Voltswap Liquidity Pool Incentives (7 Aug 2022 – 28 Aug 2022) - Theta Mainnet

Hello,

The 8th Incentive cycle on Theta Mainnet started on July 8, 2022, and ended on August 7, 2022.
As the 8th cycle comes to an end, we will review the performance of the incentivized pairs and determine the reallocation of volt for the 9th cycle from August 7, 2022 to August 28, 2022.

NOTE: In anticipation of shift to ve(3,3) model for Voltswap yield farming, the 9th incentive cycle is maintained for 3 weeks. In case of delay in the deployment, we plan to further add another short incentive cycle.

TL, DR:

Evaluation Criteria of Incentivized Liquidity Pairs:

We could define a few of the critical parameters that will help us evaluate the performance of the liquidity pairs on Voltswap;

  1. Transaction Volume
  • This is by far the most important parameter for evaluation since the goal of the product is to generate free cash flows from the operations and be self-sustainable
  1. Total Value Locked (TVL)
  • This is a critical parameter to gauge the adoption of the DEX. Higher TVL is typically correlated with higher adoption and enables bigger buys on the DEX without too high a price impact
  1. Turnover of the pair
  • It can be defined as the ratio of Volume by TVL
  • Higher volume for a specific TVL means that the pair has a higher utilization of assets and the LPs are generating higher revenues due to the turnover.
  1. Historical Impermanent Loss
  • The APY would address the IL loss incurred by the users through higher VOLT allocation
Pair Period Weighted Liquidity (Cycle 8) Period Weighted Liquidity (Cycle 9) Period Weighted Volume (Cycle 8) Period Weighted Volume (Cycle 9) Goal Action
TDROP-TFUEL 461,645.32 490,908.36 151,973.31 214,368.81 Ensure liquidity as a key pair driving liquidity and volume Maintain Allocation
TFUEL-VOLT 148,139.98 159,871.62 8,822.98 11,224.69 Ensure higher VOLT liquidity Maintain Allocation
TFUEL-BUSD.bsc 53,304.65 54,127.26 12,292.44 9,642.91 Maintain APY to maintain liquidity Maintain Allocation
TFUEL-USDC.eth 70,345.46 70,121.53 8,969.09 6,238.15 Maintain APY to maintain liquidity Maintain Allocation
TDROP-VOLT 27,124.21 34,721.79 3,615.66 6,525.73 Ensure higher VOLT liquidity Maintain Allocation
BUSD.bsc-VOLT 25,292.59 25,276.09 2,101.52 1,633.79 Ensure higher VOLT liquidity Maintain Allocation
TFUEL-MTRG 58,048.79 67,832.34 3,241.75 2,390.73 Maintain APY to maintain liquidity Maintain Allocation
USDC.eth-BUSD.bsc 128,015.68 80,661.26 3,991.05 2,688.25 Maintain APY as the current LP seems adequate to meet overall liquidity Maintain Allocation

Based on the above criteria, lets us look at the statistics on Theta Mainnet

  1. Current Volt allocation to the Incentivized Pairs

image

  1. Period Weighted Liquidity for Incentivized Pairs

  1. Period Weighted Transaction Volumes for Incentivized Pairs – Since transaction volumes do depend on market conditions and token specific events, a smoothening effect is applied to add higher weights to immediate past

Column 4,5,6 are average volumes
Columns 7,8,9 are median volumes

Column 12 is the overall average volume of each pair smoothened for periods (7-day, 30-day, Total Vol) and method (average volume and median volume). Pure Average volume would have the bias of outlier days where there is very high transaction volume or very low transaction volume

  1. Evaluation of Pairs based on overall role in DEX Growth (65% weight to transaction volume and 35% weight to TVL)

  1. Turnover (Volume by TVL) for Incentivized Pairs

image

Based on the above insights, the volt allocation proposed for the 8th cycle on Theta Mainnet are as below;