ShadeSwap Pool Restructuring (Roll-Out Target 7/3)

Greetings community, in this post I want to outline a set of changes that I believe can have a significant impact on ShadeSwap & SHD value accrual.

I would propose a 15% reduction in SHD given to LPs per day - reducing SHD issuance down to 3.5% of supply in Y1 versus the original projection of 4% of supply released in the form of LP rewards in Y1.

Some key category changes:

  • 15.32% to 10% (-5.32%, StableSwap)
  • 15.20% to 15% (-0.20%, derivative onramp)
  • 51.07% to 45% (-6.07%, SILK/volatile pools)
  • 18.30% to 35% (+16.70%, SILK/SHD)

However, not only should we change category weights, we should also change emissions to specific pools within each categories based on volume contributions.

Here is the data:

This chart makes up the top 16 pools of volume generating pools and how much each pool contributes to total volume. The idea is for reward reweighting that on a per category basis we reassign rewards based on historic volume. The more volume a pool produces, the more rewards from that category they will receive.

StableSwap Volume Category Split - 10% of rewards (90 SHD per day)

  1. SILK/USDC (currently 55.50% of StableSwap volume from this pair) β†’ V1 received 37% of StableSwap category emissions, increase to 55.50% of category emissions (+19.50%)
  2. SILK/USDT (18.35%) β†’ V1 received 37% (-18.5%)
  3. SILK/IST (12.22%) β†’ V1 received 12.47% (-0.4%)
  4. SILK/CMST (11.93%) β†’ V1 received 12.43% (-0.5%)
  5. SILK/USK (1.64%) β†’ V1 received 1.92% (-0.30%)

In this category, it is clear that USDC is the highest performer and that USDT was overpaid in relation to volume. This is a clear shift of incentives off the USDT pool to USDC.

DerivativeSwap Category Split - 15% of rewards (135 SHD per day)

  1. ATOM / stATOM (48.06% of DerivativeSwap category volume) β†’ V1 received 44.49% of DerivativeSwap category emissions (+4% more category emissions to this pool)
  2. sSCRT / stkd-SCRT (22.71%) β†’ V1 received 20.42% (+2.71%)
  3. INJ / stINJ (6.46%) β†’ V1 received 17.50% (-11% less emissions to this pool)
  4. ATOM / stkATOM (6.13%) β†’ V1 received 2.45% (+4% more emissions to this pool)
  5. OSMO / stOSMO (5.29%) β†’ V1 received 12.69% (-7.4% less emissions to this pool)
  6. ATOM / qATOM (2.91%) β†’ V1 received 2.45% (+0.5% additional incentives)

In summary, ATOM/stATOM + sSCRT/stkd-SCRT + ATOM/stkATOM were overperformers and deserve more emissions. INJ + Osmo underperformed and deserve less emissions. Specifically INJ, pretty big flop in relation to volume interest.

SILK / CPMM - 45% (405 SHD per day)

  1. SILK/stATOM (42.09% of SILK/CPMM category volume) β†’ V1 received 34.29% of SILK / CPMM category emissions (+8% category emissions to this pool)
  2. SILK/stkd-SCRT (22.71%) β†’ V1 received 6.86% (+15.8%)
  3. SILK/WETH (15%) β†’ V1 received 17.15% (-2.15%)
  4. SILK/BTC (15%) β†’ V1 received 17.15% (-2.15%)
  5. SILK/stOSMO (3.52%) β†’ V1 received 6.86% (-3%)
  6. SILK/stINJ (1.5%) β†’ V1 received 5.15% (-4%)
  7. SILK/qATOM (1.5%) β†’ V1 received 5.32% (-4%)
  8. SILK/stkATOM (3.2%) β†’ V1 received 5.32% (-2%)

As a whole, it would appear ShadeSwap vastly undervalued how powerful the SILK/stkd-SCRT pool is (as well as the SILK/stATOM pool) and missed the mark by relatively small percentages on the other smaller pools.

SILK/SHD - 35% (360 SHD per day)

Finally, I would advocate for winding down the SHD/BTC + SHD/stATOM pools + SHD/stkd-SCRT pools. These accounted for only 7.7% of all volume on ShadeSwap despite receiving 15.1% of all ShadeSwap emissions. While the transition to focusing on SILK/SHD pool does not necessarily increase volume, it does vastly improve the cost efficiency of pairings and simplifies routing entirely through SILK as opposed to alternatives and improves SHD liquidity improving accessibility.


After additional research, here is some additional information that would maybe inform changing category weights even different from what I listed above:

Major changes incoming. I agree.

But there is one point that isn’t solved still: How to buy bigger amounts of Shade than ~2000$. How are you going to attract big money if there is no way to buy huge amounts.

This is a fatal flaw that needs to be fixed ASAP. Either by CEX listing or a proper Pool for that on the DEX.

I fear the SHD:SILK Pool will not be suitable for that, because we would have to buy SILK in other pools, which are β€œexpensive” because SILK
is in demand, in order to buy Shade.

990 SHD emmissions per day for around $840 daily fees ALREADY? DAMN that’s fucking impressive tbh , really hopefull with these numbers. the only thing I am worried about is the silk/SHD pool. Is there any way we can delay this change until the silk/dSHD SHD/dSHD pools release?


I think generally your approach here is spot on, I would just caution making all of these emission changes in one go.

I think the low hanging fruit would be to shift ~5% ish of Deriv emissions to CPMM based on your second post, as well as a portion of the stable emissions-> CPMM + the rebalancing outlined in your first post. Hard to say for exact percentage to shift, but I believe deep stable coin liquidity should be encouraged to support silk even if the emission to fee ratio is out of balance.

I think eventually you would look to further adjust reward weights based on volume but 2 months of volume data is probably not enough to support a rigid decision on the emissions. Maybe evaluate volumes on CPMM pairs in another 2 months after making above proposed changes.

I think its interesting that INJ is competitive with OSMO even though INJ is not offered as a collateral type for SILK. I think this would probably bump volume up on that pair to be more in line with expectations.

Keep up the great work.

Definitely can slow roll this out over the course of a month or so, I think the sharpest/quickest changes are around the SHD pools that I think should be wound down in favor of SILK/SHD relatively quickly.

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Bounded minting is being modeled, I hope to share this soon. With bounded minting we can help fix the premium that exists which should improve the entire ShadeSwap experience (especially when it comes to acquiring SHD).