Improved YFI-ETH Rewards to Drive Volume

Overview

YFI has been a critical volume driver for SushiSwap, but this is in jeopardy right now as the YFI-ETH pair loses liquidity and volume.

This is a proposal to ramp up incentives for YFI-ETH without increasing overall emissions, in order to restore this strong positioning and drive volume to SushiSwap.

Context

YFI-ETH has been a blockbuster volume driver and far and away the highest volume pair on SushiSwap.

Last week, YFI-ETH drove more volume than the next 8 pairs COMBINED.

More broadly, YFI is consistently one of the highest volume coins among both decentralized and centralized exchanges, and is likely to remain so.

But liquidity for SushiSwap’s YFI-ETH pair has declined a lot in the past few days, and in the last 24 hours, Uniswap surpassed SushiSwap in YFI-ETH volume.

Volume is what drives revenue for $SUSHI holders, so it’s critical to distribute pool rewards as efficiently as possible to drive maximal volume.

Proposal

Let’s try to reclaim SUSHI’s strong positioning with YFI-ETH with strong incentives, while not increasing overall SUSHI emissions.

  1. Raise YFI-ETH rewards to 4800.
  2. Slash rewards on underperforming pools to keep total emissions in check. some suggestions: DAI, AMPL, BAND, UMA, sUSD, wBTC, UMA.

Poll

  • Let’s do this!
  • No let’s not!

0 voters

While this sounds like a great idea… we already have most of the volume for this pair… there’s no ‘extra’ volume to attract. Increasing rewards on USDT however, can bring a lot more volume and TVL, because most of the volume and TVL is on UniSwap right now.

The YFI volume spike was temporary and seems over for now. SUSHI/ETH had more volume on SushiSwap last 24 hours. Volume is very much driven by market events. Volatility, crashes, bull-runs will create high volume. So will new popular tokens. Getting them listed with us and reward those consistently would be a good way to optimize our reward pools. This is what the menu of the week is for.

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We did have most of the volume for YFI-ETH, but we don’t anymore. Uniswap has edged ahead in the past couple days.

YFI remains super high volume - half a billion traded in the past 24h across all exchanges. It’s consistently one of the highest volume coins, and the highest volume DeFi coin which is where SushiSwap is best positioned to compete in my view.

The thing with USDT is that Uniswap has monster liquidity there due to UNI incentives, a pool with 450m tvl. So tough for SushiSwap to compete there. But YFI-ETH we can absolutely compete and win on.

At the least I think we should experiment with this and can always lower back down incentives if need be. I think it could be a really high bang-for-the-buck way to increase volume in the short-term, while we work on more long-term stuff.

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