It is worth noting that this proposal would introduce a new type of risk onto the Optimism Treasury’s balance sheet. Not going to argue with you about impermanent loss, in this scenario it would, in some capacity, occur on some of the Collective’s liquidity positions.
Area Man unsure whether accepting free $100 a good idea:
“What if I lose $10?” he wonders
The risk is trivial when you’re comparing it against giving away the entire position. You can’t seriously be continuing on this point.
Your “modeling” is the assumption that every OP token that goes to users in the next 6 months is going to be market sold on an Optimism DEX in the current state of unincentivized Optimism liquidity. I find this unrealistic and pointed to previous network incentive campaigns where enough growth and liquidity were generated to counteract the natural selling pressure that token incentives bring.
It’s an illustrative model for which i’ve already noted there is a substantial buffer within which the sell effect continues to be intolerable. And who is going to incentivize the LPing of OP tokens? Haven’t seen any proposals detailing those specifically. Let’s say there’s 50% less selling on 50% more LP (HIGHLY generous): that would be 3.3mm sold on 15mm, still over 20% of all LPed tokens sold per month. Are you actually okay with this?
This proposal tries to lock in 25% of OP token incentives for “pairing” on long-tail AMM pairs. If a protocol wants to do this with its own OP grant, great! But why standardize this?
The 25% was a sample amount and subject to discussion, but standardization as an option (and potentially a requirement) is a good one because it makes clear and puts into action Optimism’s commitment to 1) supporting OP as an ongoing means of funding public goods, 2) supporting enduring liquidity and facilitation of market performance, and 3) expanding the scope and stakes of its governance.
The top of funnel for OP incentives should remain open-ended.
It still would be; again, this is ultimately about increasing and sustaining OP incentives for all kinds of initiatives.
Am I wrong? Given that liquidity mining on the dominant liquidity venue on the network, Uniswap V3, is not very approachable, Velodrome stands the most to benefit from this proposal. That’s all I said
You are, and it’s okay to be wrong, though I appreciate the implied compliment that we are a dominant player on Optimism.
Already explained why the marginal effect of this proposal passing (even if we were to get all of the liqudity) is insignificant and possibly a liability; if we are that dominant, all the liq mining rewards in the status quo are going to veVELO holders (i.e., not LPs) directly as revenue. If this proposal passes, we lose a big chunk of that.
But we’re still coming from behind. Synthetix, Perpetual, and Lyra, the largest players, continue to do most of their incentivization on Curve and v3. Beethoven and Zipswap are also certainly relevant as outlets.