Hello,
The 6th Incentive cycle on Theta Mainnet started on May 7, 2022, and ended on June 6, 2022.
As the 6th cycle comes to an end, we will review the performance of the incentivized pairs and determine the reallocation of volt for the 7th cycle from June 7, 2022 to July 6, 2022.
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;
- 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
- 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
- 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.
- Historical Impermanent Loss
- The APY would address the IL loss incurred by the users through higher VOLT allocation
| Pair | Period Weighted Liquidity | Period Weighted Volume | Goal | Action |
|---|---|---|---|---|
| TDROP-TFUEL | 578,257.73 | 214,391.66 | Ensure liquidity as a key pair driving liquidity and volume | Increase Allocation |
| TFUEL-VOLT | 176,042.64 | 16,244.67 | Ensure higher VOLT liquidity | Maintain a higher allocation to ensure higher VOLT liquidity |
| TFUEL-BUSD.bsc | 95,656.46 | 63,121.58 | Maintain APY to maintain liquidity | Increase allocation slightly |
| TFUEL-USDC.eth | 86,161.22 | 24,171.76 | Maintain APY to maintain liquidity | Increase allocation slightly |
| TDROP-VOLT | 36,104.26 | 6,530.04 | Ensure higher VOLT liquidity | Increase allocation to ensure higher VOLT liquidity |
| BUSD.bsc-VOLT | 36,205.42 | 6,445.09 | Ensure higher VOLT liquidity | Increase allocation to ensure higher VOLT liquidity |
| TFUEL-MTRG | 62,061.02 | 3,246.16 | Maintain APY to maintain liquidity | Maintain allocation |
| USDC.eth-BUSD.bsc | 148,001.82 | 16,818.92 | Maintain APY as the current LP seems adequate to meet overall liquidity | Increase allocation to accommodate the reduction in VOLT price |
Based on the above criteria, lets us look at the statistics on Theta Mainnet
- Current Volt allocation to the Incentivized Pairs
- Period Weighted Liquidity for Incentivized Pairs
- 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
- Evaluation of Pairs based on overall role in DEX Growth (65% weight to transaction volume and 35% weight to TVL)
- Turnover (Volume by TVL) for Incentivized Pairs
Based on the above insights, the volt allocation proposed for the 7th cycle on Theta Mainnet are as below;