We propose the creation of a V2_HBAR/HCHF pool with a 0.30% fee tier on SaucerSwap. This pool will enhance capital efficiency and maintain liquidity as V1 incentives decrease.
Abstract
The new V2_HBAR/HCHF pool will utilize SaucerSwap V2’s concentrated liquidity features, offering better returns for LPs. With the V1 pool’s incentives set to decline after 18 weeks after go-live (June 5th, 2024), this V2 pool will ensure continued support for the HBAR/HCHF pair.
Motivation
To maintain liquidity for HBAR/HCHF as V1 incentives phase out, the V2 pool will provide a more efficient and attractive option for LPs and traders.
Benefits (Pros)
Improved Capital Efficiency: Higher returns for LPs.
Sustained Liquidity: Ensures ongoing trading activity for HBAR/HCHF.
Downside (Cons)
Transition Effort: Requires moving liquidity from V1 to V2.
Voting
For: Create the V2_HBAR/HCHF pool with a 0.30% fee.
Another downside is liquidity fragmentation. I hope one day split routing for swaps can be a thing to effectively eliminate liquidity fragmentation concerns.
Two questions, how much liquidity would the team use to initiate the pool? Why 0.30% fee as oppose to any other of the fee tiers? Not that I necessarily disagree with the tier, but seeing the team’s reasoning would be nice.
Liquidity Fragmentation
Liquidity fragmentation is indeed a consideration, but with the planned migration of the majority of liquidity from V1 (~$155k) to V2, along with the potential for additional liquidity driven by ICHI integration, we anticipate a strong liquidity pool in V2.
0.30% Fee Rationale
The 0.30% fee tier strikes a balance between competitive trading costs and sufficient compensation for liquidity providers, making it an optimal choice for the current market conditions. This tier is also consistent with similar pools across DeFi, where liquidity provision is encouraged without excessive fees that might deter trading.