Move All RAI Mint + LP Incentives to RAI/ETH Pair

This is a proposal to move all RAI Mint + LP Incentives to the Uniswap V2 RAI/ETH pair in the next distribution period.

The current distribution includes 100.2 FLX/day to RAI/DAI Uniswap V2 LPs which make little sense at this point for the reasons below:

  1. RAI/DAI Uniswap V3 is insanely more capital efficient than V2. By subsidizing RAI/DAI Uniswap V2 with FLX we are unnecessarily creating sell pressure on the governance token FLX. LPing on RAI/DAI Uniswap V3 is occurring naturally, and gathers more fees (as @elghosto mentions) when RAI/ETH Uniswap V2 has more liquidity because arbitrage bots trade larger size against it.

  2. I bought into the RAI/FLX vision because of ETH as the only collateral and don’t want the system to rely on DAI (and thus centralized coins). If DAI is one of the main avenues of liquidity then there is an implicit reliance on the DAI system to not implode.

  3. RAI/ETH Uniswap V2 isn’t great for slippage at it currently stands. Whales won’t use RAI if they cause 1% of slippage when they want to swap it back and forth for ETH. To ensure sufficient liquidity, we need to focus all incentives on RAI/ETH, not RAI/DAI, especially when the incentives are denominated in the governance token FLX (which I hold) and is going down in dollar terms.


I support this and would like to announce the 100% RAI/ETH strategy next week.

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Agree :100:.
I already said this on the discord channel and it sounds like Stefan is already planning on making the change but I’ll post here for posterity.

Uniswap v3:

Uniswap v2:

RAI/DAI v3 volume is far higher than v2 and v3 LPs are, on average, making significantly more in fees than v2 LPs. IMO the only reason anybody is still LPing in v2 is because of the FLX subsidy.

The average RAI/DAI v3 LP is making about 30% APY with no direct subsidy! :tada:

The RAI/DAI v3 volume is mostly being driven by two things:

  1. RAI/DAI traders
  2. ETH<–>DAI<–>RAI arbitrage bots.

If the total amount of ETH/RAI liquidity increases, it will also lead to an increase in the size of these opportunities. Therefore, the FLX subsidy for ETH/RAI indirectly subsidizes v3 RAI/DAI volume and thus LPs.

On a separate but related note:
I think one obstacle which RAI must overcome eventually to be adopted is to become ‘whitelisted’ by the big uniswap routers (the ‘default’ router at, 1inch, matcha, paraswap, etc.).

I’m not an expert on how this works but my impression is that they will only route trades through a short whitelist of tokens so right now if the best price for ETH in DAI was to trade DAI–>RAI–>ETH, I don’t think that any of the big routers will do that – that’s a path that’s only open to people with pretty complicated arbitrage bots. If RAI gets added to these whitelists it will provide better rates for traders AND more volume/fees to RAI LPs so this is something that might be worth pursuing.

Curious to hear if anybody else knows more about this.


agree with proposal, and the next step need to have rewards for uniswap v3.

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