Thanks for the recommendation here @Fernando - I’d be very keen to contribute to this discussion on an ongoing basis. Ballers will need to regularly vet Tier 2 and Tier 3 pools, meaning it’s very important that we have checks and balances to ensure the best tokens are being taken into consideration. In this sense, I’d agree that overly engaged community members such as @delitzer and myself should provide insight to the Baller’s decision making process while still allowing them to make the final call on what is and isn’t included.
Adding some thoughts on @followthechain’s proposal around Tiers which I absolutely love:
This framework makes a lot of sense to me. There’s definitely going to be some nuance around Tier 2, and I would even go so far as to suggest that Tier 3 is ad-hoc allocations on a case by case basis, rather than a Tier itself. That way there can be the primary pools (Tier 1), seasonal pools (Tier 2), and LBP incentives (say X BAL for Y amount of time).
I also think there’s much to be discussed around @markus point on HOW we introduce the new liquidity mining schema in light of V2.
While I generally agree we want to be aggressive about incentivizing the migration to V2, it’s important that we do not alienate partner pools who have built on Balance since day one. In the case of partner pools like PieDAO or Perpetual Protocol, pulling all their BAL rewards overnight is not a decision to be taken lightly.
Instead, I’d recommend exploring ways to scale down the rewards over a few weeks (similar to @followthechain proposal) such that a % of the 145k BAL is migrated to V2 each week, with the goal to have near 100% of BAL rewards migrated within the first month of launch.
I believe that certain V1 pools like the 80/20 AAVE/ETH pool should also retain an ongoing BAL reward allocation, however this may be better to address ad-hoc rather than baking it into the V2 reward breakdown.
Lastly, @rabmarut brings up good points about the allocation of Tier 1 rewards. I’ll just say that there is clearly a lot more discussion to have around the breakdown of the rewards to different tiers.
Lots of detail to work through but the high level architecture is certainly here @followthechain !
Excited to contribute and bring this to life
This proposal talks through the post-migration V2 LP program. This will be rolled out gradually alongside community feedback and iteration.
This proposal suggests the following schema:
- Tier 1 - 60k BAL - Important pools used for multi-hop routing to be heavily incentivised.
- Tier 2 - 50k BAL - Partner pools and large cap token pools to be incentivised for their value-add to the Balancer ecosystem.
- Tier 3 - 35k BAL - New, upcoming and LBP pools to be rapidly included in the program.
In total, 145k BAL is allocated across 28 pools and all tiers per week. Each pool within in each Tier will receive a fixed amount of BAL, detailed below.
Tier 1 Pools:
Four pools in total. The pools initially proposed are:
- 80% BAL | 20% ETH: primary ETH/BAL liquidity pool
- ETH/DAI or ETH/USDC: primary ETH/USD liquidity pool
- ETH/WBTC: Primary ETH/BTC liquidity pool
- DAI/USDC/USDT: Primary USD stablecoin pool
Tier 1 pools and LP incentives will be set until governance decides to make any necessary adjustments.
These pools will receive 15,000 BAL each per week, bringing the total allocation to 60,000 BAL per week (41% of total LP incentives).
Tier 2 Pools:
Ten pools in total. These pools are focused on Balancer partners as well as pools that facilitate a significant amount of volume.
The initial proposed pools would be comprised of:
- Balancer partner projects
- Large cap/volume tokens (proposed by community)
Tier 2 pools will be rewarded 5,000 BAL each per week, bringing the total allocation to 50,000 BAL per week (~34% of total LP incentives).
Tier 3 Pools:
Fourteen pools in total. More flexible and reactive to market conditions. Tier 3 will aim to include projects that utilise Balancer LBPs.
Tier 3 pools will be rewarded 2,500 BAL each per week, bringing the total allocation to 35,000 BAL per week. (~25% of total LP incentives)
There will be a level of fluidity between Tiers 2 and 3, with the goal of allowing valuable pools from Tier 3 to move into Tier 2 and be allocated more BAL. This system also allows for Balancer to adjust less successful pools from the program and allow new pools and LBP tokens to be rewarded.
Tier 2 pools will be allocated a minimum of 8 weeks worth of rewards, and tier 3 a minimum of 4 weeks.
When a new pool is added to tier 3, its volume and overall impact will be assessed during the initial 4 weeks. When this period concludes, the pool may either:
- Remain in Tier 3.
- Move up to Tier 2.
- Be removed from the incentive program.
We look forward to welcoming feedback and ironing out next steps in preparation for V2 launch!
Hey all, glad to see the ongoing discussion.
First, let me clarify that I wasn’t proposing to remove any pools from the liquidity mining program overnight. During the transition period from V1 to V2, nothing should change for the existing pools in V1.
My concern is that if we’re not heavily incentivizing liquidity in tier 1 pools, we don’t reach enough traction to get the ball rolling. It’s late, so someone please double check my math, but at 15k BAL/week aren’t we offering something like 10% APY to a 300M pool? Do we expect in the early weeks to draw enough volume from Balancer’s other strengths that this will be enough to convince LPs to switch over instead of farming 50%+ APYs at 1inch or Sushi?
Thats right @markus. A 300M pool with 15,000 BAL per week @ current BAL price will yield ~10% APY reward. If after the first month we are not getting enough traction, we can always rebalance rewards. Let’s keep in mind that 1inch current rewards program ends on March 7th, and although there might be a new program, there is no guarantee. In addition, Sushi swap rewards decrease every month (❔ FAQ - SushiSwap). What is promising for our program is that we are offering long-term reward incentives for providing liquidity to Balancer. I would rather grow slower with loyal liquidity providers that believe in the long-term vision of Balancer than LP’s that are going to farm and dump.
@Callum - What’s the rationale for having a primary USD stablecoin pool in Tier 1? Other liquidity mining programs whether it be Uniswap, 1inch, Sushi all have primarily focused on ETH-DAI, ETH-USDC, ETH-USDT(not recommending we include this pair), and ETH-WBTC. Perhaps the primary USD stablecoin pool belongs in Tier 2?
Balancer V2 offers “stable” pools which use Curve-style pricing. There is a reason Balancer V1, Uniswap, and Sushiswap have not heavily incentivized pools like this: it’s because they are at home on Curve. But now we can make such pools as well and open the doors to “price-pegged” liquidity where the assets are expected to follow the same price over time, e.g. a stable coin pool, a pool with various forms of wrapped bitcoin, a sETH-WETH pool, etc. There is a surprisingly huge market for this; check out Curve’s volume.
That’s a fair point and a valid strategy.
My concern is that we might need all the LPs we can get in these early weeks of V2 in order for Balancer to even be considered for trades through aggregators. Imagine going through all we’ve been through to increase gas efficiency only to then still lag behind because slippage is too high! 1inch is already at 700M+ in the ETH/~USD pools and ~500M in the ETH/BTC one. And I doubt their liquidity mining program will be going away any time soon.
So here’s another suggestion: what if we let the committee assess the market at the time and decide on a weekly basis? We set clear bounds within which they can operate, eg “no less than 15k BAL to each tier 1 pool”, “no more than 5k BAL to each tier 2 pool” etc, but give them the option to allocate the tier 2 and 3 BAL to the tier 1 pools in order to increase their APY if that’s what it takes to bring liquidity over. This way we would be sure to not be overpaying, since we would not be committing to the highest possible amount of BAL for tier 1 pools at the moment like in my first proposal, but we would have room to adjust course if needed.
Good stuff @markus. I think this hits on @mike 's goals 3 (Agile) and 4 (Strategic). Having the Liquidity Mining Working Group assess and adjust each week based on predefined boundary conditions approved by community snapshot vote could be very effective. One other way the community could give the working group flexibility is to vote on target yield (in APR) for each Tier. We could then objectively compare yields at various other platforms and set competitive yield rates. Maybe Tier 1 we initially target 20%, Tier 2 target 15%, and Tier 3 target 10% for the first week and see what happens and iterate week over week.
I think what you said about deciding on a weekly basis might be the most appropriate thing to do, at least for a couple of weeks. After few weeks have passed, the committee can then decide if theres a more permanent solution/tactic.
- Is it possible to do a mock rewards based on tiers suggested here on the last snapshot? Maybe do a comparison of the actual rewards receive vs future (v2)
Two of the Tier 1 pools - BAL/ETH + WBTC/ETH - will take a hit in yields whereas returns on the primary stablecoin pool (either USDC/ETH or DAI/ETH) and the DAI/USDC/USDT will be substantial. I think this is a solid dynamic as it will drive more USD liquidity to Balancer as well as have a significant amount of BAL to bootstrap the USD-pegged stablecoin pool that’ll launch with V2.
The Tier 2 + 3 selected pools will also see some very solid returns at current liquidity and BAL price, making them competitive with Sushiswap. What’s nice about the tiered system is that governance has the ability to allocate these rewards for projects that synergies well with Balancer and can help decentralize the BAL LM allocation to better align communities.
Based on the above, I support this tiered proposal paired with an active Ballers governance committee at the above allocations! Generally, all of the yields line up as long as the Tier 2 + Tier 3 groups are managed well
Thanks for the modelling! It helps.
One thing that i still dont get with the tiered approach - i am not sure how many pools balancer has but based on the above, 28 pools have been accounted for. What will happen to the rest? No mining rewards?
Also, what is the driving factor of the tiered system - liquidity, volume, or both?
I apologize if i keep missing info. I really just want to understand how mining will work.
BAL/ETH going to 17% would be… dramatic imo compared to its current 71% but recently was in the 90’s. Rest of these, hard to really draw any conclusion because LP’s will adapt quickly when this is implemented.
Need to think long and hard about BAL/ETH going to 17% tho. We juiced it with staking - if we reverse that, some ppl won’t be happy I think.
So as I understand it, we are currently at a rough consensus that there should be:
- 3 Tiers
- Pools Per Tier: Tier 1 = 4, Tier 2 = 10, Tier 3 = 14
- Reward Per Tier: Tier 1 = 60,000, Tier 2 = 50,000, Tier 3= 35,000
Current concerns expressed by community
- BAL/ETH reward dropping from 71% to ~17%. One counter argument is that although the BAL/ETH reward will drop, the new strategic BAL reward allocations to the other incentivized pools will greatly increase the total value locked, transaction volume, and as a result, will drive BAL price higher. Thus, the BAL/ETH pool will receive less BAL per week, but the BAL will be priced at a higher value per token. Hopefully in the end BAL holders see a greater long-term appreciation even though in the immediate term it might look like a reward cut.
What is everyone’s thoughts on the following initial selections of crypto assets? I looked at three sets of Uniswap 7 day transaction volumes, token operations, market caps, and community support. I understand that this can be very subjective, but thought it would be good to get the conversations going.
Tier 1 (4 Pools): BAL-ETH, DAI-ETH, WBTC-ETH, DAI-USDC
Tier 2 (10 Pools): USDC-ETH, UNI-ETH, LINK-ETH, AAVE-ETH, YFI-ETH, MKR-ETH, SNX-ETH, COMP-ETH, GRT-ETH, SUSHI-ETH
Tier 3 (14 Pools): 1INCH-ETH, CRV-ETH, BAT-ETH, BNT-ETH, REN-ETH, MANA-ETH, MATIC-ETH, UMA-ETH, DPI-ETH, ZRX-ETH, KNC-ETH, ENJ-ETH, RENBTC-ETH, LRC-ETH
it’s going to be tricky because I think we want at least one index style pool. dunno about incentivizing a ton of 50/50 0.3% fee pools since that feels like we’re just copy pasting sushi and uni. but maybe don’t change what works.
I’m sure these discussions are happening… I’m patiently waiting for the info to be dropped
Sorry all as i am still trying to understand as to whats going to happen to a pool that is not part of the mentioned tier?
I’ve been looking all over for an answer to the following, but so far no dice.
Will the v2 liquidity mining rewards begin as soon as v2 pools are released? And will v1 liquidity mining rewards end at that time? And, so we have any clue when v2 rewards might start?
No final decision has been made. V2 liquidity mining program is still being designed, and this thread and the discord are the places for discussions about it. That being said, current consensus is for a transition period such that every week some BAL moves from the V1 liquidity mining program into V2’s. As for how long that transition period would last, a few have voiced their suggestions in the comments above, generally ranging from 4 to 6 weeks.
Current consensus is that pools that are not part of a tier won’t participate in liquidity mining
Hi, new to balancer. Does anyone have a link that can explain current liquidity mining incentives? I see above that the 80/20 BAL/ETH pool has a high APY. I currently am a LP for a 50/50 pool and want to know if I should switch. Thank you
How do i go about the 80/20 liquidity mining for Bal/Eth