LP rewards for Sushi DAI<>wstETH liquidity pool are set to expire on November 16th. It’s time to decide on what would be the next month of this pool in terms of LDO incentives.
From analytical dashboard it looks like the pool is operating normally.
Pool TVL was relatively steady over the past 30-days period except for one significant withdrawal of around $10m on October 29th. However, TVL decrease is not unexpected at current ETH price fluctuations, because the assets in the pool are exposed to greater impermanent loss.
The APY of the pool sits at impressive 28% and consistently provides one of the best yield farming opportunities for wstETH holders.
Based on these numbers and thoughts, we propose to continue LP rewards for Sushi DAI<>wstETH LP with the same amount of 200,000 LDO for the next 30-days period starting on November 16th.
In case you have any objections, please comment on this post. Otherwise, we will include LDO rewards allocation into the next weekly Omnibus voting held on Thursday, November 11th.
The goal of having these kinds of pools is to facilitate trading vs stETH as a primary asset rather than a bridge asset. I don’t think that’s what we’re getting right now. If you compare ETH-DAI pool vs wstETH-DAI pool:
You can see that in the last 24h wstETH pool had abt $37m of liquidity and $400k of trading volume vs $165m and $10m, which makes wstETH pool about 5 times less useful for trading.
I think next time we should reduce incentives 5-6 times from now. The incentivization program is excessive right now.
IMO there are a few other potential benefits for having wstETH liquidity away from Curve. It helps lenders create more reliable price feeds (multiple venues and different trading pairs), and also could offer relatively more liquidity benefits if stETH fell below peg (Curve liquidity is highly concentrated around 1:1, there wouldn’t be much liquidity available below ~0.95).
The cost Lido is paying for this is pretty high, but for now I think it still makes sense to offer steady incentives on non-Curve, non-ETH paired pools.