Strudel R&D Update: Uniswap v3 liquidity mining incentives for wBTC-vBTC are here!
One of the things Strudel has been working on for the past few weeks is the incentivization of the Uni v3 vBTC-wBTC pool. We have been tinkering with solutions while waiting on the market to develop tools to help our cause. Our patience has paid off!
Covenants has come out with general-purpose farming contracts for Uni V3. Their implementation has several unique features which will be of service for our protocol’s use case. Through Covenants, we will be issuing 1000 TRDL per day for the next 30 days for the vBTC-wBTC Uni V3 pool as our first farming schedule.
Note: This incentive is separate from Phase 2.0 of our Strudel Liquidity Incentive Revision. This can be considered “Phase 1.2”. Phase 2.0 is still in the works, and wBTC-vBTC Uni v3 pools will eventually receive 20% of TRDL rewards and be fully incorporated into the Strudel dApp.
Why is all this important? Covenant contracts offer several benefits. From their documentation:
Every contract can contain one or more setups. A setup is a single Uniswap V3 pool, with its own NFT, in which multiple farmers can stake liquidity and be rewarded for doing so. Allowing multiple farmers to stake in a single NFT is the key innovation of our contracts. It offers major benefits for everyone:
Projects can tailor the right price curves for their respective liquidity needs
Farming is cheaper; farmers don’t have to mint an NFT to add liquidity. In fact, adding liquidity using our system is even cheaper than adding liquidity directly through Uniswap.
Trading is cheaper; every time a trade happens on V3, every NFT linked to the pair is activated, at a cost. So, the less NFTs linked to a pair, the more cost-effective.
You can customize setups with any price curve range, or you can have them automatically use our template diluted curve (the safest choice, tailored to mitigate impermanent loss).
Fee earning by liquidity providers in Uniswap V3 differs from V2 as fees can be withdrawn separately from liquidity. We have made this possible even for farmers with liquidity in the same NFT; when a farmer withdraws earned rewards, they also withdraw earned fees.
We will be issuing 1000 TRDL per day for the next 30 days for the vBTC-wBTC Uni V3 pool as our first farming schedule. We will be working in the meantime on automating the TRDL issuance towards these pools and incorporating them into Phase 2.0 of the Strudel Liquidity Incentive Revision.
The Big Picture
Now that we have the means to incentivize Uni V3 liquidity, the full scope of the TRDL protocol can be better appreciated. The current Uni V3 pool requires 99.5% vBTC (0.5% wBTC) at the moment and is paying TRDL incentives. This incentivizes users to purchase vBTC to deposit into Uni V3 liquidity, bringing volume to the Mare Imbrium Fund and Uni V2 liquidity pools. This added incentive will help the price of vBTC trend towards the peg and stay there via the combined liquidity of the Uni V2, Uni V3 and Balancer (Mare Fund) liquidity pools.
Another great incentive for this new pool is the ability to add TRDL harvests to Strudel’s new Mare Imbrium Fund. This strategy benefits the ecosystem and adds increased buy pressure for vBTC (another move towards reachieving peg). The Uni V3 incentive adds even more support to this virtuous cycle. Please see the Mare Imbrium Guide for more details regarding the #MareFund and how it works.
The current wBTC-vBTC Uni V3 farming setup is manually seeded with TRDL minted in the previous governance proposal. The current setup will last for a month and allow us to implement minting rights to a proxy contract dedicated for Uni V3 liquidity.
We will deploy vBCH:renBCH pools if we receive good results and positive input from the community on this first batch of V3 farming.