SushiSwap and Pickle Finance are now partners within the Yearn ecosystem. It makes sense to explore synergies and collaborate with our partners. SushiSwap, being an AMM, provides an opportunity for us to migrate our existing PICKLE/ETH liquidity from Uniswap.
0xNigiri, COO of Sushi, recently dropped by our Discord to express an interest in collaborating as well:
Currently, about 75% of all PICKLE rewards are allocated to the PICKLE/ETH LP pool. This is intended to be 65%, but the pDAI farm was decomissioned without having its rewards be re-allocated. These rewards are what is up for consideration in this proposal.
Option #1 - allocate ALL of our rewards to Sushi
This option represent’s Pickle’s greatest possible commitment to helping Sushi increase their liquidity. By migrating all of our current PICKLE rewards to PICKLE/ETH SLPs, we signal our intention for Sushi to be the home of PICKLE liquidity/trading.
However, this option is not without drawbacks. One factor to consider is that our liquidity may be fractured. As a relevant case study, Cover Protocol provides its liquidity mining rewards to a Sushi liquidity pool. This has often become a source of confusion on their Discord since many users default to Uniswap. Despite the lack of COVER incentives, about 25% the trading volume happens on Uniswap regardless.
Option #2 - allocation a portion of rewards to Sushi
This option accepts that fractured liquidity might be a reality and comprises incentivizing a healthy liquidity pool on both Uniswap AND SushiSwap.
For example, under this option, 50% of the current PICKLE/ETH LP rewards can be allocated to those staking PICKLE/ETH SLP tokens.
SushiSwap has recently introduced the Onsen, which replaces its Menu of the Week program. The Onsen features the ability for SUSHI incentives to be applied ON TOP of our PICKLE incentives:
We will make it easy for projects to contribute to a Joint Liquidity Mining contract in a few weeks by releasing a wrapped MasterChef contract where they will be able to distribute their own tokens in addition to Sushi. (Double the yield!)
However, it is currently unclear whether SUSHI rewards to Onsen pools can serve to incentivize PICKLE liquidity long term. In the case that it can, this can be advantageous for:
- reducing PICKLE’s need to incentivize its own liquidity; and/or
- making SushiSwap the preferred liquidity pool for Pickle, even if Option #2 is pursued.
We’re excited for the opportunities to collaborate with SushiSwap and others in the Yearn ecosystem going forward. We invite your thoughts and comments on this proposal.