Mis-use of Marinade gauges by closed AMM

Governance
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#161

What do you propose?

I propose the following:

  • The prevention of the creation of “permissioned or fully closed pools” liquidity gauges.
  • Permissioned - being that having a list of addresses, which are controlled by another entity
  • Fully closed - pools that do not accept liquidity or capital from other people

This includes the removal the current Lifinity liquidity gauge where deposits are limited to only Lifinityan d prevent the creation of future closed off or permissioned liquidity gauges.

This proposal would include the removal of Lifinity’s gauge, regardless of whether they choose to open the pools. They are welcome to re-apply for a gauge after this proposal has passed, subject to the Chef’s screening process from start to end.

What is the rationale behind the proposal?

“One of Marinade core value is decentralization, including the spreading of MNDE ownership around the ecosystem, so we should not allow Liquidy Mining Gauges for large pools that are private by design of by lack of community participation, because that leads to a feedback loop of MNDE concentration rather than decentralization”

This was eloquently put by Lucio, and I think serves as a good summary of the “why” of this proposal.

This proposal’s goal is to restore liquidity gauges to it’s original purpose:

“MNDE Liquidity mining serves 2 functions in Marinade:

  • it incentivizes staking SOL and using it in DeFi integrations, being a means of acquisition and retention
  • it spreads the ownership of MNDE around in the ecosystem to its users, decentralizing Marinade”

This was demostrated by Lifinity. (Lifinity constantly receiving MNDE and relocking it for more MNDE rewards, leading to exponential growth). This proposal aims to solve the root issue (liquidity gauges), and open the door for Lifinity to change their current model (opening the gauges as Durden suggested?) before re-applying for a gauge uner the new model. While many wont believe that this is a pitchfork session on Lifinity, it is really trying to just solve the root problem.

What is the expected positive impact of this change?

The removal of the Lifinity gauge should see more incentives driven towards other AMMs (Orca and Raydium) and other DeFi platforms. While also keeping (hopefully) the liquidity/value add that Lifinity provides. (Once again, I highly suggest a pivot to volume goals instead of shutting the pool and dumping MNDE).

Under a more aligned model, mDAO benefits from Lifinity in a measurable manner, while also encouraging other DeFi protocols to participate. This should see more mSOL TVL growth and mDAO participation from other DeFi protocols.

More MNDE has to come from somewhere else to reward Lifinity, but mDAO won’t be overpaying for Lifinity’s liquidity as much as they are now and discouraging more protocols from acquiring MNDE.

Any other considerations?

There are a few potential risks with the proposal:

  1. Will Lifinity stop participation in mDAO, due to the perceived violation of their grant terms?
  2. How hard is it to monitor different liquidity gauges that they are playing by the rules (set out here.)
  3. How will other DeFi protocols react to this change? Maintaining these relationships between various DeFi protocols and mDAO is important.

Under the proposal, we have Hao from Hedge/Nazare, and Rooter/Nope from the Solend team commenting. It would be ideal to see more DeFi protocols commenting here to ensure that the change is seen favorably. Lifinity has been an active participant in mDAO and would benefit from a pivot in reward mechanism. For the sake of keeping this proposal focused, I suggest we bring up the Lifinity’s volume goals in a separate proposal.

While I feel that a volume based model will aligns mDAO and Lifinity’s interests better than the current model. I note that this was what Lifinity initially proposed, and views upon it negatively… However the current model, Lifinity’s gauge receives 10% of MNDE incentives, regardless of any volume or results achieved, which is less than ideal for mDAO.

I am not arguing that Lifinity is -ev for MarinadeDAO. I am for volume based goals, and a way of quantifiable goals (volume, spread, execution) to be presented and assessed, instead of Lifinity utilizing its MNDE (that it got as a grant) to drive more MNDE to themselves.

This model discourages other DeFi protocols from accumulating MNDE as Lifinity got a headstart for free. (As mentioned by mst from Tulip)

#162

Thanks for posting the clarification. Can you elaborate on the rationale behind this?

Why should Lifinity’s gauge be removed if, once they open their pool, they comply with the same terms as every other protocol?

None of Mariande’s Liquidity Mining Gauges have required an onchain vote so far, even if Lifinity chose to include the gauge creation on their proposal. The only reason adding a gauge is currently a permissioned system is to avoid scam pools.

This would make it a Lifinity-specific rule.

#163

Quoting you again from Discord: “Currently no other protocol need to apply onchain.”

The intent here from OP is once again obvious, to silence Lifinity’s community, remove Lifinity from the protocol, and then block Lifinity from returning. Hopefully members of mDAO can see through this charade.

#164

Will elaborate once again. The main reason is because in this forum, there has been plenty of anti-Lifinity voices. These voices should have the opportunity to discuss and vote on a Lifinity gauge.

As noted in Discord, we should not target Lifinity’s gauge and make theirs the only one that requires on chain vote.

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I have a suggestion.

Instead of targetting Permissioned and Closed pools, I suggest we tweak the model to also include pools that contain >50% of the liquidity specifically by protocol-owned liquidity. This is easy to monitor (due to the protocol owned liquidity being concentrated by 1 address, or being very clearly documented, and solves the targeting of Lifinity while solving the issue of over centralization initially brought up.

How do i addendum the previous proposal to include this?

#165

It is a bit rich, considering the Lifinity community literally posted a proposal to censure me.
Tribeca - Governance By DAOs, For DAOs. I have no way, and don’t intend to silence your community. I have made changes based on your community’s suggestions, and repeatedly tolerated verbal and cultural abuse.

1 Like
#167

If the pool is open with decent UX, no deposit/withdrawal fees, proportional distribution of fees etc, why should it matter if the liquidity is PO or not?

At that point the liquidity provided by the protocol is the same as everyone else. It’s just as if a “whale” deposited on the pool, which happens regularly in many pools across other DeFi protocols.

Seems unnecessarily targeted, again

#168

Because POL allows for 1 address to receive all the MNDE rewards, which leads to further centralization and precisely the problem we are trying to solve.

#169

Retracted the previously suggested changes regarding >50% POL.

I find it amsuing that changes/improvements are demanded, and then shot down constantly and accused of moving the goalpost when made.

Sticking to the proposal. Remove Lifinity’s gauge, introduce a restriction against permissioned/closed pools. Lifinity has to reapply again.

#170

In a open pool that’s the same as having whales LPing no? Doesn’t really change if the LP is the protocol or another wallet.

I think the point is making a fair proposal with general content and not targeted at one specific protocol.

#171

POL is directly competing with LPs. Every DEX that also LPs has a conflict of interests.

#172

This is false. A person who is a member of both Lifinity and Marinade made that proposal. Please do not confuse one person with the Lifinity community, nor that the Lifinity community approves of what they did.

1 Like
#173

If the pool is open and other people deposit, the POL will not be receiving all the MNDE rewards.

#174

Is there competition between the POL and other LPs? Yes, just as there is competition among LPs. But once we open the pool, there is nothing our POL can do to get an edge on other depositors.

#175

you control the DEX and set the rules for all LPs aka how LPs are going to compete with each other and for what.
I’m not saying you will abuse your power, but the conflict of interest is there.

#176

Again, surprised I even need to say this, but we’re not going to do anything like give 80% of trading fees to our LP tokens and only 20% to everyone else, or whatever other ideas there are to give ourselves an advantage at the expense of other LPs. The only variable to compete on is whether to deposit or not. All depositors are on equal footing.

2 Likes
#177

Since there seems to be a general consensus here and in Marinade’s Discord server that opening Lifinity’s pool will rid the need to close our gauge (no reason for closing it has been provided), we have begun preparing to open the pool. We will also make every effort to let the world know that they can now deposit and participate in liquidity mining through our pool.

I have also taken the liberty of creating a proposal that is the same as Batman’s except that it doesn’t include the removal of Lifinity’s gauge. This will allow people to express the view that closed protocols shouldn’t be able to create gauges but that there’s no need to close Lifinity’s gauge once it opens its pools. If you do want to express this view, we ask that you also vote no on Batman’s proposal since it includes removing Lifinity’s gauge.

5 Likes
#178

For the sake of transparency, could @CryptoBatman tell everyone who’s interest he defends? Cause its clear to me he is not arguing towards the benefit of Marinade protocol, not even to the benefit of MNDE holders

#179

I think it’s pretty clear that he represents the citizens of Gotham in this case.

#180

While I understand where you are coming from, I do not believe that is an accurate description. Anyone can see that this would impact Lifinity financially but (as far as I can tell) nobody is asking that their votes not be counted, the grant somehow get clawed back, or their team members get blocked from conversation.

Acknowledged, thanks for elaborating.

If the issue here was that these voices considered Lifinity a bad ecosystem player, then it would have been cleaner to address that point from the start along with the reasoning. Not only is it a separate topic from that of closed pools, and has muddled the discussion, but I expect that you might end up finding that people who feel strongly about one can take or leave the other.

Having said that (and given that it seems I now need to make it clear that this is not PlayerOfBitsiztan) it is always up to the community to decide what ends up getting voted on chain, and to bundle topics as they see fit.

#182

<<<<< The name is Lollipop not Lifinity