Should the DAO dedicate 30,000 PNT/week from its Treasury to fund pNetwork’s liquidity incentives?

Summary: This proposal aims to dedicate 30,000 PNT/week from the DAO Treasury to fund liquidity incentives for the PNT/ETH Uniswap pool and the pBTC Curve metapool. Specifically, the budget would be split 50-50 between the two initiatives (15,000 PNT/week for the PNT Uniswap pool and 15,000 PNT/week for the pBTC Curve pool) and allocated for a period of 6 months.

The budget would be fixed in the number of PNT tokens and taken from the DAO Treasury (budget allocations for the following months or for additional incentives would be decided by the pNetwork DAO via further proposals).

Motivation: The DAO Treasury is devoted to the growth and further development of the pNetwork protocol and ecosystem. Liquidity mining incentives on strategic assets and DEXs contribute to this goal initially by increasing the Total Value Locked in the system and later on by creating the basis for higher volumes on the assets.
Dedicating PNT incentives to pBTC and PNT liquidity pools is set to bring long-term benefits to the ecosystem, such as a smoother decentralized trading experience, a more appealing cross-chain experience for those operating on multiple blockchains and/or with multiple wrapped asset representations and, more in general, broader adoption.

Specification: Following the approval of PIP-17, the DAO Treasury is now being replenished creating a budget for the DAO to dedicate to the further development and growth of pNetwork. This proposal aims to allocate 30,000 PNT/week of the Treasury’s budget to liquidity mining initiatives for the next 6 months.

One of the most effective ways to increase the adoption and liquidity of specific tokens is through liquidity incentives.
Currently, there are two active liquidity pools on the Ethereum network being incentivised.
This is a proposal for the DAO to continue incentivising these liquidity pools dedicating 30,000 PNT/week from its Treasury, specifically:

  • Uniswap PNT/ETH - with a distribution of 15,000 PNT/week
  • Curve pBTC/sbtcCrv - with a distribution of 15,000 PNT/week

Additional rewards for liquidity providers are necessary for liquidity pools, especially in the case of long-tail assets where the incentives to lock liquidity are lower because of the higher risk.

pNetwork’s ongoing incentives on the aforementioned pools have led to a growth both in terms of Total Value Locked and liquidity on decentralized exchanges.

There are strong reasons behind the proposal to fund these pools with Treasury funds:

  • Incentives on the PNT/ETH Uniswap liquidity pool help maintain an amount of PNT liquidity in the decentralized exchange that is sufficient for people to smoothly trade PNT in a decentralized way.
    While PNT is supported by leading CEXs such as Binance and Huobi, the PNT/ETH Uniswap pair gives users the chance to rely on a non-custodial and decentralized solution.
  • Incentives on the pBTC Curve metapool (pair with other wrapped BTC tokens) make the pBTC cross-chain solution more appealing on the market. For example, at the time of writing, the pBTC/sbtcCrv pool gives 0.02% as base Curve fees, plus an on-top 9.34% incentive in PNT tokens. The pNetwork v2 host-to-host direct token bridge (pTokens to pTokens bridge) paves the way for the further development of peculiar cross-chain features specific to assets with various representations such as BTC or USD. Incentives on the pBTC Curve pool help maintain a level of liquidity adequate to build on top of it.

If approved, this proposal would direct funding from the DAO Treasury towards the incentives programmes for pBTC on Ethereum and PNT on Ethereum for 6 months. Specifically:

Liquidity pool PNT per week PNT per month PNT for the period
Uniswap PNT/ETH 15,000 60,000 360,000
Curve pBTC/sbtcCrv 15,000 60,000 360,000

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