Authors
PEPO – inactive permaholder, long time NFTX enjoyer
Glossary
LP Revenue
Summary
Provide optionality on vault creation for LPs to decide whether they want to use Sushiswap or Uniswap as their preferred go-to-LP market.
While my initial intention for this proposal was to propose a complete switch from Sushi to Uniswap V2, it would most likely be more feasible to offer optionality moving forward for users to do so (in order to avoid painful UX on migrations and security concerns with all that process)
Rationale
The history behind this proposal comes from the changes made in January 2021 (Draft Proposal - Switch preferred DEX to SushiSwap) which at the time made sense since Sushi seemed to be aligned with the decentralized ethos of the ecosystem, but after the departure of Maki and all the debacle afterwards (departure of CTO, organization becoming a syndicate and more) it became clear that this wasn’t going to work for NFTX for the long run.
As to what was outlined above, a proposal was made in order to move the DAO owned positions from Sushiswap to UniswapV3.
While its good to look toward new upgrades on the protocol (integrating UniV3 to vault management), its even better if we can do so by also preserving the value of our beloved users & LPs:
The protocol has generated a gross revenue of $4.4M over the past 6 months, most of this revenue came from swaps (either targeted or non-targeted) leveraging the Sushi pools. If we assume that 70% of that revenue comes from Sushi, its around $3M net revenue.
Sushi has a governance fee of 15% (net LP revenue is 0.25% of trade volume) vs Uniswap with a governance fee of 0% (net LP revenue 0.3% of trade volume). A switch from Sushi to Uniswap would represent an increment of $600k (20% of $3M) on the net revenue which would improve the overall revenue by 13.6% (from $4.4M to $5M).
This is a significant increase in revenue with no downside for NFTX, why?
- Sushi turned off rewards for NFTX pools a long time ago
- We are exposing LPs on NFTX to a higher IL with no upside
- Majority of the traffic comes from NFTX itself (NFTX 50k monthly visits vs Sushi 750k monthly visits)
- Majority of trading activity happens through NFTX itself or NFT aggregators (I don’t think that Sushi was never the go-to place in order to trade vTokens, but NFT aggregators did help a ton on this point)
All the opportunities and risks are outlined above around the core idea of the proposal, but the motto of this proposal is: Let’s bring more LPs to the protocol.
Specifications
TBD (based on discussions below)
