Increase rewards multipliers for stable-coin pairs

I highly recommend that we increase them rewards multipliers for stable coin pairs (USDT & DAI). Increasing the liquidity of stable-coins in Pangolin is necessary to the success of Pangolin, and also important to the health of the Avalanche DeFi ecosystem, specifically for lending platforms. Pangolin’s current ratio of stable-coins is only 3.1% of overall TVL, which is very low compared to other major DEX which have between 18%-26% stable-coins in TVL.

Proposed changes:
AVAX-USDT 1x >3x
AVAX-DAI 1x > 3x
PNG-USDT 3x > 5x
PNG-DAI 3x > 5x

Current state of liquidity in Pangolin
Stablecoins pairs are critical to the function of Pangolin, of future lending protocols like BenQi, and to the Avalanche DeFi ecosystem. USDT and DAI are consistently in the top 5 tokens for daily volume, yet only have a fraction of the liquidity of the other top 5 tokens. Currently there is ~2.32M DAI liquidity and ~2.26M USDT liquidity in Pangolin, and these tokens generate ~400k-800k in volume per day. Other major tokens generating high volume (ETH, AVAX, and PNG) all have over 20M in liquidity.

Tokens and pairs sorted by swap volume

The stablecoin liquidity in Pangolin has been trending down recently due to higher yields being available for stablecoins in other apps (Ex: Trader Joe, Snowball StableVault). To remain competitive and keep enough stablecoin liquidity to support swaps and lending platforms, we should increase our rewards for stablecoins.

Liquidity trending down over the past month for USDT and DAI

StableCoin liquidity % in top DEXs
Pangolin (3.1%) has a very low percentage of stable-coins compared to major DEXs (18-26%). We should increase this percentage to have a more optimal distribution.

Pangolin: 3.1% of overall TVL is USDT & DAI

Uniswap: 19% of overall TVL is USDC, USDT, & DAI

SushiSwap: 18% of overall TVL is USDC, USDT, & DAI

PancakeSwap: 26% of overall TVL is BUSD, USDT, & USDC

Primary benefits of more stable-coin liquidity:

  1. Swap volume and revenue. Stable-coin pairs consistently have high swap volume, and we want to capture the swap revenue from this.
  2. Supporting lending projects like BenQi that depend on deep stable-coin liquidity for liquidations. Effective lending solutions are key to growing DeFi on Avalanche
  3. Low slippage swaps for users. We can provide lower slippage on swaps if these pairs have more liquidity.
  4. Attracting new users and new projects into Pangolin over other apps. As new users and projects come to Avalanche, we want them to choose Pangolin over other apps as their primary DEX, and having the most stable-coin liquidity helps Pangolin be the top choice

Rewards at current rates
AVAX-USDT x1 | TVL: $3,962,742 | Weekly rewards: 8330 PNG per week
AVAX-DAI x1 | TVL:$4,111,474 | Weekly rewards: 8630 PNG per week
PNG-USDT x3 | $494,078 | Weekly rewards: 3130 PNG per week
PNG-DAI x3 | $80,773 | Weekly rewards: 519 PNG per week
Weekly Total: 20,609 (1.68% of total weekly rewards)

Projected rewards at new rates
AVAX-USDT x3 | TVL: $3,962,742 | Weekly rewards: 24990 PNG per week
AVAX-DAI x3 | TVL:$4,111,474 | Weekly rewards: 25890 PNG per week
PNG-USDT x5 | $494,078 | Weekly rewards: 5321 PNG per week
PNG-DAI x5 | $80,773 | Weekly rewards: 882 PNG per week
Weekly Total: 57,083 (4.66% of total weekly rewards)

The increase would roughly triple the emissions allotted to these pairs, increasing the weekly total from ~20,609 to ~57,083. Pangolin emits 175,000 PNG per day, or 1,225,000 PNG per week, so this increase is only a small percentage of total rewards (1.68% increase to 4.66%), and the impact is not projected to be significant.

In conclusion:
A higher level of stable-coin liquidity is required for Pangolin to see increased success a DEX, and is also required to support future lending partners. We should be continuously monitoring the rewards pools and pair liquidity levels to ensure that emissions are being used effectively to attract the correct type of liquidity and volume that makes Pangolin successful. USDT and DAI pairs are generating tremendous volume and add significant utility, so we should increase rewards to attract and keep liquidity in Pangolin.

Please leave any feedback or questions below


This is a great proposal. Will the emissions be increased again if stablecoin liquidity doesn’t get to the 18% lower bound of other DEXs?

Got some internal feedback that we should increase the AVAX pairs to 3x instead of 2x, so I have updated the figures in the post to reflect that

Yes, we should be constantly evaluating performance of pairs and the associated emissions to be the most optimal. Continuously optimizing emissions is a best practice that successful DEXs follow

I believe the scissor between PNG pairs and AVAX pairs should be much more in order to prevent people to sell their PNGs for AVAX which is believed to be a more safe harbour.