Proposal to create a V2 xSauce/Stickbug pool

Proposal
1

Title: Proposal to create a V2 xSauce/Stickbug pool
Author(s): Stickbug, Postmaster, and the Stickbug community
SaucerSwap Voting Interface: n/a
Related Discussions: (RFC - Proposal to create a V2 Sauce/Stickbug Yield farm)
Submission Date: 10/25/24

Summary

  • We propose the creation of a V2 xSauce/Stickbug pool with a 0.30% fee tier on SaucerSwap. The objective of this pool is to increase liquidity for Stickbug token, and incentivize Stickbug holders crosschain to move to Hedera for staking rewards. Additionally this pool should create a healthier market.

Abstract

  • The creation of a V2 xSauce/Stickbug pool should increase the amount of liquidity in Stickbug related pairs while minimizing the price impact users see when swapping. This pool creation may help to optimize trading pairs. Stickbug is one of few truly Hedera Native crosschain tokens, and at our core we wish to bring users to Hedera, and Saucerswap By creating this pool linked with Sauce, it would give users the opportunity to interact with Saucerswap with the hopes of bringing more retail to hedera, and SaucerSwap. Additionally the new pool will utilize SaucerSwap V2’s concentrated liquidity features, offering better returns for LPs.

Motivation

  • The V2 pool will provide a more efficient and attractive option for LPs, Traders, and bring more retail from cross chain.

Specification & Rationale

  • Token pairs - xSauce/Stickbug

    • This pair was chosen as xSauce at baseline has an estimated return. Overtime this means that there will be a deviation in xSauce, and thusly increasing the overal value of Stickbug if this remains a dominant LP. Additionally It incentivises new retail users to interact with SaucerSwaps swap function, and xSauce Token, thus further creating an interaction with the end user.

  • Fee Tier - 0.30%

    • This fee tier was chosen as it give a modest reward for our LP providers. Specificly when looking at current V2 pool volumes there are several pools that provide 0.30 fee tiers with much lower volumes than what Stickbug currently provides as a non farm pool (Example HBAR/HCHF, CLXY/HBAR, WBNB/HBAR, GRELF/HBAR, ,WAVAX/HBAR, HBAR/STEAM, USDT/HBAR, WETH/USDC.) Additionally with the goal to bring more users to SaucerSwap with this fee tier it is not a large ask, however is a a great incentive for end users. Additionally Sickbug has been traditionally moderate to volitile, thus a fee structure in the 0.15% - 0.30% would be best utilized with tick spacing in the 30-60 range. We expect to have increased volatility with the addition of Stickbug on Solana, and Base.

  • Why V2

    • One of the main hurdles of V1 pools is the need to make cuts. That being said as a V2 pool xSauce/Stickbug will provide increased capital efficiency, mitigate risk/overexposure, and provide a smooth curve to users who deposit liquidity. Additionally we have the option to do LARI reward airdrops too, which we plan to do in the future.

  • Some other details about Stickbug:

    • Stickbug has over 40,000$ in liquidity currently, with a majority Burned/Locked >7 months.
    • We have partnered with Karate combat with a licensing agreement to create NFTs for fighters to help fund them giving them over 60% of all proceeds.
    • We plan to stay primarily on Hedera but plan to go cross chain in order to find new users - will give rewards to users like staking and farming on Saucerswap as an incentive to come to Hedera.
    • Postmaster is a Karate Combat IFC fighter and doxed cofounder.
    • Stickbug is currently working with big names such as Keith Berry, Bitboy, Loudmouth, and JChains to bring more exposure to Hedera, Hashpack, and SaucerSwap.

  • Even More Information

Benefits (Pros)

  • Enhanced Liquidity: Improved trading conditions, reduced slippage, and encouragement of long-term investment in xSauce/Stickbug pool.

  • Stronger Community Engagement: Increased involvement and enthusiasm from the Stickbug community, fostering a more vibrant and active user base.

  • Option for LARI Rewards

  • Improved Capital Efficiency: Higher returns for LPs.

  • Sustained Liquidity: Ensures ongoing trading activity for xSauce/Stickbug.

  • Improved market health for Stickbug

  • Incintivises transfer of retail from Solana/Base to Hedera/SaucerSwap.

Downside (Cons)

  • Transition Effort: Requires moving liquidity from current Pools to V2, whereas some is locked for several months, some is burned.

  • V2 pools are at their core more technical demanding on the platform - We however believe that these pools give us an opportunity to bring more users to SaucerSwap thereby offsetting these costs.

  • Reduced Farm Weight for Other Pools: The redistribution may decrease incentives for other pools, potentially impacting their liquidity.

  • Concerns of liquidity fragmentation - as Stickbug plans to be crosschain, with a primary focus on Hedera this is a risk. This however is mitigated by using hashport as a hardstop transition and native Base/Solana tokens which are paired to the Hashport token.
    Initial liquidity to Initialize the V2 pool - as much of xSauce/Stickbug is locked, there will need to be more liquidity brought, which we plan to do.

  • Normalization of arbitrage opportunities.

Voting

  • For: Create the V2 xSauce/Stickbug pool with a 0.30% fee.
  • Against: Do not create the V2 xSauce/Stickbug pool.

We hope that the SaucerSwap community votes in favor of this V2 pool to enhance Stickbug’s growth, impact, and ability to bring new users to Hedera.