The Onsen LM program has been ongoing for almost a month now.
Perhaps it is time to regroup as a community, discuss the pros and cons of the project and how we can recalibrate forward
As a start, lets count our achievements!
In general, TVL and trading volume has grown and benefited from the Onsen program:
TVL: gained from USD1.1bn to 1.8bn (+60%)
24HR trading volume: jumped from USD0.1bn to USD0.35bn (+350%)
*arrows refers to Onsen start date.
I believe that there are still room for improvements (against Uniswap) - let me share some thoughts :
Transaction fees to LP (especially eth/stable/btc majors) can improve: UNI’s LP receive 0.3% in fees, while SUSHI’s LP receive 0.25% for the similar effort, which means SUSHI LP program loses out. The result is self fulfilling, LP goes to Uniswap because more returns, TVL pools gets larger and creates higher frictional volume.
Of course, SUSHI’s LPs are also compensated through ONSEN emission, but why do LP still provide on UNI instead of SUSHI? I feel it is the lack of education. There was never an easy way to compare net returns of LP-ing between the two DEXs. We can change that right?
Request: Could the community come out with an LP calculator to compare returns between Uniswap and Sushi? This will better educate the LPs to switch.
In addition, are there other better ways to lube/incentivise LP over from UNI to SUSHI? Perhaps a incentivised 1 click “LP swap” that was used back in Chef Nomi days? Some form of IL insurance or better rewards for long vesting?
More permissionless entries for Onsen: At this moment the onsen program is not dynamic or permissionless because it requires ‘centralised approval, or Maki to coordinate. This is not optimal because it’s centralised and not real time. Is there a way to make it easier? This will incentivise new projects to list on Sushiswap instead of its competitors.
On this train of thought, we probably also need a way to filter out opportunists (which are just in it “listing mining”)
Solution (“private room onsen”): Allow permissionless listing and unlock Onsen returns once a certain performance benchmark is reached. For example, when the pool size hits USD5m liquidity it auto kicks in some ONSEN rewards.
This will help weed out fake projects, while encouraging quality ones to join. Who knows? Maybe future projects will start incentivising its community to reach OUR benchmarks - a win-win situation.
Fishing for comments. And the core team too!