Proposal type: CP4 Author(s): ogre44444 Beneficiary: Stellaswap Wallet: 4g14AyHrg4MrFubtUhq6omPsN6zmtfuMHD5Hg9NUzGj97Bdd Date proposed: 2023-04-24
This is a proposal for CFG tokens to be used as incentives on StellaSwap’s CFG-DOT pool and for Stellaswap to support the growth of CFG on Moonbeam… If accepted this would run for 2 months, at which point both parties can evaluate the success of the program and take next steps.
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, generally capturing 80-90% of on-chain volume. We’ve recently launched Pulsar, a Uniswap v3-style concentrated liquidity dex which constitutes a unique offering on Polkadot. The capital efficiency of Pulsar is many times higher than a standard dex, allowing much larger trades to be made on the same TVL without compromising on slippage. StellaSwap - Leading Moonbeam DEX & DeFi Gateway
The Advantages of CFG liquidity on Pulsar
There are two angles to explore in terms of how Pulsar incentives are uniquely positioned to promote the growth of CFG.
Stellaswap Support & Alignment with Centrifuge
Stellaswap is the leading dex on Moonbeam, making it readily accessible to Metamask users coming from other EVM chains. We want to help create awareness for Centrifuge’s Real World Assets, and we have a couple of ways to help create exposure.
- When a user selects CFG on the Swap page, put a message with a link under the swap widget, “Learn more about how Centrifuge is bringing Real World Assets to DeFi”
- A link to Centrifuge would appear 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 every user counts.
Another way we can support Centrifuge is with our Cross Chain Swap feature. Tinlake is on Ethereum and funds its loans with Dai, making it awkward for users on Polkadot to get involved. But on Stellaswap, users can swap from any Polkadot asset into Dai on Ethereum in one click.
Pulsar is an extremely efficient Concentrated Liquidity AMM. With a utilization rate between 20-100%, liquidity goes much farther on Pulsar than in a traditional “v2” style dex, enabling much lower slippage and sustainable yields.
The second reason Pulsar is an excellent choice is efficiency. As aforementioned, concentrated liquidity can do a lot more than standard constant product pools. Whereas a Uniswap v2 style dex will only use ~5% of tokens in a day, we’ve seen some of our pools approach 100% on volatile days. This means that your incentives go farther on Pulsar in terms of reducing slippage on trades.
And that’s a key thing to consider. Slippage governs whether an asset is suitable for lending protocols. Slippage also governs how much money can enter a token at a time. Lower slippage leads to greater adoption.
Real Life Example of Slippage Reduction with Lower TVL
|Pair||Type||TVL||Price Impact of $5k Trade|
With a TVL of 12x, USDC-GLMR still has higher slippage than the USDT-DOT Pulsar pair.
This proposal also asks that Centrifuge provide CFG-DOT incentives on Pulsar. Because of Pulsar’s efficiency, swaps can be supported with a more modest allocation than a constant product pool would require. Centrifuge incentives would be accompanied by STELLA incentives.
In conclusion, we think this is an excellent opportunity to grow not just liquidity for the CFG token, but also awareness for Real World Assets.
Budgeting and Incentive Structure
|Pool||Target TVL||Expected APR||$ CFG / Day||$ Stella / Day||Reward APR||Swap APR|
Responsible To Implement
Governance and Coordination Group (ImdioR, Rhano). This proposal will utilize CP4, per community guidance.
Delivery & Reporting
Stellaswap would be ready to launch 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.