Thread by @litocoen

I have re-submitted the proposal for @uniswap to incentivize liquidity on L2, this time for Stage II of the governance process.

As such, the proposal is much more concrete laying out all the details of the liquidity mining such as length, no. of assets and how to reward 👇

The proposal strives to achieve two goals:

I. Kickstart L2 adoption by incentivizing users to bridge and shift their DeFi activity to L2’s

II. Offering deep liquidity for key pairs on L2

Number I is super important to understand this proposal.

If the goal was *just* to achieve deep liquidity we could have chosen a standard Uni V3 liquidity mining program a la Ribbon

This would get us good liquidity on L2 but most normal LP's would only receive a tiny share of rewards

https://twitter.com/freddycoen/status/1460919501428559879?s=20

Why?

Because these liquidity mining programs incentivize LP's the closer their LP range is to the spot price

Large whales provide liquidity on a single tick and re-balance their range every minute to get the vast majority of rewards

In Ribbon's case one whale (pink candle) is providing millions of dollars on a super narrow tick close to the spot price and passive LP's receive much less as a result

Uniswap V2 liquidity mining was better in that regard because it was easy for passive LP's to participate and they were not at a big disadvantage compared to whales

So my proposal is to use the best of Uni V2 and Uni V3 = Uni 2.5 😇

The idea would be to use fixed ranges within which everyone receives the same pro-rata share of $UNI rewards

E.g $1000/ETH to $10,000 this would cover both a very bearish and very bullish scenario

Users who want to rake in more swap fees can still set a more narrow range

With this approach we get deeper liquidity than on Uni V2 but still relatively easy for users to LP

These would be suggested ranges for the 3 months program but we could set-up an expert committee to define the ranges in an optimal way 👇

Think about all these new users who get to experience the magic of LP'ing on Uniswap V3 on super fast and inexpensive L2's and getting a share of the $UNI ✨

It will bring in tons of new users to L2's and have so many ripple effects

To keep the proposal simple I suggest to stick to similar pairs than the initial liquidity mining program

$WBTC/ $ETH
$USDC/ $ETH
$DAI/ $ETH
$USDT/ $ETH

No DeFi gov tokens

Optionally we could swap out e.g $USDT for a decentralized stablecoin like $LUSD or $sUSD

Rewards should be calculated based on a target TVL and target APR

The target TVL is simple = parity with L1 liquidity

Target APR = 10%

This would get us to a total cost of 1.5 million $UNI

Not a whole lot for Uniswap treasury but a huge step towards L2 adoption 🚀

Forum post: gov.uniswap.org/t/consensus-ch…

Snapshot: snapshot.org/#/uniswap/prop…