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Governance: Liquidity programs should factor time #3546
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I'm currently experimenting with this. @julian-molina - I have two follow-up questions on how we imagine the target picture:
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Sorry for the late reply, I somehow missed the notification!
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@BastianMuc have you got to look into this? |
The liquidity programs need to be improved to eliminate an obvious attack vector:
People may add liquidity the last day of the governance process, get rewards, remove liquidity immediately after, and potentially dump the rewards in the market. Because liquidity rewards don't require voting or any manual process whatsoever other than setting up and submitting a profile, the danger is quite real. There is no community oversight that would prevent such things from happening.
Even if no bad actor is involved, it is not fair to reward all liquidity equally.
The liquidity programs must check the date the LP tokens arrived in the wallet, and factor in the time spent in the calculation of rewards.
I suggest time should not be a linear factor. Longer periods should be rewarded more, so as to incentivize long-term stability of liquidity. There should probably be a cap at 90 days where the factor stops increasing, so as not to privilege excessively long-term liquidity providers, discouraging new comers.
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