[LIP-4] Lightning Season 2 with new reward mechanism

Summary :

  • Begin the process of voting for rewarded pools in Lightning Season 2;
  • Introduce a point allocation reward system for easier calculation that makes use of Allocation Points (APs) (max. 100 APs.);
  • Increase APs allocated to the ZWAP/ZIL pool to 40 APs;
  • Change the categories to take into account of liquidity instead of market cap; and
  • Adjust APs for pools in each category accordingly.

Abstract :

This proposal aims to kick off the voting of Lightning Season 2 with an easier reward mechanism, improve the qualifying criteria to reward pools properly, and better protect ZWAP LPs who are the protocol’s main stakeholders.

Motivation :

The newly updated rewards are insufficient to incentivise deployment of capital by ZWAP LPs in ZilSwap. As such, we propose to increase the ZWAP/ZIL pool incentives from next Season onwards.

Also, as the current reward system is overly complicated in its calculation, we intend to change to a simpler mechanism for awarding ZWAP to pools. This new mechanism utilises APs to determine the reward weightage for each pool. Each cap category will have their own AP cap to ensure pools are not overly incentivised for the liquidity present on ZilSwap. Any unused APs—though highly unlikely due to the current 10% minimum vote threshold—resulting from a lack of pairs will be reallocated to the ZWAP/ZIL pool.

Specifications :

The new specification for liquidity mining will be as follows:

16 tokens pairs will be eligible to receive ZWAP liquidity mining rewards at point of time. Every 3 weeks, the eligible list will be re-evaluated to ensure that there is maximum capital efficiency for the ZilSwap ecosystem and a governance vote will be proposed to decide on the pool rewards. After every 4th epoch , the new incentive scheme will be enacted.

Every week, there will be 5,312.5 newly-minted ZWAP tokens allocated to liquidity providers on ZilSwap. The distribution of the ZWAP tokens will be based on the allocation points that each pool is given:

  • ZWAP/ZIL token pool
    • Total APs = 40
  • Tier 1 token pools (Total Liquidity > 50m ZIL)
    • Total APs = 35
    • 5 pairs maximum
    • Capped at 7 per pair
    • If there are < 5 pairs, remaining APs will be reallocated to ZWAP/ZIL pool.
  • Tier 2 token pools (5m ZIL < Total Liquidity < 50m ZIL)
    • Total APs = 20
    • 5 pairs maximum
    • Capped at 4 APs per pair
    • If there are < 5 pairs, remaining APs will be reallocated to ZWAP/ZIL pool.
  • Tier 3 token pools (500k ZIL < Total Liquidity < 5m ZIL)
    • Total APs = 5
    • 5 pairs maximum
    • Capped at 1 APs per pair
    • If there are < 5 pairs, remaining APs will be reallocated to ZWAP/ZIL pool.

To be voted into each category as stated above, each token in that category has to garner at least 10% of the total votes casted for that category’s proposal vote. Otherwise, the reward allocation will be redistributed as specified above.

  • For
  • Against

0 voters

Great proposal. This new reward system will definitely benefit the entire zilswap ecosystem.

6 Likes

Great proposal. Totally agree with it.

7 Likes

100% on board with this well thought out proposal. Should benefit Zwap price and in turn still give decent rewards for all LPs.

5 Likes

Good initiative and helpful to reduce volatility on ZWAP and weekly drop in price when rewards in LP are paid out. Enough stimulus for other tier 1 and 2 tokens

4 Likes

All for it, looking forward to seeing this implemented. Should get people excited about Zilswap ahead of 2.0. Good work Han Wen.

1 Like

This Proposal is dangerous for the Zilliqa ecosystem for many reasons I list some below:

The Zilliqa ecosystem is very young. It is important and crucial for its future that it can grow sustainable and healthy in order to constantly attract developers and users. This proposal is only made to short term maximize the Zwap profits as a Zwap holder without thinking about the consequences for the ecosystem. It centers the whole attraction of the zilliqa ecosystem to Zwap because Zwap rewards are currently the only reason for most coins why they have a demand. Without enough zwap rewards, they will lose attraction and as a result the zilliqa ecosystems user attention shrinks to one coin. This will harm the current and especially future development on the zilliqa platorm because no dev wants such a centralized ecosystem.
I agree we should extend the zwap rewards to other, smaller coins too. But we should not have such a big difference between the pools (zwap/zil >= 50% of the rewards; others max. 6%).
Let’s discuss a new allocation model, but please do not make it like this. No one who plans to stay long term in zilliqa can agree with this proposal.

6 Likes

Strong proposal.
A strong value of Zwap is key for all pools. Better to have a 8k Zwap price with 100 Zwap in the pool versus 3k Zwap price with 200 Zwap in the pool.
All pools will benefit from higher Zwap price and this will facilitate that

5 Likes

this must be another joke or serious mistake.

Tier 2 token pool → max pair is 10 and to qualify 10% voting ---- what kind of math school this comes from?

5 Likes

Good proposal, Should be proposed sooner rather than later (see also sushiswap and uniswap)

5 Likes

I hope you see the problem in this statement "Zwap rewards are currently the only reason for most coins why they have a demand. "

ZWAP imo should be considered a bonus for any project that has decided to have it token traded on ZilSwap. ZWAP should not be the reason a project has value.

Each project must be valuable enough by itself that it’s able to attract “investors”.
Developers must find ways to properly incentivize it liquidity providers as this part of their responsibility not ZilSwap.

7 Likes

Write the proposal! :wink::blush:

This is a great proposal. ZWAP needs to be the heart of the ZIL ecosystem. We need to protect the ZWAP value, this will also benefit the real good Dapps on ZIL.

I VOTE YES!!

5 Likes

I prefer the original 3-tiered structure. 10 pairs requiring 10% vote can only be inclusive if each pair receives exactly 10%. Unless the structure is designed to be non-inclusive, I suggest:
Tier 2 (1m-10m) 5 pairs, 2 AP
Tier 3 (50k-1m) 5 pairs, 1 AP
Allocate remaining 5 AP to gZIL, to recognize it’s primary importance, and support a balanced valuation.
Eligibility requirements should be rigorous, and always include AMA before vote. A 5-minute website and 4-page whitepaper should not be allowed to slip through the cracks (barter).
I would like to have a yes/no vote for each token < 1m, to approve eligibility for LIP-4, and serve as an additional scam filter.

2 Likes

*heart of the zilswap ecosystem

I fixed it for you.

I second this, I like how pancake swap have different proposals for each token (its how ZIL got on pancake swap). But I would love the option to filter scam/PnD tokens before they make it to the official proposal.

2 Likes

Disappointed to see this vote is being manipulated, I’m suspecting cheating going on here. 1/3 of the votes coming in 20 mins and all going against how the majority.

2 Likes

This is a horrendous and biased proposal to dumped on other coins. You are negating the rest of the other coins in favor of Zwap and encouraging scammer coins to be created just to hit 50k liquidity to be in the same reward tier pool as seasoned as XSGD and ZLP.

I would suggest some form of neutrality to be in this Dex. Recommeding a three tier reward scheme such as High, Mid and Low tier and calculations in liquidity shouldnt be in dollar form but in Zil.

Focused tier Zwap - 35% shares
Tier 1 - 20m> zil liquidity (30% shares)
Tier 2 - 10m-20m< zil liquidity (25% shares)
Tier 3 - 1m-10m< zil liquidity (10% shares)

This format will promote a healthier and fairer ecosystem.

3 Likes

That’s 4 tiers :joy: I agree tho that liquidity probably ought to be measured in Zil rather than USD

1 Like

This vote doesn’t matter by the way. It is just a signal vote.

The real voting happens on Snapshot where ZWAP holders vote on the outcome.

2 Likes