Proposal: Adding WBTC/ETH to the common pool

I propose that we add WBTC/ETH to the common pool with weight 1750.

$17mm worth of WBTC has traded on Uniswap in the last 24 hours. WBTC is 6th highest coin ranked by 24hr volume. On Sushiswap however, sushiswap.vision currently shows zero 24hr volume for WBTC. This is not great, as we are missing out on millions of dollars of volume, and therefore, a large amount of fees which could be going to xSushi holders.

The reason there is no volume in SushiSwap is that there is much more liquidity in the Uniswap WBTC-ETH pair. As a result, the price is better on Uniswap than Sushiswap more often than not, and so we get none of WBTC-ETH AMM trading volume

I believe that creating incentives for the WBTC/ETH pool would result in many liquidity providers moving their liquidity from the Uniswap WBTC-ETH pool to SushiSwap, along with people currently in the SushiSwap community adding to the pool. This means that we would be able to provide a competitive market when it comes to trading WBTC/ETH, resulting in us capturing more fees.

Two polls, as it makes the most sense to hear from all LPs, stakers, and community members!

https://snapshot.page/#/sushi/proposal/QmXvC4djfTYjbb9TgYJ3HeoCBoJZuPyhrPMHuqWoVhUydC

WBTC/ETH Pool
  • Yes, with 1750 weight.
  • Yes, with a different weight.
  • No.

0 voters

Why 1750? Here are some numbers:

With the 30 bps fee, $17mm in volume translates to $51,000 in fees, or $18,615,000 a year.

Looking at current sushi prices, a pool with weight 1750 will distribute about $9,625,000 a year

In order to get more WBTC-ETH liquidity on Uniswap, we must convince current LP’s that the yields on Sushiswap are either the same, or better.

With the numbers above, given that the current WBTC-ETH pool at Uniswap has $767mm of liquidity,
A weight of 1750 should be able to capture about $255mm from Uniswap. This is because with $255mm of liquidity in our pool, even if nobody trades, it would still be just as good to provide to Sushi instead of Uni, and so we can expect an amount close to $255mm to immediately move from Uni->Sushi. I believe this is a good place for us to start. (1-2 ratio)

As the Sushi pool will be also be generating fees, LPs should be continuously moving their funds from Uni -> Sushi, for the APY will be better.

We can continue funding this pool until a majority of LPs have moved from Uni to Sushi, at which point we will have successfully captured the WBTC volume that is currently trading on UniSwap, and so will no longer need to provide any additional incentive for the LPs to stay.