SIMP #2 - Onsen

Sushi Improvement or Modification to the Protocol #2

Introducing Onsen, our new liquidity mining incentivization program, a replacement of our Menu of the Week initiative intended to bring positive long-term liquidity changes as well as ensure stability of our platform.

Bringing new liquidity onto our exchange, decreasing slippage, expanding our pool offerings and creating exciting synergistic partnerships with other DeFi projects. Onsen allows tokens that are voted to become accredited to participate in our liquidity mining program.

58 tokens pairs will be eligible to receive accreditation. Every 90 days, the accredited list is re-evaluated to ensure that there is maximum capital efficiency for the SushiSwap ecosystem.

Onsen has 2000 allocation points (AP) set aside for it. These AP are what determine how much of our new token emissions (SUSHI minting) are awarded to incentivized Onsen pairs, the same way we allocate rewards to the permanent menu.

So how do we decide what token deserves what percentage of rewards? And how do we ensure that it benefits both the project in question and SushiSwap’s protocol as a whole?

By using a new weighting method to ensure that accredited tokens receive allocation points proportionate to their market cap!

Out of the 2000 AP, MISO (Minimal Initial Sushi Offering) projects get to take part of a 200 AP reserve that will initially be reserved for 3 months.

The remaining 1800 AP are divided based on the market cap size of the applicant token. To keep this manageable, we have created 3 categories according to market cap size average;

Midcap (25m-100m Market cap)

  • 13 pairs maximum
  • 100 AP per pair

Lowcap (25m-5m Market cap)

  • 25 pairs maximum
  • 20 AP per pair

Gems (5m-1m Market cap)

  • 20 pairs maximum
  • 10 AP per pair

We will make it easy for projects to contribute to a Joint Liquidity Mining contract in a few weeks by releasing a wrapped MasterChef contract where they will be able to distribute their own tokens in addition to Sushi. (Double the yield!)

As there are some projects already participating in a Joint Liquidity Mining initiative with us, or moving their liquidity to SushiSwap, we will accredit $AMPL, $zLOT and $SEEN tokens from the very beginning.

Applying to the Onsen program, applicants must send 1000 SUSHI or 2 ETH to be used in permanent, irrevocable liquidity provisioning in the SUSHI-ETH pool to ensure serious projects are partaking in the process.

This accounts for a total of 58 pairs, contributing a total of 58 000 SUSHI burned or 116 ETH locked in liquidity every 90 days (Note: For the first round the first 25 pairs to apply won’t have to contribute any fee), as specified per basic application requirements seen in the next section.

Basic Application Requirements

Our listed requirements below are not exhaustive. SushiSwap core team reserves the right to reject applications from tokens deemed to be a risk or loss proposition for the SushiSwap ecosystem or where there is contentious debate in the community about the token and its protocol.

If applicant has fulfilled the requirement of providing and locking liquidity as a show of good faith (1000 SUSHI or 2 ETH), and is rejected, the liquidity will not be returned and should be considered as a non-refundable application fee.

Any Applicant token that is already whitelisted at Balancer satisfies the base requirements to become accredited and only needs to conform to points 1 & 2 in the below list.

  1. Proposed pair must already exist as a liquidity pool with a minimum of $1,000 in TVL before applying.

  2. 1000 SUSHI or 2 ETH must be sent to the specified wallet, with the message containing the token’s ticker and proposed pairing, i.e “SUSHI / SUSHI-ETH” or similar.
    (The first 25 projects to apply don’t need to send any SUSHI or ETH to be reviewed)

  3. Applicant token must have an age exceeding 14 days, must not charge fees upon transfers and is highly recommended to be Verified on Etherscan.

  4. Applicant token must be listed on CoinGecko as we use their platform to provide a consistent way of evaluating the tokenomics for all Onsen applicants.

  5. Applicant token cannot be a token that has no intrinsic value proposition, and must have an overall function or purpose for existing. Tokens that are perceived by the community or core team to have no existential purpose beyond that of being traded will be rejected.

Disclosure & Optional Criteria

  • If the project applying to participate is headed by Anonymous founders, we will conduct a basic due diligence to ensure no malicious projects are being included in the Onsen program.

  • Audited projects are prioritized.

  • Projects willing to migrate their Liquidity Mining Programs to SushiSwap will be prioritized

  • Application reviews will be performed by 1-2 members of SushiSwap core team who will also choose 3 random community members to participate in the review (must have participated in at least 5 governance votes).

  • Community members elected to assist in the accreditation process will be compensated 500 SUSHIs for their time.

  • The fee is to curb spam and deter non-serious projects from applying.

  • Rebasing tokens might require some technical alteration to be supported.

This proposal is awesome, and the application process for new Onsen projects is spot on.
  • Yes - Burn the sushi
  • Yes - Lock funds in SUSHI/ETH
  • Yes - With modifications
  • No

0 voters

9 Likes

I like the idea of locking the SUSHI + ETH in the SUSHI/ETH pool. It’s like burning, but they still serve the purpose of growing the SUSHI/ETH pool. To be clear, the idea is a one way deposit, right? (Very easy to do with a helper contract or you can just send the LP tokens to a dead address)

90 days in DeFi is a very long time, 30 days is a bit short… I’d prefer a 60 day cycle.

6 Likes

Yessir, one way deposit sayonara.

We went with 90 days for the first round, but this can of course be adjusted downwards later too.

1 Like

I think burning will impact the price more than providing liquidity to SUSHI-ETH but providing liquidity will be more future proof and overall better for the project.

Hello friends it is the infamous BK.

I am proposing:

COL / ETH

SUSHI / YFI

COL / SUSHI

2 Likes

$BASED.madman here, proposing mbBASED (Moonbase) / ETH :slight_smile:

2 Likes

Personally agree with BoringCrypto for having a 60-day cycle (more flexible even for the first round?) and we can have 6 rounds then.

Really love the overall design especially the permanent liquidity provisioning.

And as many pools listed in MotW before just lost almost all the liquidity once farming incentive ended. I am thinking are there any similar methods to lock some permanent liquidity in the listed pools (If it makes sense haha, just a random thought)?

Great ideas, Sushi is getting far in the game ! Would love to see all these changes in the next months :wink:

Hello,

  • Burning 58000 sushi per 90 days is equivalent to 232000 sushis / year, around 0.14% of the supply burned by year.
  • Burning 58000 sushi per 60 days is equivalent to 348000 sushis / year, around 0.21% of the supply burned by year.

For each possibilities, the price can be positively impacted by the classic law of offer and demand, but I think, it can be more positively impacted by being locked, it will show the trust that people give to SushiSwap.

You said " due diligence " for Anonymous founders. It really need to be clarify and, if it happened, it must do by a professional third party. We are on the internet, it’s too easy to have fake ID and who care about the selfie.

You said " Applicant token must have an age exceeding 14 days " , isn’t too early ? Of course, it can attract early good projects, but if people lost money because this project is a scam and only available on SushiSwap, it can be very very bad publicity.

Since zLOT is part of the program from the start, how about zHEGIC too, pretty please?

Hi guys,

I very like this proposal, and I love to see SushiSwap continue to develop in a promising direction thanks to an amazing team!

Question: Would the SUSHI + ETH locked in the SUSHI/ETH pool also received their share of fees (i.e. diluting existing LPs in the pool)?

Asking project founders to commit money to your protocol seems like unnecessary friction. It’s far easier to run pools without establishing contact and collaborating with the projects you will run incentivised pools for.

If those projects wanted to incentivise pools they would just use their own tokens to do so, it is a bit unnatural for them to pay Sushiswap to run incentives.

It is possible that your model of slightly more active collaboration becomes the norm and makes MISOs something every project aims for … but it is just as possible that the friction causes us to lose out on a lot of projects. This is also observed in the CEX world, where smaller project pays for listings, but once other CEXes list them there is a race for listing (even without pay). In the DEX world, everything lists on Uniswap by default and Uniswap has brand name, so we have stiff competition for every pool.

3 Likes

All for this proposal!
Am I reading this wrong or is the maths off?
2000 AP - 200 for MISO = 1800 - 1300 for Midcap = 500 - 500 for Lowcap = 0 left for Gems?

Locking the SUSHI and ETH in the SUSHI/ETH pool is better than burning SUSHI. It improves the liquidity of the SUSHI token and its locked, which should remove any bad sentiment from dumping fears. Burning sounds good in the sense that its perceived to be good for the price of the token, but in reality that is not the case. I think there’s enough data in the past 2 years that shows that burning tokens doesnt really have a longterm net positive effect on prices and that bull markets happen because of other idiosyncratic factors rather than deflation of token supply.

Placeholder VC has also pointed out in this article - https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead that burning tokens might not be the best value action for productive assets. SUSHI is a productive asset.

Re: the “application fee”, i am assuming the 1000 SUSHI/2 ETH will be adjusted lower as the prices of the 2 go up significantly?

5 Likes

Good point. The math doesn’t add up here. Will someone please clarify?

Will someone please help me understand how these new Onsen(s) can incentivize liquidity from SUSHI users?

Based on my observation, most of the liquidity do flow to SUSHI-ETH pool due to high returns so wouldn’t potentially adding 58 more pools be overwhelming to SUSHI users? Decision paralysis is a real problem. Maybe there’s a way to strike a balance?

Those are max # of pairs. It’s unlikely that all the pair slots will be filled at once

1 Like

Miso isn’t out there so you don’t need to substract it.

Once it is live you can assume that the AP will be deducted proportionally

2000 AP = 1300 midcap - 500 lowcap - 200 gems

If we don’t have 58 pairs at launch the points will be spread among the selected projects
ex: if we have only 1 gem token it would receive the entire AP (200)

Or should the AP be directed to Low-Mid? Keen to have more opinions on this.

2 Likes

Maybe AP can rotate between midcap, lowcap and gems? Maybe offer protocols the opportunity to promote themselves could be another form of revenue stream…

I would like to propose a DFD/WETH pair. DFD (DefiDollar Dao) is the governance token for the project DefiDollar.

What is DefiDollar ($DUSD)?
DefiDollar (DUSD) is a stablecoin that uses DeFi primitives to stay close to the dollar mark. DUSD provides an avenue for diversifying your stablecoin holdings to hedge against an event where the underlying stablecoins e.g Tether (USDT), DAI deviate from their peg.‌ DUSD is collateralized by Curve LP tokens. For more details, please refer to our docs and join our discord. The project is audited.

Details

  • SushiSwap pool address: 0xb12aa722a3A4566645F079B6F10c89A3205b6c2c
  • Uniswap pool address: 0xac8833b0da01b8f2ca53f549f13b5790066a842d. Has ~$660k in liquidity.
  • The DFD token is already whitelisted in balancer.
  • We would like to co-incentivize the pool with weekly emissions of 50,000 DFD.
  • Would love to add 2eth liquidity to SUSHI/ETH pool and put that up as bond amount, once there is more clarity on the process and the destination for the LP tokens.

Our community expressed interest in having several other sushi pools denominated in DUSD (the stablecoin) - DFD/DUSD, ETH/DUSD and SUSHI/DUSD and we will explore them in the very near future.

5 Likes