DEC-DAI Uniswap Pool
While the rapid price appreciation of Ether (ETH) over the last few months has benefitted the value of the DEC token due to them being linked in the DEC-ETH Uniswap pool, liquidity providers in the pool have faced a significant amount of impermanent loss as the result of the fact that the DEC token price is more stable compared to ETH.
As a result, and in response to a significant amount of player feedback, we will be supporting a second Uniswap pool for the DEC token where it will be paired with the DAI stablecoin. The addition of a USD-pegged stablecoin pair for DEC will allow players the ability to paricipate in the liquidity provider promotion with significantly reduced risk of impermanent loss as compared to the DEC-ETH pair.
For anyone who is not familiar with the Uniswap liquidity provider promotion, please see the following posts on the topic:
The DAI stablecoin was chosen due to the fact that it is a decentralized stablecoin run by the MakerDAO protocol and is therefore not subject to as much of the reserve or regulatory risk of the other popular centralized stablecoins such as USDT and USDC.
The DEC-DAI Uniswap pair has already been created and can be found at the following link: https://info.uniswap.org/pair/0x1c19fd9bd77d4383c66d9a6ecf1bc67d462c477f
Starting on Friday, February 5th at approximately 12:00 PM ET / 17:00 UTC the DEC reward pool for liquidity providers will start to be split at a 50/50 ratio between liquidity providers in the existing DEC-ETH pool and the new DEC-DAI pool.
This means that, starting at that time, the ~274,000 DEC / day given out as LP rewards will be split with ~137,000 / day going to LPs in the DEC-ETH pool and ~137,000 / day going to LPs in the DEC-DAI pool. Players may contribute to the DEC-DAI pool at any time, but they will not start receiving rewards until the date posted above.
Splinterlands also plans to move roughly half of the liquidity it is currently providing to the DEC-ETH pool over to the new DEC-DAI pool around the time that the rewards for the new pair go live. The contributions from the Splinterlands company account will still be ineligible for rewards in either of the pools.
The bonus multiplier for liquidity providers in the new DEC-DAI pool will all start at 0 and will begin to increase at the same rate of 1% / day, up to the maximum bonus of 100%, at the time that the rewards for the new pool go live as mentioned above.
Additionally, the bonus multiplier will no longer be reset to 0 when liquidity is removed from either pool going forward. This means that existing LPs in the DEC-ETH pool can withdraw a portion of their liquidity to move it over to the new DEC-DAI pool without affecting their boost for the liquidity remaining in the DEC-ETH pool. Please note that the bonus multiplier will still be adjusted accordingly when more liquidity is added to a pool by a particular address as previously described in this post.
Finally, the DEC price feed used in the game will switch to a liquidity-weighted average of the price between the two Uniswap pools. This means that if one of the pools has double the liquidity of the other pool, then that pool's price will be weighted twice the smaller pool when calculating the average. This will ensure that if one pool has very low liquidity (and is therefore subject to larger price swings) it will not be able to significantly skew the average feed price.
Market Dynamics
The amount of DEC rewards that players will receive in return for providing liquidity to either of the DEC Uniswap pools is completely dependent on the amount of liquidity provided as compared to the total amount of liquidity in the pool (less the Splinterlands portion). This means that it will be completely up to free market forces to determine how much liquidity will ultimately end up in each of the two pools.
The more liquidity that is provided to a pool in total, the less the rewards will be for each participant, so it will be up to each player to decide in which pool(s) they want to participate based on the risk/reward profile of each.
Risks
We also want to reiterate the risks involved with providing liquidity to a Uniswap pool. When you provide liquidity initially, you are required to add an equal dollar amount of both DEC and ETH or DAI tokens based on the current pricing of the Uniswap pair. Then, as people swap DEC for ETH or DAI and vice versa, the amount of each token in the pool will change.
This means that the amount of DEC and ETH/DAI you will receive when you withdraw your liquidity from the pool may change significantly from the amount you put in. You will either receive more DEC and less ETH/DAI or less DEC and more ETH/DAI depending upon the amount of each token in the total pool at the time you withdraw. Additionally, the prices in USD of any of the tokens (even including DAI) may vary significantly between the time you commit your funds to the pool and the time you remove them.
We want to additionally note that all transactions on the Ethereum blockchain require gas fees to be paid in ETH tokens. Gas fees have been historically high recently, which means that there may be significant costs to participating in the Splinterlands liquidity provider promotion. Splinterlands has no control over these costs, and they are something that each player should take into account when deciding whether or not to participate.
As we mentioned in the original announcement post, Splinterlands does not assume any responsibility, nor can we issue any refunds for loss of funds or any other issues relating to the use of Uniswap or transactions on the Ethereum network. Please make sure you know what you are doing, and if you are unsure, please ask for help in the Splinterlands Discord server.
Season Rating Reset Changes
Starting at the end of the current ranked play season (which ends on Monday, February 15th, at 3:00 PM ET / 20:00 UTC) the rating reset levels for Bronze and Silver leagues will be adjusted as follows:
- Bronze III: 0 (no change)
- Bronze II: 100 (previously 200)
- Bronze I: 300 (previously 400)
- Silver III: 500 (previously 600)
- Silver II: 700 (previously 800)
- Silver I: 900 (previously 1000)
The reason for this change is so that Silver I players will drop back down to Bronze league instead of remaining in Silver, which is consistent with how the rating decreases work for the higher leagues.
Stay tuned for more updates from the Splinterlands!
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NOTE: All rewards from this post will be burned.