, meta-governance, and active collector of revenue streams from PieDAO products. All liquidity pools would in fact require the allocation of a 50% weight to DOUGH, soaking a large chunk of the available supply and driving further demand for our governance token.
  • Establish a correlation of DOUGH to the DeFi, Gaming and NFTs ecosystems. DOUGH has been historically following a fairly uncorrelated path vs most of DeFi tokens. By tying in together DOUGH with PIEs that represent the best of the various ecosystems, a higher degree of correlation would be established.

2) Introduction of a per-block distribution of DOUGH incentives
This new incentives design introduces a per-block distribution of DOUGH, based on the Alchemix StakingPools contract which was inspired by the battle-tested masterchef contract by Sushiswap. Core features of this new design are the following:

  • Runs on Periods of 200k blocks each (~1month)
  • Nominal DOUGH issuance starting at 6 DOUGH / block, with deflationary trend (5% reduction every 200k blocks)
  • Incentives rewards paid partially liquid (20%), partially escrowed (80%).
  • Introduction of a 0.5% Withdrawal fee collected by the DAO Treasury form leavers.
  • Reward allocated by governance vote for each period across multiple Whitelisted & Permanent Pairs
  • Newly incentivized pairs not to be voted out of whitelist for minimum 3 consecutive Periods.
  • Introduction of an “Extra-Kick” for the first Period of the program, boosting the DOUGH issuance beyond imagination to a staggering 12 DOUGH / block in order to attract the deserved visibility while celebrating the launch of the program! (* during the Extra-kick rewards would be paid 5% liquid/ 95% escrowed, and the withdrawal fee temporarily raised to 5% within the period).

Below a comparison of the nominal DOUGH issuance proposed as part of DOUGHpamine program vs the current one:

Below a projection over 1 and 3 yrs of the DOUGH monthly issuance for DOUGHpaming (+ Extra-kick) vs. Current incentives, also highlighting the liquid portion of rewards.

Monthly issuance DOUGH - 1 yr

Cumulative issuance DOUGH - 1yr
Cumulative issuance DOUGH - 3 yrs

3) Proposed launch of the program on PLAY/DOUGH & DOUGH/ETH
We are thrilled to propose (pending Governance vote) the launch of this new incentives program with the PLAY/ DOUGH and DOUGH/ETH pools on Sushiswap!

PLAY has seen an unbelievably warm response from the community and likely represents the perfect candidate to make a splash within the ecosystem, putting the right emphasis on this new incentive program.

Below the proposed specs for the incentivization of the two pools, exemplifying their evolution over 3 months also in term of projected APR to LPs for different liquidity levels (figures are merely indicative).

Under this scenario, currently incentivized pools would be initially maintained with reduced incentives, pending their whitelisting by governance vote, to take part in the upcoming periods of the DOUGHpamine incentive program.

CONCLUSION

We welcome any feedback and questions on the above proposal and target to move to a Snapshot vote over the next few days, to be ready for launch asap early next week.
Stay Crusty!

8 Likes

Not a fan of 0.5% withdrawal fee at all. That leads to even less TVL, and we need every bit we can get atm.

BCP liquidity for example is so low I can barely transact in it and I am just a average farmer.

Agree on everything else you said

3 Likes

Does this refer to withdrawal from the sushi PLAY/DOUGH and DOUGH/ETH pool?

I would love to provide liquidity but I hate impermanent loss and this will bite us in the ass with our beloved $DOUGH and the others.

I actually moved to Bancor with all my liquidity and will never move back.

I suggest that the pools are created on Bancor and you will see liquidity poor in like crazy.
Together with the Bancor team you can setup incentives for your pools.

First you need to ask the community for whitelisting, and then coordinate a rewards program.
We then would be exposed to the Bancor community and get also liquidity from other Bancorians.

Lets move to the future of AMMs and let us provide liquidity without impermanent loss via Bancor.

Also trading any other token is just a single hop: like $LINK <> $DOUGH

1 Like

Is there a specific reason for going with Sushi over Uniswap or Balancer? Based on my understanding, Uniswap is more popular and v3 will have some interesting changes for the AMM model and Balancer has better controls over the pool attributes. All three can take advantage of routers.

1 Like

Also one thing I dont like about this article is that you want to solve poor tokenomics with liquidity incentives. This is doomed to fail on the long run.

Focus in this article on the liquidity issue and create a new proposal for updated tokenomics of $DOUGH.
Dont mix them up. You cant solve the price issue with currently bad desigend tokenomics of $DOUGH with pouring more DOUGH on top.
But you can solve the liquidity issue with a clever incentive program.

1 Like

All have impermanent loss as a fundamental design problem.
If $DOUGH moons, how will you feel as a LP when 50% of your pool legs behind? Not goodie…

And I must agree that Balancer is better than Sushiswap or Uniswap. I dont see a reason to move to Sushiswap. Moving to Sushi wont provide more liquidity. Why should it?

If there is not enough liquidity, then rather looking for the AMM, the problem lies more likely with the underlying asset.

The problem is this proposal wants to fix all underlying issues of the tokenomics and indices with a move to Sushiswap? Doesn’t make sense.
We need to have other discussions right now about tokenomics of $DOUGH and better index designs.

This is incorrect. Uniswap at its current stage only provides multihop over ETH / WBTC, they are looking to change that in v3. My understanding is that trade on Balancer V1 would be a lot more expensive assuming they could enable this sort of routing.

As for now, Sushiswap would be the feasible option and they already listed DOUGH as a base asset.

Totally agree we should use that once available.

3 Likes

Please consider my feedback;

  1. Performing multi step swaps (eg, ETH->Dough->PLAY) is more error prone from an end users perspective. Anecdotally I have had this fail for me in the past.
  2. Performing multi step swaps increases the fees that the end user pays. These fees are collected by the AMM and not by PieDAO.
  3. “The current incentivization of liquidity pools doesn’t seem to effectively boost growth in TVL for the Pies, or streamline the role of DOUGH at the heart of the PieDAO ecosystem.”; The purpose of incentivization of liquidity pools is to counteract IL, not to incentivise TVL for Pies. There are other more effective methods of increasing TVL.
  4. “All liquidity pools would in fact require the allocation of a 50% weight to DOUGH, soaking a large chunk of the available supply and driving further demand for our governance token.”; This actually disincentives providing liquidity as the provider needs to account for two volatile assets.
  5. “Introduction of a 0.5% Withdrawal fee collected by the DAO Treasury form leavers.” More detail is needed here. Is this 0.5% of the total LP tokens staked in the pool? What is the point in rewarding LP providers with DOUGH but at the same time penalising them from removing liquidity?
  6. “Reward allocated by governance vote for each period across multiple Whitelisted & Permanent Pairs”; What is ‘whitelisted’ vs ‘permanent’? Currently this concept does not seem to exist and rewards are allocated by the dao. Are you proposing a more structured method of reward allocation? If so please provide detail.
  7. “Newly incentivized pairs not to be voted out of whitelist for minimum 3 consecutive Periods.” This is a good idea. Some users were burned with the ypie reward period being short. Detail needs to be provided as per point (6).

Thanks for reading.

6 Likes

I like that this provides more long term vision to better plan positions in advance. The three month cooldown from whitelist grants security to plan 3 months ahead in liquidity provisions and the extra kick helps coordinate seeding. That def helps smallers users participate with better confidence the gas wont eat their profits.

The switch from Balancer uneven weight to pure 50/50 should provide less slippage for DOUGH spent on incentives which I think is the right move.

4 Likes

I think the proposal makes a lot of sense and will add further value to DOUGH and boost liquidity and product growth.

One other thing to consider is that Sushiswap will also shortly be able to support double yield, so you will be able to earn DOUGH and SUSHI via Onsen program ideally.

4 Likes
  1. I’m going to read more about the Sushi mulihop feature before addressing this, as I’m not overly familiar but know NFTX has seen positive results. Gas difference on swaps should be minimal.
  2. More fees to LPs isn’t a bad thing if they are providing liquidity for our products.
  3. I personally disagree that incentives are purposed to counteract IL. They are for the purpose of encouraging economic coordination to provide liquidity. LPs on their own are valuable investment tools. Incentives are meant to encourage the behavior, not hedge risk.
  4. Better to use two volatile assets than one volatile and one stable as more potential intersections of price ratio. Volatility drives swaps which drives revenues.
  5. At 30% it would take about 5 days to capture the withdrawal fee. Even less at higher Liquidity Mining returns. This acts to prevent the behavior of large LPs exiting during periods of volatility to hedge short term IL, ensuring those benefiting the most are those providing liquidity across economic conditions. The new structure gives users security to plan 3 months ahead.
  6. My interpretation is the difference is no real difference. Where decommissioning a pool takes 3 months so there is certainty on a longer time horizon as to where rewards will be received.
  7. agree.
3 Likes

Thanks BlockEnthusiast for considering my feedback.

  1. For fees; my understanding is that there will be 0.3% per swap, with sushi taking 0.05%. Two swaps will add an extra cost of 0.3% that pie holders will need to pay entering or exiting their position, compared to the current state. I don’t think the benefits of this proposal represents the value 0.3% additional entry and exit fee. I believe the DAO should primarily consider providing value to pie holders over liquidity providers.
  2. Let us agree then to consider then that the only purpose of DOUGH rewards is to incentivise liquidity. I do not believe that incentivising liquidity is the best way to drive TVL.
  3. I can see your point here. I personally don’t want to have the exposure to DOUGH that 50/50 pairs with DOUGH would require, and would likely move my own liquidity elsewhere.
  4. To clarify; Is it 0.5% of the LP tokens held by the users farm contribution on withdrawal?
3 Likes

What will happen with the current BAL pools?

  1. Yes this will create a situation where users entering to Pies from ETH pay an additional 0.3% fee for a second pool hit.

But let us first compare this to the current state. At present we often use Balancer 70/30 pools, which have about 0.3% more slippage vs a 50/50 pool at the for the same order size relative to liquidity. We also often have split liquidity between Sushi Rewards and DOUGH rewards. This proposal allows us share liquidity and overlap rewards. As such Pie holders benefit from more coordinated pooling of liquidity and reduced slippage which should make up for the additional 0.3% and provide a better user experience for swaps making it easier to enter or exit a position.

This change imo primarily benefits Pie holders by better coordinating liquidity to better reduce slippage. This can reduce the need to redeem to swap several assets and exit staking/lending positions in PieVaults more effectively. I believe this will make users more confident they wont face as high slippage on exit and may be more likely to utilize Pies for a hold with the added confidence exits aren’t very high gas from many txns.

  1. LM is a way to drive TLV and is not exclusive. There are plenty of additional routes we can take to drive TLV in addition to Liquidity Mining.

  2. I totally understand that. For my curiosity, when you say move liquidity elsewhere, would this mean, a. provide liquidity for Pie’s with ETH in a non incentivized pool, b. not provide liquidity for ies but still hold Pies, c. Exit the Pies held since no incentivized route that meets your needs.

  3. As I interpret it, yes.

3 Likes

Thanks @BlockEnthusiast for the great points, which I totally second.

@margin, yes I confirm this being the way the withdrawal fee is intended.

One additional aspect worth considering is that, as part of a Treasury diversification effort it could make a lot of sense for PieDAO to also keep a balanced exposure in some Pies, of which a portion could be provided as additional liquidity within the 50/50 pools paired with DOUGH at no additional cost for the DAO (which holds off circulation >83% of DOUGH). This would improve the liquidity levels of PIE/DOUGH pools and contribute to the further reduction of slippage.

3 Likes

Thanks for getting this together. How does Sushi benefit from this? I like that DOUGH is given more utility by changing the swapping bridge, what are future plans of this? Are there more product ideas that benefit from ETH/DOUGH—DOUGH/PIEDAO? Trying to get the type of scope that comes with a partnership like this.

1 Like

I do enjoy the SUSHI experience though.

1 Like

Im just here to see if this passes and get a design ready. Smarter heads like you guys and gals know better than me. :grin:

I’m confused here. so is it 0.5% on your ( initial deposit + you gain) or (initial depositif only) ?

I think it’s a good idea if it helps DOUGH, even if i really liked the BCP pool (only BCP), but i understand it doesn’t really help $DOUGH.

Could we also think at a xDOUGH, or something to really make $Dought attractive ? And stream fees generated to holders ?

1 Like