I’ve mentioned this elsewhere, but Lifinity already provides “too much” mSOL liquidity given the current volume, and volumes aren’t increasing. It’s not even close to being as simple as increase in liquidity → commensurate increase in volume.
Anyhow, I guess you are in fact suggesting that LPs should just have to “take IL like a man”, and that trying to mitigate it by adjusting the amount of liquidity provided (which, by the way, every professional market maker does) is disingenuous?
Since you appeared to have completely ignored my point of building liquidity for future events, I will rephrase it a bit: how will the idea of “target liquidity” help mSOL scale beyond what it is right now?
Let me add some additional commentary.
The crux of the issue @nope seems to have is that our protocol fees are too high. So let’s think about this from first principles.
First, basically all DEXs have protocol fees, certainly all major ones on Solana. Prior to dynamic fees, Lifinity had a fixed protocol fee of 15%. Apparently this was acceptable because no one complained.
Once we switched to dynamic fees, the fee for the mSOL-USDC pool became 100% because it had more liquidity than the target liquidity. Now Solend starts to complain. (And let’s be clear, it’s just Solend because they are basically the only other LP in the pool besides Lifinity.)
So the natural conclusion, then, is that there is some value between 15% and 100% past which a larger protocol fee becomes unacceptable, for whatever reason. We know that this value isn’t 15%, because there are DEXs on Solana that have a MNDE gauge and also have a protocol fee higher than 15%. So where is the threshold? Is it 20%? 30%? 50%? 99%?
The answer to this question is subjective. There is no “correct” answer. Any choice is purely arbitrary.
So then, who should decide? Apparently, @nope believes that they or the Marinade community should be able to determine what is “too high” or “too low”, what the magical threshold is where DEXs aren’t disincentivizing deposits too much (newsflash: any and all protocol fees disincentivize deposits). This is nonsense.
In July, Solend introduced interest rate spread fees, which disincentivizes deposits compared to before (lower deposit APR). Should I push for Marinade to remove Solend’s gauge because they don’t incentivize deposits as much as they used to? Of course not. A protocol’s fee structure should be decided by the protocol itself, not by Marinade. It is a self-regulating mechanism because if a fee structure is bad no one will deposit, which will then incentivize the protocol to improve it. Or if deposits are not useful beyond a certain point (which is the case for Lifinity) and the protocol runs optimally at the current level of deposits or less, there is no need to incentivize additional deposits.
Suppose Lifinity were to lower its protocol fee. The only difference would be that Solend receives more trading fees. It would not increase Marinade TVL nor change the level of liquidity provided. So at bottom, this discussion is about whether Solend “deserves” more trading fees. It doesn’t concern Marinade governance.
The MNDE rewards for Lifinity’s mSOL-USDC pool still fulfill their purpose of attracting more liquidity to the pool. It’s not as if Lifinity is blocking those rewards from LPs. It’s also not as if dynamic fees cause there to be less liquidity than the originally promised $1M.
If people don’t like that the gauges incentivize a fixed amount of liquidity on Lifinity, perhaps they should suggest ideas for how to improve how the gauges work rather than merely try to shut down a single gauge.
If volume increases, the target liquidity (which, again, is already too high and provides more than enough leeway to accommodate increased volume) will be increased to match.
false dichotomy 2 mil at 50x is twice as deep liquidity as 1 mil at 100x (literally the liquidity goes twice as deep in price movements)
i guess it hasn’t been doing to well at this for msol
interesting the timing with which it became such a priority! i wonder why?
this is just not true, I think it was a huge consideration in the other thread and if you are going to deny it I can’t even argue against you with facts.
when directly questioned you at best mislead and at worst outright lied then immediately after celebrated the deception in your discord, based on some plan you had previously written about which you claim removes you from any culpability because “oh they coulda just read the docs lol”
sorry which ones? i think all the ones i checked at <20%
There’s one point that has not been brought up by anyone so let me bring it up. Lifinity has executed all of its obligations as per the original proposal. If mDAO votes to shutdown the liquidity gauge, then the original terms will be voided. So mDAO will need to accept the fact that Lifinity will no longer be obligated to honor the terms.
Possible consequences of this include:
Again? Like less than a month after this was discussed you propose to reopen this discussion ? Really?
Same as last time, many people here are focusing on TVL solely, like if max TVL would make things big and important.
@nope , you clearly have a personal problem with lifinity, if you get to close the gauge then what?
Lifinity is one of the few amm doing things differently from uniswap v2/v3 and curve. The rest of the protocols are substantially forks.
Lifinity is attacking many of the problems of those protocols , focusing on deep liquidity at the right price , obtained by an oracle, like no other protocol on solana, closing the gauge will be a loss for the whole ecosystem and specially to marinade. It also looks for profit, this is why it tries to have the efficient ammount of liquidity. This is good for lifinity and its holders, maybe better to lock lfnty instead of just adding liquidity where it is not needed…
Maybe because you couldn’t continue with Nope finance and got absorbed by Solend, you couldn’t construct your own protocol so now you try to attack and destruct other protocols… ?
Liquidity at the current price (where the vast majority of swaps take place) is the same, and yes there is more depth, but that depth almost never gets utilized, if it ever has. (doubtful).
Yup, mainly because it turned out that the promised $1M at 100x concentration was already too much liquidity, then Solend’s $1M was added, which exacerbated it (we let it be for a while to test it before reducing concentration).
I’m not pretending that the timing of its implementation had nothing to do with Solend’s deposit. Regardless, it was going to get implemented eventually anyways. We implemented it when we saw that it would have a clear benefit of helping to regulate excessive liquidity. If you think that there’s something wrong with that, please point it out.
My Discord comment was posted a week after my comment on the forum (both screenshots below were taken today on 10/13). So no, one did not follow “immediately” after.
The thought of dynamic fees did not even enter my mind when I was responding on the forum. But by some wizardry you seem to know that I had a clear intention to mislead or lie. Maybe you can also tell me what color I’m thinking of right now?
Anyhow, I would have thought that you would read our articles or docs and make an attempt to fully understand Lifinity before depositing $1M of Solend DAO’s funds without a vote.
Orca was 16.7% last time I checked. And of course, just because theirs is the highest fixed fee (if it is) doesn’t mean their threshold is the “right” one in any sense and no protocol should go above it. Let’s not get stuck on a particular instance of a fixed fee, though. The point is that any choice is subjective and arbitrary. But supposedly you do happen to know the one true magical threshold, because by your standards 15% is sufficiently low while 100% is too high, right?
Can you show the work you’ve done that proves that $1M of liquidity is the “optimal amount,” and that any additional amount causes an overabundance of liquidity? This claim is very convenient for Lifinity’s interests, which IMO casts some doubt.
Why should mDAO be providing a dynamic gauge to incentivize a constant amount of liquidity? Especially when it’s actually disincentivizing users from adding liquidity. This makes the gauge useless since its goal is to improve liquidity, not keep it constant while spend increases.
My comment was intended to convey that Lifinity would not make an ad hoc change to the mSOL-USDC pool’s fee structure
The timing of the fee change appears to be a direct response to mDAO’s requirement to open the mSOL-USDC pool. Seems very ad hoc to me.
I dont have a personal problem but I do have a problem when I believe things are going against the interests of entities which i have interests in (solend and mdao). I clearly layed out why I believe this is the case.
Such ad hominem that it’s feels like it’s not even worth replying but lmao who do you think built solend lmao
when i said immediately i meant immediately after voting finished
?
This is getting ridiculous; you’re essentially suggesting that we are arbitrarily choosing the target liquidity to benefit ourselves rather than to indicate the amount that would optimize the pool’s performance. Really, it should be you providing the data if you’re going to lob such an accusation, not us defending against baseless insinuations. And even if we provide such data, you’re not going to change your mind about shutting down our gauge, right? So what’s the point? But sure, have it your way.
First of all, as I’ve been saying $1M is not the optimal amount given the current trading demand, which is why the pool has not performed very well from the start. The target is set to $1M simply because we committed to that amount for the grant.
The chart compares the IL of Lifinity and a CPMM. The sharp drop after Solend deposited is due to the price of SOL dropping when the pool was unbalanced (it had a lot more mSOL than USDC). Excessive liquidity delays the rebalancing process, which caused the loss. This does not happen for pools that have an optimal or a less than optimal amount of liquidity.
The volume did not increase even after doubling the liquidity, which implies that the extra capital is not being utilized. Note that this is true even before we lowered the concentration from 100x to 50x and we were providing double the level of liquidity compared to before.
Quoting myself from Marinade’s Discord:
I’ve always said we’re open to other forms of cooperation and have encouraged people to talk about ways to improve the gauges if they are unhappy with how they work. Unfortunately, the discussion always seems to revert to shutting down Lifinity’s gauge or trying to tell it to function differently. If people think Lifinity is misusing the gauges, perhaps they should propose an improved gauges v2 that cannot be misused (whatever their definition of misuse). Isn’t that part of the whole reason for blockchain? Making it so people “can’t be evil” and we don’t have to rely on people willingly obeying “don’t be evil”? (To be clear, I don’t think Lifinity is doing anything wrong, just speaking from the perspective of others here.)
We just finished developing v2 so we had time, and for the first time we had a pool where dynamic fees would serve its purpose of regulating liquidity. When I say “an ad hoc change to the mSOL-USDC pool’s fee structure”, I mean changing fees just for that pool, just because. I’m not referring to implementing a feature that we planned from long ago.
Seriously, can we move past this gotcha game where Solend team members try to prove that I tried to intentionally mislead or lie and talk about things that are actually productive?
The change was not applied to Solend’s specific LP tokens or to just the mSOL-USDC pool. It was a protocol-wide change that applied to all pools and all LP tokens. As was always the plan.
It’s hard to move past that for obvious reasons.
I’ve been trying to understand Solends position (on Solend discord channel) and I’ve arrived to the conclusion that you are just defending interests of Solend solely, you don’t care about marinade or Lifinity. You want traditional AMMs only because in case of a big liquidation, lifinity is not your best option and you don’t want others to be diluted in voting power nor you want to risk them not doing anything to avoid that. I think the discussion can end here, if you have some proposal like closing the gauge, make it and vote. You have the biggest voting power anyway, so you have bigger chances to get what you want, and what you want involves a lot of personal whim. But please, if it doesn’t pass, leave the whims!
if you take 1 step further with the line of reasoning you would understand solend being able to handle more msol collateral → more msol minted (since it’s the largest sync of minted msol), which is good for marinade.
was giving opportunity for lifinity to revert change or others to come up with alternative ideas, but yeh will probably make the vote shortly.
Question for the Solend side here. What else, other than cutting off LM incentives to the Lifinity pool, can be done to reduce the risk to users lending USDC and/or SOL against mSOL collateral? Is there any other way that we could incentivize deeper liquidity on other trading venues (ie pull the capital from the Lifinity pool and put it to work elsewhere)?
** no financial interest in either protocol, just trying to find a solution
Sounds like you have already made up your mind on the matter, so further discussion is pointless. Might as well put it to a vote already.
But would like to hear your magical threshold for the maximum protocol fee that “doesn’t disincentivize deposits too much”.
in the interest of time, would have not bothered bringing it up if <=20% fee (and would still be willing to drop the issue).
Using Solend’s maximum interest rate spread as the acceptable threshold, are we now? How convenient.
a number was asked for
