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DPI Liquidity Mining Update
DPI Liquidity Mining Update
As a tool for incentivizing large amounts of liquidity or AUM, liquidity mining (LM) has been a vital aspect of DeFi. While some protocols allow for extended token emission via LM, many others use it to bootstrap AUM. Large onchain DEX liquidity for ou...
8/11/2021
Index Coop
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DPI Liquidity Mining Update
As a tool for incentivizing large amounts of liquidity or AUM, liquidity mining (LM) has been a vital aspect of DeFi. While some protocols allow for extended token emission via LM, many others use it to bootstrap AUM. Large onchain DEX liquidity for our product allows more buying options and helps the DPI price stay close to the Net Asset Value (NAV). However, direct liquidity mining for DPI is a significant expense for Index Coop.
As there are now multiple established liquidity pools for DPI:ETH, Index Coop is in a position to reduce INDEX emissions by stopping the liquidity mining on the Uniswap v2 pool. As a consequence we expect AUM in this pool to drop and for some trade volume to move to other DPI:ETH pools.
What does this mean for DPI holders / traders?
There should be very little difference for DPI holders. Use of a trade aggregator is still recommended to get the best price at any particular time and direct flash minting via the Tokensets website may be better for large purchases.
What does this mean for Liquidity providers who are currently staked and earning INDEX?
Staking rewards will end by the 13th of August, 2021, at which point you can unstake and claim all the INDEX tokens due to you.
You then have a few options:
Stay in the Uniswap v2 pool — this may have tax advantages for some LP’s.
Migrate to Uniswap v3 pool with tight limits — expected to capture higher fee income, but requires more attention and risks higher impermanent loss (IL)
Migrate to the Uniswap v3 pool with wide limits — expected to be low attention and less IL, but lower fee income.
Migrate to Sushiswap on the mainnet or Polygon.
Migrate to a Balancer pool on mainnet or Polygon.
Stop being a LP and use your ETH and DPI in
Which option is best for me?
No one knows, as it depends on what other LP’s decide to do, and how much trade volume each pool captures in the future. Furthermore, Index Coop can not provide direct advice.
Additional resources:
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Index Coop yield tokens simplify earning yield in DeFi by automating complex strategies and diversifying across protocols. They are user-friendly and cost-efficient, appealing to both new and seasoned DeFi users.
Leverage tokens automate a leveraged position by utilizing onchain money markets like Aave or Morpho to borrow funds, amplifying a user's exposure to an asset without requiring manual management. The token's smart contracts autonomously handle the borrowing, lending, and rebalancing of assets, maintaining a consistent leverage ratio despite market fluctuations. This automation eliminates the complexities of collateral management and liquidation risks, while also charging low, transparent fees that avoid expensive funding rates often charged by perps.
Index Coop is a decentralized autonomous organization (DAO) that specializes in creating and maintaining onchain structured products. Index Coop aims to democratize access to the crypto market, empowering everyone to participate in the growing digital asset ecosystem with ease.
No, yield automatically compounds and accrues to the token price. The value of the tokens you hold in your wallet will simply go up over time without the need to claim or compound rewards.
Index Coop products protect you from liquidation with automated risk management that rebalances assets to maintain a target leverage ratio that avoids liquidation.
INDEX is the ERC-20 governance token on Ethereum for Index Coop. INDEX empowers its holders to participate in decision-making processes that shape the future of Index Coop.
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