Last 3 pools to be on October, 23

Archive LuaSwap
1

After the core team’s discussion with LuaSwap’s LP, there are few factors to consider:

  • Hyperinflation is coming to an end (we are in week 4)
  • LuaSwap V1.0 is launching on October, 30 with a production swapping facility.
  • LIP2 and LIP3 proposals
  • A lot of LUA has been given away for free so far

Core team proposes adding only three pools before we launch V1.0. This would round out the set of coins we have available for V1.0, so that V1.0 can offer values to the end-users who wants to trade using LuaSwap. Three pools are: UNI-LUA; WBTC-USDT; FTT-SRM. If LP community passes this round of pool additions, new codes will be deployed on Thursday, 22 at 1p.m SGT, and goes live on Friday, 23 at 1p.m SGT.

After V1.0 launches, we will have more strategies to attract new projects such as: tokens airdropping to LuaSafe stakers (LIP2) in exchange for adding tokens in one of the incentivized pools. This will bring more benefits to LuaSafe stakers, while only helping projects that the community wants.

This proposal has been published for voting in our snapshot page

A reminder that LUA has to be in your balance at the snapshot block to be counted toward final tally.

2

Agree that we need BTC as that is one of the most popular coin held by traders/arbs will be great addition to luaswap swapping platform, in order to compete with the best in class.

However I think BTC-USDC is better pair to be consider as compared to BTC-USDT.

Rationale: it will be more efficient in terms routing for those token that we said we have best liquidity at.
e.g. swapping from BTC to LUA: BTC-USDC-LUA … will be better than BTC-USDT-TOMOE-LUA … 2 hops vs 3 hops which saving 0.5% fees for traders or 33% of all the fees.

even more saving if you look at other tokens.
e.g. swapping from BTC to FTT: BTT-USDC-LUA-FTT which is better than BTC-USDT-TOMOE-LUA-FTT … 3 hops vs 4 hops

UNI-LUA looks interesting and reasonable.
FTT-SRM is questionable which i will challenge in another post

3

WBTC-USDC seems reasonable given we have LUA-USDC but not LUA-USDT.

4

good, glad that you see the same reasoning for this one

5

another challenge … what is the rationale of adding direct pair FTT-SRM in such an early stage, having known that we already have LUA-FTT and LUA-SRM, swapping (routing) between these are already quite efficient, ie. FTT-LUA-FTT, fees wise 2 hops (2 times fee) is already not bad in my honest opinion.

both FTT and SRM are good token, that is agreeable. but direct pair in such an early stage to earn big chunks of LUA rewards, i dont think this is for the best interest of Lua holders/stakers.

instead i will suggest add one more stable coin pairs to allow more efficient routing to and fro such stable coin, e.g. USDC/DAI makes sense, because DAI is top 5 popular coin in terms of TLV of all DEFI liquidity market, with 200M+ liquidity in https://info.uniswap.org/tokens

many existing traders, LP, and crypto community is already holding DAI it will make them easier to participate in Luaswap. adding DAI is just following similar thoughts as adding BTC.

both DAI/ETH and DAI/USDC will give similar efficiency in terms of routing in LUA, with same rationale given to BTC, we should add DAI/USDC, and not DAI/ETH for the very reason we are not ETH centric, but LUA and stable coin centric.

what is even more interesting is that this DAI/USDC happens to be the very first stable coin/stable coin pair (in luaswap), which will means almost 0 impermanent loss, which means LP can just safely place the funds there and earn risk-free rewards. Which some people may not like, but it actually works very well towards Luaswap vision and mission. I foresee we will get huge number of LP flock into luaswap… driving APY% of that pool from top to double digit %, which is still the very best in the market for stable coin. I predict we will get 10M+ on week 4 driving APY to about 10-30% ish and we still top the chart for that stable coin category, means that is conservative prediction, it might capture even more TVL. Other pools are unaffected much as we are still on fixed rewards per pool based method. I will address this against TLV based reward calculation in another post responding to the TLV article later.

let me know if that makes sense, and if you think any of the above illustration is not correct.

1 Like
6

I have some skepticism toward DAI and stablecoin-stablecoin pairs though:

a) More than 50% DAI collateral is USDC making it a form of USDC coin in disguise
b) LuaSwap/ Uniswap MM algorithm is not naturally best fit for stablecoin-stablecoin pair (Curve is way better for that as their algo specialize for this). Consequently, quoted prices will tend to be not good. We may just avoid this type of pools until there are further changes in algo. Or we could do BUSD-USDC. Let’s have more debate on this.

Keep more comments coming, especially pairs or coins you think is best fit for LuaSwap.

7

I think if we can get a stablecoin/stablecoin pair with a decent APY (anything over 12%) then that would greatly attract attention of people who want to farm with the least risk.

And yes I think BUSD-USDC is good. We might get some attention from CZ and get some exposure. Furthermore, Binance liquidity swap doesn’t have BUSD-USDC pair yet.

However, USDT-USDC would give us a lot more volume. The current APY for USDT-USDC on Binance pool is 8.9%. If we can beat that by a wide margin (say 15%-18%) then we would definitely snatch liquidity away from Binance.

8

Keep in mind that while stable-stable pools have big TVL, but that do not translate to higher trading volumes and higher fees earned. Check here


9

Yes, i think BUSD-USDC is also interesting, would be a good choice to consider. @dohongnam had a point there, which is not too bad, considering future synergy, and might ease listing consideration.

Agree that Curve does better, but we cannot incorporate that algo easily as yet, is it. We should still able stable coin / stable coin pair, dont missed the lucrative rewards while we still in hyperinflation to attract LP, 4 weeks hyperinflation is great for them. And after that LuaSafe and other value of holding LUA is there, the LP will likely stay. Even current “not so good quoted price” in Uniswap, it is still getting handsome swap fees, 3%-6% swapping fee alone, which is really not bad for stable coin pairs. Luaswap even gives more percentage to LP, and plus with Lua rewards even when hyperinflation is over it will still be a low double digit APY% which is fantastic, beating any bank in no time…

1 Like
10

True. But higher TVL would give liquidity providers and traders more confidence to use our platform. So it indirectly leads to more volume, I think.

1 Like
11

An alternate 3 pools was put out for snapshot voting. This alternate 3 pool vote will end at the same time with the previous 3 pool vote. The proposal with a larger YES percentage that is higher than 50 percent will win, and be implemented.

Three pools for this alternate is UNI-LUA; WBTC-USDC; USDC-USDT; If none of 3 pool vote is passed with >50% YES, there will be a different vote next week.

12

The proposed pairs in LIP3 are the wrong approach. Please vote no. Here’s why:

For LuaSwap to compete against Uniswap and other Dexes holding much more liquidity, it needs to stake out a niche. This niche can be providing higher liquidity in small market cap coins, as suggested in the original vision from the first Medium article.

One way it can attract liquidity to small cap pairs is by providing higher swap fee to LPs than they would receive on other exchanges. Long outlined the plan for 0.5% swap fees in the spec for LuaSwap v1.0. So far so good. Higher swap fees discourage trade volume, but the theory is that traders will receive better pricing on the AMM curves because of the deeper liquidity, therefore compensating for the higher swap fees, and attracting a net gain in volume.

Here’s a sketch of how that looks:

LuaSwap(1)
LuaSwap(1)960×720 42.6 KB

To incentivize the liquidity for this flow, we therefore should give rewards to only 2 types of pairs:

  1. LUA - Small Cap
  2. LUA - Mega Cap or stable coin

Incentivizing any other pair dilutes the core value proposition of the platform. If people want to trade between mega cap pairs, stable coin pairs, or mega/stable coins pairs, there are better places for them to do it, where they will pay lower fees (Uniswap, Curve, etc).

Therefore none of the pairs in LIP3 make sense. I’d suggest instead LUA-wBTC, LUA-USDT, and possibly another LUA-small cap pair.

Please reconsider.

(P.S. It’s ridiculous that I can’t vote because my LUA is either provided as liquidity, or locked for vesting… I would have to withdraw liquidity to vote???)

1 Like
13

It should also be noted that prioritizing LUA pairs also means that ANY small cap to small cap or mega cap/stable coin to small cap trade can be executed with only one intermediate hop at a reasonable cost. You don’t need to attract liquidity to every pair (e.g wBTC - OM, USDT - OM, USDC -OM etc.) This allows deeper liquidity by concentrating everything in the LUA based pair.

1 Like
14

This statement seems not so reasonable. The point is not about trading between mega pairs alone or stable coins alone, but adding popular pairs that LP hold to provide better offerings of Luaswap 1.0 without these pairs trader holding certain popular coin wont be able to trade in luaswap, and will have to another platform and then bring that other coin that luaswap support to further swap. Trading and Arbitrage opportunity might just be gone because of due to that, not to mentioned big a hassle.

Hence adding popular coin and stable coin is required and mandatory to make luaswap a successful platform and fit the mission well, as opposed to diluting core value as you mentioned.

15

I don’t follow your logic Benny. Why would a trader want to swap “popular pairs” like DAI/ETH as you suggested on LuaSwap, when the liquidity will be much deeper and the swap fee lower on Uniswap? If that’s the trade they want to make, they’ll do it somewhere else. If their goal is to trade for a small or micro-cap, that can be facilitated by the approach I outlined. Don’t forget that Dex aggregators like 1inch or now Metamask are also going to be looking for the best pricing.

We are trying to attract 2 separate groups: LPs and traders. Traders will be attracted by optimal pricing. LPs will be attracted by yield. If the yield is good on LUA pairs because of swap fees and volume, liquidity will come. (And yes, this a chicken-egg problem that needs bootstrapping. That’s the role for short-term incentives)

16

Well, i cant help it if you dont follow. I give one more simple example: say i am trader i have 5BTC and I want to buy LUA, or SRM. With the BTC-USDC added with decent liquidity they trader will be able to do it all on Luaswap, one step, internal routing takes care swapping to USDC as transit currency. As simple as that.

And if you follow the discussion point i brought up, we are able to attract both LPs and traders. No chicken and egg problem.

I will end my response to you here. I will let others who is more articulate to convince you if you still have doubt.

17

You give two examples.

  1. BTC --> LUA
    Yes, if we add a BTC - USDC pair, then BTC can be traded to LUA with 1 intermediate hop. But if we add BTC - LUA then there are no hops and it’s cheaper for the trader. In other words, why make USDC an intermediary when we already have LUA that can play intermediary for all pairs?

  2. BTC --> SRM. Here your method comes out even worse. The routing would be BTC --> USDC --> LUA --> SRM. Even more costs on the trade. Whereas adding the BTC --> LUA pair would allow BTC --> LUA --> SRM.

Meanwhile, no one is going to come to LUA to trade BTC --> USDC because the swap fees are higher. So traders lose in every version of your approach. This means low volume and low fees.

You could make USDC or ETH the routing hop for all trades, but then $LUA loses substantial utility. If this is the preferred strategy, then incentivizing the LUA pairs in the first place was a mistake, and we should choose a stable coin or ETH as the base of all pairs, and then concentrate liquidity in small-cap - base, and mega-cap - base pairs. Then LuaSwap could still focus on facilitating small cap trading via the new base, and all LUA would probably move to the LuaSafe. In the short run, this would probably crash the price of LUA (as LPs exit the LUA pairs) and that’s :frowning_face:.

18

A swap system often has more than one base coin where the routing goes through. For example: in Uniswap, they are WETH, DAI, USDC, USDT, COMP and MKR. The reason comes from end-user’s demand from both token projects and swap users. Projects may want to have their coin in a pool with a base coin other than LUA as they may prefer stablecoin or TOMOE/ETH/WBTC. The end game is that LuaSwap needs projects to come in voluntarily to build their coin liquidity pool for swapping with a base coin they like. It will generate volumes, interests and liquidity. In LuaSwap (Ethereum version) the base coins will likely be LUA, ETH, USDC, USDT, TOMOE, and probably one/two more major coin when they are needed.

19

I endorse the DAI/USD pool. However non lua pool should be limited by the amount of Lua they receive as reward for Liquidity provisioning. The SRM- FTT pool should be limited in rewards they receive in lua. SBF will swap and crowd out other lua long term holders.

20

It was already decided by community at the time of your writing, see voting result on this snapshot link. https://snapshot.luaswap.org/#/luaswap/proposal/QmXi4JUCSqs7EyUAgJXBcs86iswMEfMs58z8Vci2kSFbFe

The outcome is quite good tbh. UNI-LUA; WBTC-USDC; USDC-USDT

There is limit of LUA rewards per pool currently, that should address this concern of yours

Like i mentioned earlier, we shall tackle about the same point when we are moving to TVL based reward model, we should not let too much LUA given out to non-LUA pools as they are able to pump in as much TVL to the luaswap as they like, where LUA pools will lose up due to current value and limited circulation. Lets continue discuss that in this thread: LIP3 - LUA reward bases on liquidity contribution - #5 by Benny_Yao