CP106: Stellaswap <> Centrifuge Liquidity

Uses component: CP2
Author(s): ogre44444
Beneficiary: Stellaswap
Wallet: 4g14AyHrg4MrFubtUhq6omPsN6zmtfuMHD5Hg9NUzGj97Bdd
Date proposed: 2024-04-28
The proposal can be found here 
https://github.com/centrifuge/cps/pull/106

Summary

This is a proposal for CFG tokens to be used as incentives on StellaSwap’s CFG-DOT pool, in conjunction with the 1 million in DOT rewards that Stellaswap was recently awarded via Polkadot Governance. If accepted, this incentive program would run for three months, with the possibility of renewal if the Centrifuge community would like.

Check out the referendum on Stellaswap’s DOT grant here

And read the proposal in detail here

As a hypothetical and an aside from my main proposal, I’d be curious to learn the community’s level of interest (and the techncial feasibility of) the Centrifuge Dao depositing protocol owned liquidity to a CFG-DOT pool, rather than providing incentives. Generally Stellaswap is a venue for active market making, but if there’s a strong preference to go down this route instead we are open to it.

Objective

Increase liquidity of the CFG token and create awareness of Centrifuge to both EVM and Polkadot ecosystem users.

Background on Stellaswap

Stellaswap is the leading dex on Moonbeam, capturing the majority of on-chain volume. We have a Uniswap v3-style concentrated liquidity dex (running on the Algebra engine) which constitutes a unique offering on Polkadot. The capital efficiency of Stellaswap is many times higher than a standard dex, allowing much larger trades to be made on the same TVL without compromising on slippage. Our dex calculates swap fees automatically - no need for LPs to guess what fee tier to use. And we’ve got an integration with Gamma to provide automated liquidity management on many of our top pools, which if this passes could include CFG.

Note that as of this writing Gamma support is only available for one pool, but will be integrated in all of our largest pools by the time we receive our DOT incentives, in about two weeks.

The Advantages of CFG liquidity on Stellaswap

There are two angles to explore in terms of how Stellaswap incentives are uniquely positioned to promote the growth of CFG.

Stellaswap Support & Alignment with Centrifuge

A key benefit of liquidity incentives is that it’s more than just about minimizing slippage for traders. It’s about creating brand awareness. When folks are drawn to Moonbeam for the 1 million in DOT liquidity incentives, this is an opportunity for them to discover Centrifuge, and we want to help make that happen.

  • A link to Centrifuge appears on CFG’s row on our Pools page. Users browsing our liquidity pools would see this and be able to click it to learn more. So much of DeFi is just about awareness and discovery, and once we’re adding large DOT (and hopefully CFG) incentives to this pool it’ll drive attention and ultimately clicks from curious users.

Budgeting and Incentive Structure

Target TVL (again, based on DOT + Stella incentives only) - $100k
Note that this level of TVL would allow for significantly less slippage than an equivalent TVL on a non-concentrated dex.

Asset Tokens Period
DOT 1000 12 Months
STELLA 24556 12 Months
CFG 4477 3 Months

Implementation

When passed, tokens will be transferred to Stellaswap multisig and from there to the CFG-DOT rewarder contract

Delivery & Reporting

Stellaswap would be ready to assign incentives to this pool upon delivery of the tokens, or whenever the Centrifuge team finds it convenient based on their marketing schedule. Funds would be delivered to the Stellaswap multisig, from which they’ll be moved to the farm’s rewarder contract. Stellaswap would be responsible for reporting statistics such as TVL growth and swap volume to determine the pool’s traction, as well as click-thrus via the link on our pool.

Good day @ogre44444

As a simple token holder. I have a few questions:

  • How many active users does Stellaswap have?
  • How many dailies trading Stellswap have?
  • How many trading with $CFG pair is happening on Stellaswap daily, weekly, and monthly?
  • How can I find full daily statistics about CFG trading (daily, weekly, monthly)?

Is this a one-time ( 1 day\1 week) TVL Target?


The actual trading volume CFG\DOT is 880$ now and 14k in TVL. Can you please explain how you will achieve TVL 100k and the most interesting question is how long you will maintain this target?

With an incentive, you can definitely attract more users for a short time period, but once the incentive is finished the TVL will drop again.

Right now this incentive looks like a trying to warm up on a cold night by burning 100 dollar bills.
Yes, the paper burns well, but very quickly.

3 Likes

You can find information on the CFG-DOT pool on Stellaswap here

In terms of the number of DAUs, I will get back to you with the number.

In terms of volume overall, Stellaswap has been doing 500k to 1.5m in daily volume since the market turned down a bit lately. Feb-March it was more like 2-8m on a given day.

The 100k TVL target is a 12 month projection, as that is how long the Stella+DOT rewards will run for. The Stella and DOT will also the the majority of the incentive in dollar terms. This proposal is for 3 months of CFG rewards to jumpstart the pool.

I’ll add that if we can get deep liquidity for a CFG pool, we may be able to explore a Moonwell listing as well, which could help make the CFG liquidity “sticky”. I’m not aware of any lending platforms on Polkadot allowing you to collateralize CFG.

Do you happen to know if Chainlink has a price oracle supporting it?

Btw you can find more stats and our daily active users here: https://dune.com/substrate/stellaswap

@ogre44444, are you up for presenting this proposal in our governance call next week (15th May 18.00 CET)?

Just like you did last time with the first proposal.

Yes that works for me, if there’s still time to fit me into the schedule. If not, I could attend the following one.

1 Like

Given that the reception has been somewhat cool to this proposal, I’d be curious to discuss what the logistics of CFG PoL might look like on Stellaswap, if there isn’t interest in this proposal

When I see the last day swaps the volume by WGLMR, xcUSDT and xcDOT as these two contribute to more than 80% of the volumes. However looking at data for longer period of time there are peaks of other pools which have been active, can there be a possibility to select the pairs and look at the volumes on the monthly volume, so that we can filter the main native one (WGLMR , xcUSDT and xcDOT) and view the volumes

@ogre44444, thanks for confirming and joining - I have added your proposal to the agenda the 15th May 18.00-19.00 CET and it will be posted on the forum later today.

I`m not sure what other token holders think about this, but providing the liquidity with full control from the DAO is definitely something that I will vote Aye.
Even if Stellaswap requested a small amount of CFG that CFG will be just burned out and will not bring any benefit for CFG Protocol (IMHO).