IIP-24: MVI Liquidity Mining -

EDIT 05Apr21

The original proposal will be used based on a 3,810 over the first 30 days for $140,000 as below and a 20 day TWAP of $36.68.


### EDIT 03 Apr 2021

Please see comment IIP-24: MVI Liquidity Mining - - #6 by overanalyser for a modified liquidity mining proposal.


IIP: 24
Title: MVI Liquidity Mining #1
Status: Draft
Author: Overanlayser @Overanalyser
Created: 27th March 2021

Simple Summary

Start liquidity mining incentives for the Metaverse index ($MVI).

Abstract

Create a new $INDEX liquidity mining program for the Metaverse Index Set with the following parameters:

  1. Asset pair will be MVI:ETH on uniswap
  2. Programme runs for 90 day in three 30 day blocks using the same staking contract
  3. Programme will use a new Smart Contract with the same functionality as the one currently used for DPI liquidity mining.
  4. Programme will have an issuance targeting certain pool parameters described below and calculated using the 20-day average price of $INDEX prior to launch and at day 25 and 55.

Motivation

The MVI index is the first community methodologist product from Index Coop. Following the successful DG2 vote, it will shortly be launched on chain. The product will launch with exchange issuance. However, this is much more gas intensive than a simple uniswap trade (100K + 80k per token vs ~180K = x7 gas cost ~ $140 vs $20 at 100 gwei gas price).

As there is no plan to seed the pool with capital, liquidity mining is recommended to establish liquidity. This will have a secondary benefit of boosting AUM.

The intention of the programme is to kick start liquidity for the initial 30 days, refine the rewards to target $5 M for days 31 - 60, and then deliver half the rewards to LPs for days 61 to 90 (note that if liquidity is non-sticky, then this could result in the pool reducing to $2.5 M by the end of 90 days).

Specification

Following the liquidity mining framework discussions we are targeting the following for the first 30 days:

  • $5 M liquidity in the Uniswap MVI:ETH pool.
  • 2% depth of $50 K
  • 35% APY.
  • $140,000 liquidity mining rewards
  • Using a 20-day price of $INDEX of $24.43 = #5,700 INDEX

Following the first 25 days of liquidity beginning, the product working group and treasury working group would review the following

  1. Liquidity pool size over the previous 7 days.
  2. LM rewards APY over the previous 7 days.
  3. 20-day INDEX price.

The second 30 day period would also target 5M liquidity based on the average mining returns over the last 7 days. If the pool is larger than $5M, then the rewards would be reduced in proportion ($10M pool would get ½ the rewards). Likewise, a smaller pool would get an increased incentive.

At 55 days, the second review would take place and consider the rewards due to $5M of liquidity, and then target a reward APY of 50% of this.

Rewards bands

The proposed programme of rewards is intended to allow some flexibility to target $5M, while responding to the market price of liquidity and the fluctuations of INDEX price. The intention is to minimise governance demands of this product launch (a single IIP for 90 days LM) while fulfilling the objective of $5M liquidity for 60 days, and $2.5 m to $5 m at the end of 90 days.

In order to reduce some of the uncertainties (for LP’s and the coop) in the proposal the rewards will be limited to the following bands:

Days 0 to 30: Fixed at 5,700 INDEX total

Days 31 to 60:

  • Minimum 2,850 INDEX (likely due to high index price and high liquidity)
  • Maximum 11,400 INDEX (likely due to low INDEX price and low MVI liquidity)

Days 61 to 90

  • Minimum 1,425 INDEX (50% reduction compared to 31 to 60 days)
  • Maximum 5,700 INDEX

FOR

  • Start liquidity mining incentives for the MVI set according to the parameters above.

AGAINST

  • Do not start liquidity mining incentives for the MVI set according to the parameters above.
MVI Liquidity mining
  • FOR: Start liquidity mining incentives for the MVI set according to the parameters above.
  • AGAINST: Do not start liquidity mining incentives for the MVI set according to the parameters above.

0 voters

2 Likes

For but I think it makes sense to account for a new 20-day rolling average

1 Like

My first thought was: This isn’t necessary at all. It’s a well thought product at the right time (okay, maybe 2 months too late :wink: ). But okay. Let’s see how this will work. Happy to see it launch in the next week.

A fair point, I was thinking we should consider something like the 20 day average based on coingecko opening price ending on a specific day.

I wondered about the launch day as the last time point, but maybe we use Monday the 5th, then we have a couple of days to modify the IIP (possibly as a reply @dylan :thinking:) with New INDEX token numbers.

Then we have time to deploy the contracts / tokens and write the liquidity mining blog post before launch.

2 Likes

Some more thoughts on how we could consider the liquidity mining multiple products.

Modification has been withdrawn, see IIP-24: MVI Liquidity Mining - - #10 by overanalyser

IIP 24 modification IIP-24: MVI Liquidity Mining -

@Overanalyser 03Apr21

Our goal as Index Coop as manager of the Metaverse Index is to provide the best experience for the customer. This means ensuring that MVI trades roughly in-line with net asset value (NAV) and that the volatility of MVI is in-line with the volatility of the underlying tokens.

However with 15 tokens in the index, the cost of arbitraging the pool is rather high at current gas prices, which means buying the underlying tokens could cause slippage and minting MVI directly could cost over $1000. With such a high hurdle before arbitrage trades become profitable, there is a risk that MVI could experience volatility close to launch, until the MVI/ETH pool has sufficient liquidity.

We have several options to address the problem:

1. Seed initial liquidity;
2. Increase liquidity mining incentives;
3. Remove tokens.

After reviewing the potential outcomes of each solution and assessing the effect to Index Coop and the MVI product, we settled on the following plan:

1. Maximise MVI issuance and liquidity during the first couple of weeks through a high incentive rate for a short initial period.
2. Taper the INDEX rewards during the next 11 weeks.
3. Have a specified taper so that LP’s understand the plan for the liquidity mining campaign and the coop understands the full expenditure.

These modifications are made in concert with the proposal for 90 day DPI liquidity mining.

IIP-28 DPI liquidity Mining #6

Specification

1. 7 Day staking contract with the ability to be topped up (Similar to DPI contract with a 30 day period)
2. Two x 7 days of 100% APY rewards for $10 M Liquidity. This is $27,400 of rewards per day. At today’s 20 day TWAP for INDEX of $34.64, this is 790 INDEX per day. (vs the proposed 700 INDEX per day from the 9th April to the 9th of May for DPI)
3. Then rewards would be reduced to 600 (Week 3) and then a weekly reduction of 50 INDEX per day.
4. In total, over 13 weeks the liquidity mining be fixed at 38,010 INDEX tokens (0.38% of total supply)
5. Liquidity mining of MVI:ETH targets a start time of 12pm PST 7th April.

|Week|Daily|weekly|
| — | — | — |
|1|790|5530|
|2|790|5530|
|3|600|4200|
|4|550|3850|
|5|500|3500|
|6|450|3150|
|7|400|2800|
|8|350|2450|
|9|300|2100|
|10|250|1750|
|11|200|1400|
|12|150|1050|
|13|100|700|
||total|38,010|
||Of supply|0.38%|

Comparison with the initial proposal

The initial proposal, IIP-24, allocated between 9,975 and 22,880 INDEX, so this is an increase in rewards intended to ensure a liquid launch, increasing the potential for arbitrage to take place ensuring the price stays close to NAV.

For: To initiate liquidity mining for MVI/ETH LPs as specified above.

Against: Do not provide liquidity mining incentives for the MVI launch.

[poll type=regular results=always chartType=bar]
# Liquidity mining MVI with modified specification
** FOR: To initiate liquidity mining for MVI/ETH LPs as specified above.*
** AGAINST: Do not provide liquidity mining incentives for the MVI launch.*
[/poll]

I’ve got to say that the drastic swings within days on the core details within liquidity mining program are tough to follow and understand. For this one, within the course of days we’ve 2-3x’d the amount and frontloaded the first two weeks with half a million dollars.

Would be great to have a version history. While it makes sense to frontload, and taper, hard to see where the justification for doubling the original liquidity mining program comes in.

I would also say that going forward and post-mortem, we really need to be using more than just the metric of servicing 1% at $xx,000 in slippage and also be evaluating our LM programs on the basis of trading volume / rewards, as ultimately, trading volume is the end-all metric liquidity mining programs should be servicing.

1 Like

I agree wholeheartedly.

The liquidity mining framework makes sense, but we still need to align and agree on objectives for each programme.

The current system of modifications every 30 days can not continue as we expand the portfolio.

I’ve added a slide to the weekly stand up deck so we have the opportunity to discuss on Monday and then review / agree a way forward.

1 Like

Totally agree that this is not ideal. To clarify, we were told Friday night that with high gas prices and so many tokens in MVI that we had to ensure liquidity would be there right at the start otherwise the token price would be quite volatile (arb trades are expensive on so many tokens especially at current gas prices).

As methodologists we were faced with the choice of removing 5 tokens just days before launch, or finding a way to incentivise liquidity. To be fair to OA with a tight time to turn it around, he stayed up to help draft the document and come up with a plan that worked. The incentives as laid out have support from Set and help us stay on track for launch with the right product while ensuring a good experience for potential MVI holders.

This isn’t saying anything new, it’s all in the post above but I can see that it would be hard to follow the justification. On a positive note, the amount of incentives aside, the plan is clear and will be communicated as part of the launch, making the calculations for potential LPs easier than something that changes every 30 days.

4 Likes

OK, I’m happy to say that we have resolved some of the uncertainties around initial seed liquidity and the initial liquidity mining programme is now viable.

As such the modification is not required.

The liquidity mining will use today’s 20 day TWAP (coingecko opening price) of $36.68, so the $140,000 for the initial 30 day programme will be 3,810 INDEX (127 per day).

My apologies for any confusion caused my the modification proposed over the weekend.

8 Likes

Hi guys,
I have a question about purchasing MVI tokens. When I tried buying 25 tokens using metamask on desktop it gave me a transaction fee of $34 using a gas price of 105, but it’s been pending fir 20 min. When I try to use the same Metamask account on mobile to make the same purchase it shows me a transaction fee of almost $800 !:flushed: I thought I remember reading someone here saying that the transaction cost could be high for this set for some reason but $800 seems quite high. Can anyone tell me if this seems accurate? Thanks

Could you please ask this in the Discord, there’s mvi-discussion channel there.

In short, $34 in fees sounds about right. My guess is that gas prices spiked and you bid was too low - that’s why he tx was pending. Buying through Uniswap shouldn’t cost $800.

1 Like