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 $36.68.
### EDIT 03 Apr 2021
Please see comment IIP-24: MVI Liquidity Mining - - #6 by overanalyser for a modified liquidity mining proposal.
Title: MVI Liquidity Mining #1
Author: Overanlayser @Overanalyser
Created: 27th March 2021
Start liquidity mining incentives for the Metaverse index ($MVI).
Create a new $INDEX liquidity mining program for the Metaverse Index Set with the following parameters:
- Asset pair will be MVI:ETH on uniswap
- Programme runs for 90 day in three 30 day blocks using the same staking contract
- Programme will use a new Smart Contract with the same functionality as the one currently used for DPI liquidity mining.
- 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.
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).
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
- Liquidity pool size over the previous 7 days.
- LM rewards APY over the previous 7 days.
- 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.
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
- Start liquidity mining incentives for the MVI set according to the parameters above.
- Do not start liquidity mining incentives for the MVI set according to the parameters above.
- 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.