Liquidity Mining on L2 AMM - the DPI opportunity?

I am in favour of extending liquidity mining on Loopring whilst also turning off Uniswap LP incentives. If INDEX incentives is the only reason why users are providing liquidity to Uniswap then we can expect these weaker hands to migrate to Loopring’s L2 network in search of yield…

It is better to keep the incentives on L2 going past the L1 incentives as this will act to pull liquidity to L2 where the higher transaction costs from L2 to L1 will act as a natural barrier retaining liquidity once incentives are turned off.

We also want to have as much liquidity as possible on L2, so phasing out incentives in this sequence makes sense.

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Did I hear there is gonna be a loop ring wallet soon™ :smirk:

hey @overanalyser, just an update on some of the data:

Per Loopring - “446 addresses have at some point owned DPI.”

Over the LM period (up to Feb 5), there were 946 total swaps with the pool. Of those, 366 were selling DPI and 580 were buying DPI. Average tx size for the entire data set was 1.55 ETH, median was 0.5 ETH. For the txs selling DPI, average tx was for 1.84 ETH, while median was 0.51 ETH. For the txs buying DPI, average tx was for 1.37 ETH, while median was for 0.5 ETH.

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I think that the number of trades is smaller than I expected / hoped for especially considering the .$ 300K of daily volume.

However, it’s good to see that we have lots of small trades, so we are certainly allowing smaller positions to be taken while saving gas.

946 trades at ~$50 gas each is ~$47,000 of gas saved (less the elevation to L2…). At $22 the INDEX rewards have cost the coop about the same as the gas trade size.

I’m currently leaning towards extending the L2 rewards, but a reduction in the # of INDEX. Maybe reduce to 1,500 or 1,000?

I think if we reduce to 1,000 most people will likely stay as costs to move back to L1 would be high. Both will be a higher $ amount than we originally planned.