Proposal: Remove incentives for the KEEP-TBTC pool

Right now a solid amount of liquidity rewards are being spent on the KEEP-TBTC pool, which has seen really small traction compared to the ETH pool.

We propose the immediate removal of all KEEP rewards being spent on it.

Metrics

txcount
volume

On top of that, @state has gone through every single tx on the pool in the last 16 hours and all of them were just arbitrage transactions, that is, it seems to have no real usage apart from being arbitraged against.

Reasons

Why are we seeing this difference in tx count/volume? Here’s a few untested hypotheses:

  • Neither TBTC nor KEEP are being used as routing assets, so generally routing algorithms never consider the TBTC/KEEP pool
  • Aggregators such as 1inch almost never use it, actually for even a TBTC->KEEP transaction 1inch suggests TBTC->WBTC->WETH->KEEP, thus using the KEEP/ETH pool
  • ETH is the main asset and reserve currency on Ethereum, so most people probably want to enter and exit through it instead of TBTC

Conclusion

The ETH pair is driving much more transactions and volume even though the TBTC pair has been awarded more incentives (charts don’t include the last weeks). So, why are we incentivizing it? Furthermore, liquidity on ETH-KEEP should be cheaper since more fees are being awarded to LPs and thus the incentives can be lower for the same APY.

Notes

I believe the charts start the 1st of january (around the time liquidity rewards started) and end in the 2nd week of february. It would have been better to have them up to now but I forgot where I have the code that I used to generate them and I think the current sample is representative enough (I originally generated these charts a few weeks ago but I wanted to hold off on the proposal until I got some data to test my hypothesis that TBTC-KEEP is mostly used for arbing, however I’ve now decided that the current findings are enough for this proposal).

10 Likes

I support this as I think we should save them for v2 and coverage pools.

I would prefer a 3-4 days notice before going into effect

2 Likes

I’m for it.
Fwiw I’m a LP in this pool.
But I think that our’s and Keep Network’s top priorities, this means energy, focus and incentives, should be on:

  • having enough rewards available to bootstrap v2 and aiming at wBTC numbers
  • having a smooth signers transition from v1 to v2
  • increasing value of KEEP and TBTC

That’s the bigger picture, and that’s what we shouldn’t forget.

That being said, 1 week notice doesn’t hurt and will give everybody time to accomodate.

4 Likes

I think this pool was nice for being able to convert KEEP into TBTC in the case of quickly needing to redeem a Keep that had been courtesy called without having to hop through two pools.

I am in favour of removing the incentives on this pool to conserve them for v2.

3 Likes

I’m in favor of proposal as LP’s are getting 1 week notice.

I also am an LP of this pool. However, given those statistics, it seems to be in the favor of the longevity of KEEP and tBTC to cut those rewards and store them for a more useful portion of their progress.

However, I would prefer for those LPs to get at least a 3-7 day notice.

The reasons stated and the comments in support are good. I agree with marshaling resources and rewards where they have the most proven impact, especially with v2 adding significant improvements.

3 Likes

I like this proposal. Makes sense to remove the KEEP rewards for the KEEP-TBTC pool.
The rewards can be used for something else, maybe in the future we can incentivise a KEEP pool on Layer 2?

1 Like

Great analysis. Makes sense to start trimming the rewards wherever not effective. Support the proposal.