Outlining the Principles of Incentivized Pools

Hello, I am a Shade community member and go by the alias Smolaf.

In the recent weeks after the launch of staking there has been a refinement in the structure of pools and emissions. This proposal goes to further that discussion so we have a more clear picture of the future of the ShadeSwap liquidity.

My goals here are:

  • Solidify Shade as the undisputed on-boarder to Secret Network from around Cosmos and other ecosystems.
  • Make SHD a good platform to on-board to IBC from any ecosystem.
  • Efficiency. Concentrated liquidity is best liquidity.
  • Protecting the value of SHD
  • Using our funds constructively in securing long-term beneficial partnerships.

Shade is still early and I have no problem with experimenting with pools early on to see what is a hit and what is not. And what is not a hit now may suddenly become so later. But to avoid arbitrary randomness in this lets try and apply a structure based on our best interests.

Problem: Incentivizing pools that are capital inefficient sub-optimal routes, causing fractured liquidity in cosmos and beyond, while emitting precious SHD to unprofitable efforts.

Solution: I want to commend the decision to move most pools over to Silk instead of SHD, using the great routing system to its benefits. The native projects usually have the deepest pools of their native coin, so to also help with the overall routing system cross ecosystems we should only incentivize with shade main ecosystem coins, core coins. Ethereum on eth, Atom (or whatever the deepest liquidity coin ends up being) on cosmos, and so on. Stablecoins like USDC are also hugely important as its active and liquid on many ecosystems. As well as partnerships projects that is beneficial for Shade, wants to work with us, gives their own emissions, prioritizes our DEX and integrates with us at some level. This deep and concentrated liquidity also hugely benefits from a cosmos-wide and cross-chain routing system / DEX aggregator, that will surely come in time.

To quantify this I propose a check-list that will be assessed by the dev team with assistance of community feedback, and later on by community voting/governance. This check-list if passed will ensure more efficient and concentrated liquidity in the cosmos and beyond as well as preserving SHD incentives to what makes Shade Protocol profitable.

Question: Should this project get SHD incentives?
Answer: If it meets one or more requirements on our check-list:

  • Does the project provide a beneficial partnership to Shade Protocol? (Providing own emissions, integrating Shade apps / Silk, prioritizing our DEX)

  • Is the coin a core/main ecosystem coin of a relevant ecosystem? (Good example of a very relevant ecosystem would be Ethereum, and ETH meets those parameters there, being deepest liquidity)

  • And of course, our very own native coins needs to be incentivized, those really fulfill 100% of both criteria :wink: For now that is SHD-SILK and Silk-stkd-SCRT

Thank you for reading and I hope this could be a contributor in formulating the strategy on this!


Hey Smolaf, good to see you here :wave:

I definitely agree with the proposal


One of the coins we should focus on is OSMO ( SILK/stOSMO and OSMO/stOSMO )

Looks like liquidity is not the main issue in these pools, but rather the interest in using them ( Daily volume is just arbitrage )

Apparently there is no interest in using OSMO on Shade (no wonder Osmosis has its own exchange).

The sum of the 24h volume is 3000$.

I suggest we halve both incentives, in the case of the 1st pool this will not be a major change due to the concentrated liquidity and in the 2nd case it will take away the excess APR which is unnecessary here for this pair.

Osmosis doesn’t significantly help the Shade/Secret ecosystem at the moment, besides it’s a competitive coin

For this step we can expect a 15-30% change in terms of OSMO TVL to Shade Swap
Proportional money saved > proportional TVL lost