DEC-DAI Uniswap Pool & Other Updates
DEC-DAI Uniswap Pool
While the rapid price appreciation of Ether (ETH) over the last few months has benefitted the value of the DEC token due to them being linked in the DEC-ETH Uniswap pool, liquidity providers in the pool have faced a significant amount of impermanent loss as the result of the fact that the DEC token price is more stable compared to ETH.
As a result, and in response to a significant amount of player feedback, we will be supporting a second Uniswap pool for the DEC token where it will be paired with the DAI stablecoin. The addition of a USD-pegged stablecoin pair for DEC will allow players the ability to paricipate in the liquidity provider promotion with significantly reduced risk of impermanent loss as compared to the DEC-ETH pair.
For anyone who is not familiar with the Uniswap liquidity provider promotion, please see the following posts on the topic:
The DAI stablecoin was chosen due to the fact that it is a decentralized stablecoin run by the MakerDAO protocol and is therefore not subject to as much of the reserve or regulatory risk of the other popular centralized stablecoins such as USDT and USDC.
The DEC-DAI Uniswap pair has already been created and can be found at the following link: https://info.uniswap.org/pair/0x1c19fd9bd77d4383c66d9a6ecf1bc67d462c477f
Starting on Friday, February 5th at approximately 12:00 PM ET / 17:00 UTC the DEC reward pool for liquidity providers will start to be split at a 50/50 ratio between liquidity providers in the existing DEC-ETH pool and the new DEC-DAI pool.
This means that, starting at that time, the ~274,000 DEC / day given out as LP rewards will be split with ~137,000 / day going to LPs in the DEC-ETH pool and ~137,000 / day going to LPs in the DEC-DAI pool. Players may contribute to the DEC-DAI pool at any time, but they will not start receiving rewards until the date posted above.
Splinterlands also plans to move roughly half of the liquidity it is currently providing to the DEC-ETH pool over to the new DEC-DAI pool around the time that the rewards for the new pair go live. The contributions from the Splinterlands company account will still be ineligible for rewards in either of the pools.
The bonus multiplier for liquidity providers in the new DEC-DAI pool will all start at 0 and will begin to increase at the same rate of 1% / day, up to the maximum bonus of 100%, at the time that the rewards for the new pool go live as mentioned above.
Additionally, the bonus multiplier will no longer be reset to 0 when liquidity is removed from either pool going forward. This means that existing LPs in the DEC-ETH pool can withdraw a portion of their liquidity to move it over to the new DEC-DAI pool without affecting their boost for the liquidity remaining in the DEC-ETH pool. Please note that the bonus multiplier will still be adjusted accordingly when more liquidity is added to a pool by a particular address as previously described in this post.
Finally, the DEC price feed used in the game will switch to a liquidity-weighted average of the price between the two Uniswap pools. This means that if one of the pools has double the liquidity of the other pool, then that pool's price will be weighted twice the smaller pool when calculating the average. This will ensure that if one pool has very low liquidity (and is therefore subject to larger price swings) it will not be able to significantly skew the average feed price.
Market Dynamics
The amount of DEC rewards that players will receive in return for providing liquidity to either of the DEC Uniswap pools is completely dependent on the amount of liquidity provided as compared to the total amount of liquidity in the pool (less the Splinterlands portion). This means that it will be completely up to free market forces to determine how much liquidity will ultimately end up in each of the two pools.
The more liquidity that is provided to a pool in total, the less the rewards will be for each participant, so it will be up to each player to decide in which pool(s) they want to participate based on the risk/reward profile of each.
Risks
We also want to reiterate the risks involved with providing liquidity to a Uniswap pool. When you provide liquidity initially, you are required to add an equal dollar amount of both DEC and ETH or DAI tokens based on the current pricing of the Uniswap pair. Then, as people swap DEC for ETH or DAI and vice versa, the amount of each token in the pool will change.
This means that the amount of DEC and ETH/DAI you will receive when you withdraw your liquidity from the pool may change significantly from the amount you put in. You will either receive more DEC and less ETH/DAI or less DEC and more ETH/DAI depending upon the amount of each token in the total pool at the time you withdraw. Additionally, the prices in USD of any of the tokens (even including DAI) may vary significantly between the time you commit your funds to the pool and the time you remove them.
We want to additionally note that all transactions on the Ethereum blockchain require gas fees to be paid in ETH tokens. Gas fees have been historically high recently, which means that there may be significant costs to participating in the Splinterlands liquidity provider promotion. Splinterlands has no control over these costs, and they are something that each player should take into account when deciding whether or not to participate.
As we mentioned in the original announcement post, Splinterlands does not assume any responsibility, nor can we issue any refunds for loss of funds or any other issues relating to the use of Uniswap or transactions on the Ethereum network. Please make sure you know what you are doing, and if you are unsure, please ask for help in the Splinterlands Discord server.
Season Rating Reset Changes
Starting at the end of the current ranked play season (which ends on Monday, February 15th, at 3:00 PM ET / 20:00 UTC) the rating reset levels for Bronze and Silver leagues will be adjusted as follows:
- Bronze III: 0 (no change)
- Bronze II: 100 (previously 200)
- Bronze I: 300 (previously 400)
- Silver III: 500 (previously 600)
- Silver II: 700 (previously 800)
- Silver I: 900 (previously 1000)
The reason for this change is so that Silver I players will drop back down to Bronze league instead of remaining in Silver, which is consistent with how the rating decreases work for the higher leagues.
Stay tuned for more updates from the Splinterlands!
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NOTE: All rewards from this post will be burned.
i like the idea of DEC/DAI better. hmm decisions.
thanks for providing some time to mull it over
Shouldn't the split be equal to the amount in each pool?
Yeah that makes a lot more sense. But I think they're trying to get Dai swap motivation going at the expense of those of us that have been getting the rewards for doing eth.
😩
That is not true at all. See my reply to the parent comment. Also, doing it the way we are may actually give LPs in the ETH pool more rewards if more than half of the liquidity moves to the DAI pool whereas that would not be the case if it was split equal to the "amount" in each pool (which isn't really possible anyway).
This way, assuming an "efficient" market, the rewards should be higher for LPs in the ETH pool because there is more risk there.
yes another comment i wrote indicates that it would go down unless half or more moves to DAI. So there is a heavy incentive to move to DAI presently.
I don't deny the benefits of a DAI pool... was just trying to be straight with the users asking the questions.
Well I took offense at the part where you said that we are doing something at the expense of the people in the ETH pool. We are doing this FOR those people specifically. DEC is a stable-priced asset (for the most part). ETH is an appreciating asset, which will in all likelihood continue to appreciate significantly from here.
Previously, people's ONLY option to earn LP rewards in Splinterlands was to participate in the ETH pool and be subject to significant impermanent loss. The system as it stands now benefits the players (ETH prices increasing brings more value to DEC prices) but it was at the expense of players in the ETH pool.
If we left it with just the ETH pool, people would continue to lose more and more ETH over time. We don't want that, so we're providing another option. Now people can choose which pool they want to participate in based on the risk/reward ratio of each.
I understand gas fees are a problem w/r/t switching pools, but there's nothing I can do about that right now.
there is an expense/impact for rewards ... but there is a great benefit for stabilizing the asset. So I'm glad you're doing it in general.
I felt like i was answering the questions about the rewards which people were asking... but it's important to give the full context so they understand the additional benefits that impact their contributions to either pool because of the introduction of a stable asset pool.
In theory If all that goes into the DAI pool is $100 beyond your contribution then they will earn 100k dec a day. So we all hope that people are motivated to move to dai. Motivations (and expenses for inaction) are indeed part of this equation.
I assume that eventually incentives like this will motivate a sort of equilibrium or perhaps more reward to those that are on the riskier pool which sounds like the eth pool?
We started implementing it like this, but it doesn't work because the "amount" in each pool fluctuates based on the volume traded in each pool and the market values of the paired tokens. So there's no good way to accurately compare the "amount" across pools with different token pairs.
Splitting the rewards is a much better solution because it allows the market to decide the risk/reward ratio for each pool.
This is true... it does allow the market to decide the risk/reward ratio. Eventually there will be a sort of equilibrium... but i think the equilibrium will likely take some time and it may appear unbalanced until such time.
So if I just leave all my DEC and ETH right where it is I will be earning half the reward?
Yes your rewards are gonna be cut in half unless half of the eth providers go to Dai
whee...
I should add that there will likely end up being a sort of equilibrium as many may migrate to a system with less apparent risk.
No, this is a misconception that we tried to explain in the market dynamics section of the post. It's most likely that the more liquidity will go to the DAI pool than the ETH pool which means that your percentage of the total liquidity in the pool will increase. It's possible that your rewards could even increase if more than half of the liquidity moves to the DAI pool.
Well I will leave everything as is and just add more to the DAI pool then. Thanks.
DAI/DEC LP is gonna be like...
This is a great move. I assume others like LEO would follow the lead too.
Great move team Splinterlands
Holy crap! $104 dollar fee to convert DEC -> DAI so I can enter the pool? And then however much additional to actually enter the pool? That is messed up. So much for my joining that pool until transaction fees hit a reasonable level (and why does it have to be a two step process to enter the pool -- why doesn't the pool just allow you to enter with one currency and then auto-rebalance like it has to constantly do anyways).
Maybe Splinterlands should offer a service (one-time) to dump into the pool (with one transaction so we can all split the fees). How about it team? I was going to put $1000 in -- but not when I'm hit up for over 10% on the first step of a two-step process. That is just CRAZY!
And the market certainly isn't going to be liquid with that much fee friction.
And providers to the previous pool ARE getting screwed because there is no real way to transfer between pools without paying exorbitant fees. Would the team consider NOT switching to a 50-50 apportionment until gas fees are more reasonable (yes, I know about the current extension but . . . . who knows when fees will go down, if ever)?