Rebalance reward pools

Some pools are doing great, others not so much, to bring a bit more balance I’ve analyzed the performance and made some suggestions on changes to optimize volume and TVL. All feedback welcome… I’m sure there will be many opinions, but please think about this: are you saying pool X should have more rewards, because you’re in that pool? Or because it will help Sushi overall perform better :wink:

Happy to take all feedback and unfortunately I’m not sure how we could “poll” the community to get the best outcome for the community on this one… I guess I’m looking for comments such as: If we increase rewards on X by Y%, this will bring improve overall performance because Z… or: W can drop rewards on X because there are no other places that give much yield, so all liquidity will stay anyway…

Anyway, tough topic, this one… bit subjective. Anyway, some of my thinking behind the my suggestions:

  • UNI pool has no incentive on UniSwap, so we could still bring more TVL and Volume
  • For some pools we already have most of the liquidity and volume, because there are no rewards in other places… so dropping rewards somewhat will probably not lead to drop in liquidity or volume.
  • USDT is the best performing pool competing with UniSwap… UniSwaps pool is much larger. Doubling rewards may well double the TVL and volume. Worth the experiment, an adjust next month is it doesn’t perform.
  • SUSHI doesn’t perform great, but well, we should keep supporting it of course :slight_smile:
  • UMA, COMP, sUSD, BAND… these aren’t performing well and there’s no growth left in these it seems… better invest more in other pairs.

It’s not perfect, it can’t be… but is that a big step in the right direction?

  • Yeah, overall a good move…
  • Nope, this is garbage

0 voters

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I suggest the introduction of:

  • new pool WBTC - Stablecoin (USDC, PAX, DAI or USDT)
  • new pool Stablecoins i.e. USDC-USDT or USDT-PAX or USDC-PAX
  • the replacement of SUSHI-ETH with SUSHI-Stablecoin for a lower IL risk of the Sushi LPs

See the results (trading volume & fees) in 1 - max 2 weeks and decide to keep those pools longer or to replace them.

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The WBTC is coming in the Menu of the Week… a proposal to try new pools has already passed and is going live in 2 days. :wink:

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over incentivising the UNI-ETH pool could create additional selling pressure that can not yet be offset by the generated fees.
The UNI-ETH stakers are most likely to take profits on the farmed Sushi. After we implement the new lockup I believe this potential downside can be neglected.

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I think we should not mess with the Sushi-ETH pool. It will force the people who support Sushi to take their impermanent loss into permanent loss.

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As an uma/eth LP, I am against slashing rewards even further for available pairs.
If we are punished for being loyal to the pool (instead of being rewarding for long term staking), then the LTV will quickly evaporate and our pennies will go elsewhere, despite having to realize the IL.

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I agree the experiment alone to see whether USDT volume and tvl will increase is well worth it… looking at dai and usdc here too

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Props @BoringCrypto for crunching the numbers. This is the exact sort of data-driven analysis I’ve been looking for!

So suggested total comes out to 22000 vs. current 22600…but the new rotating menu will increase sushi emissions considerably, right? So it seems we need to slash rewards more for current pools to offset that?

I like most of your suggestions, but in the interest of being constructive, a few things I’d push back on:

I think you’re putting a bit too much weight on TVL. Yes TVL is nice but ultimately it’s just a vanity metric IMO. If liquidity is just sitting there and not driving meaningful volume/accruing value to $SUSHI holders it’s essentially dead weight. Or even worse, it’s creating sell pressure for SUSHI.

For example… DAI-ETH is one of the worse performing pools and its volume has been on the decline since Uni added farming - but it’s also one of the costliest. YFI is costing the same and delivering 4x the volume, USDC is costing the same and delivering 2x the volume. I think DAI-ETH rewards should would be put to better use elsewhere.

Same thing with SUSHI/ETH…yes maybe a bit controversial…but not sold on 4800 for SUSHI. Liquidity there can be substantially lower and it will still drive strong volume. And I think with 1/2 to 1/4 the current rewards, a good portion of LPs would either stay or stake at SushiBar instead maybe even sell ETH and add buy pressure to SUSHI.

SUSHI + DAI pools are consuming ~1.3million SUSHI/week. I think that should be much lower. For similar reasons, skeptical of doubling rewards for already costly USDT pool.

Also, I would consider removing rewards altogether for the bottom 5 pools and redirecting them into new more promising pools. They’re not delivering.

I think where SushiSwap can really shine, where it can compete with Uniswap and win is with blue chip DeFi tokens like YFI, LEND, SNX, LINK etc as well as more trending coins like MEME. So I think it makes sense to double down on those and more importantly add new pairs, as we’re doing some with rotating menu.

Basically I think a lower portion of rewards should go to stablecoin pairs, sushi/eth, and the worst performing pools and a higher proportion to new DeFi token pairs.

I agree the ones that are already way ahead of Uniswap don’t need further incentives but I think we should be aggressive in creating new pools and being generous with rewards there while being more conservative and slashing emissions with some of the existing pools.

2 Likes

Great feedback! The Menu of the Week is already included in the new 22000 number :wink: I’ll make some tweaks based on this and some other feedback I’ve received.

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Just throwing my two cents here. As far as I know, the 100 sushi minted per block is distributed to all farming pools. Some farming pools count as 4.8 pools (Sushi/ETH pool), some count as 2.3 pools (YFI/ETH), others as 0.2 pools (REN/ETH pool). So before we had the rotating menu, the 100 sushi was distributed to all 18 farms as if they were 21.3 farms (if we sum up their multiplier rewards).

But now with the rotating menu, all the 100 sushi are distributed to 28 farms as if they were 23.1 farms. This is because each new pool in the rotating menu, counts as 0.2 pools. But still, only 100 sushi is being minted every block.

So from my understanding, sushi emissions didn’t change at all. Am I missing anything here ?

But everything else you said, yes, it sounds great.

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Correct, it’s still 100/block. The lock-up change however now put’s 2/3rd (66.66/block) away to be released in 6 months. There is another proposal to reduce emissions over time: Schedule to reduce SUSHI/block to meet 250M max target

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Thanks for the clarification @TimHalpert and @BoringCrypto.

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One more thing I’d propose in light of recent developments…

Would definitely not reduce YFI-ETH rewards at this time.

YFI-ETH liquidity has been falling this past week. A bit too on Uniswap but much sharper drop on Sushiswap.

This is concerning since the YFI-ETH pair has recently been far and away the biggest volume and revenue driver for $SUSHI holders.

In the past week, for example, it drove 145.5 million in volume, more than the next 8 pools COMBINED.

So while I’m a strong proponent of cutting rewards and being more conservative with SUSHI emissions in general, this is a case where I think we need to be aggressive with rewards to maintain and cement Sushiswap’s strong position with YFI.

If anything I think we should raise YFI-ETH rewards. There are plenty of other pools where we can and I think should slash rewards, but this one is just pure gold and I wouldn’t want to see it slip.

Note, I am not a YFI holder or a YFI-ETH LP. Speaking here purely as a $SUSHI holder and community member.

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Should definitely increase rewards for usdt-ETH pools and take uniswap LPs, especially as farmers flee into usdt and usdc to reduce exposure during this period of uncertainty

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the value of sushi comes from the its overall trading volume. I supports having rewards for sushi stake, but i am suggesting to review the reward rate, if we can move some of the reward from sushi pool to main stable coin/eth pool, it may benefit sushi price more in long term.

For people who wants to dump sushi, so be it.

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I think it´s a great idea to cut the reward for the non performing pools and lower the reward where it´s too high. The money is better spent on pools with potential!

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Posting here b/c I think it’d be nice to start getting some more discussion going on rebalancing pool rewards. @Bento makes a good point about TVL being a vanity metric, and the more important metric is the overall volume.

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To some degree you are right. TVL is needed for volume though, to reduce slippage and give best prices. Especially important for people who use aggregators.

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That is a very good point. I guess in essence what we are really looking for is how to capture more TVL than uniswap, on the current and future high volume pairs.

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