SIP 51: sETH & sUSD Liquidity Incentive Source

AuthorNocturnalsheet
Discussions-Tohttps://discord.gg/2MmKtHb
StatusImplemented
Created2020-04-04

Simple Summary

Ease of access to synthetix.exchange is critical to the success of the platform, so this means new users must be able to convert ETH and other cryptocurrencies to Synths to begin trading on the exchange. For off ramp, users must be confidence in the stability of the sUSD peg at $1. A strong peg will provide confidence in both on and off ramp for trading in synthetix.exchange.

Abstract

This SIP formalises at the protocol level to divert 64,000 SNX from inflation into Curvepool to incentivise liquidity providers of the sUSD/USDT/DAI/USDC/TUSD pairing in Curve and reduce to 32,000 SNX from inflation into Unipool for the sETH/ETH pairing in Uniswap

Motivation

The trial has been successful for Curve pool and to ensure this mechanism to work long term it must be formalised into the protocol. Reduction of SNX for Unipool is to ensure that debt pool is not over sETH bias and provides an added incentive for sETH/ETH liquidity providers to switch to sUSD liquidity provision.

Specification

Workflow

  • User adds liquidity to sETH uniswap exchange or sUSD Curve pool and receives LP tokens
  • User then stakes the LP tokens at Unipool or Curvepool time staking contract respectively
  • Anyone can call Synthetix.mint() to mint the inflationary supply. This will then be sent to the RewardsDistribution contract where it will send an amount of tokens to the Unipool and Curvepool contract.
  • LP stakers will be assigned their % amount of SNX rewards based on their % of staked LP tokens against the pool of LP providers.
  • LP stakers will need to come to the Unipool or Curvepool contract or use Mintr UI to claim their SNX rewards anytime.

Rationale

By implementing this distribution mechanism at the protocol level, liquidity providers can be assured that the incentives will exist long term so the effort of establishing liquidity will be worthwhile.

Test Cases

TBD

Implementation

The ProtocolDAO executed the transactions on 8/9 April, 2020. https://etherscan.io/tx/0xad50275df0cb41738b64a6bfddf67fb93e47ad2e05cd9d3584bd137a4d1e7fcb https://etherscan.io/tx/0x1a9c0a85c3fae8d9f1946f5fec6b792da9e6da11b0e87140be445d19db027dad#eventlog

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