[Proposal] Balancer V2 Liquidity Mining Program

[markus]

Glad to see discussions around this pick up!

@Fernando

I propose that pools CANNOT stay less than 4 weeks in liquidity mining if they are elected to be part of it.

I don’t think we should move in that direction. A four-weeks commitment is too long - it reduces the flexibility of the program and I’m afraid it will hurt our ability to accomplish Goal #3 from Mike’s excellent post kicking-off the V2 Liquidity Mining brainstorm:

@mike

Taking a step back and looking at the broader dex space, one thing that has become clear is how fast narratives and interest shifts in the Defi ecosystem. In any given week new sets of tokens make up for massive % of overall trading volume. There was the uniswap & yfi fork phase, the algo stablecoin phase, and many more.

The idea with liquidity mining is to incentive liquidity that is healthiest for the protocol. And because accrued fees is how the protocol may capture value, real trading volume is the metric to try and align BAL incentives to. By being open in V1 to all tokens, incentives get spread incredibly thin when trading volume follows a long tail distribution. This means Balancer loses out on a lot of trading volume when it does not have competitive liquidity for the hot tokens.

GOAL #3: Agile. Liquidity mining should be agile to target high volume tokens

@Fernando

it would be a lack of respect with stakers that paid high transaction costs to stake only to find out that their pool will only be getting LM for a week

I understand the concern and appreciate the care for small liquidity providers, but I would rather not sacrifice the LM program’s flexibility for this. Eventually this will probably be addressed by solutions built on top of the staking contracts - eg something that aggregates BPT before staking.