Summary
This proposal seeks community support to start incentivizing Fluid markets to attract liquidity, especially stablecoin liquidity, to achieve a $2B market size in the next month.
Proposal
Currently, Fluid has a $1.1B in market size with $220M in stablecoins lending with an active rewards program going on the stablecoin lending side for USDC, USDT & GHO (GHO incentives are provided by Aave/Tokenlogic). Scaling stable coin lendings to $400M will organically grow the market size to $2B.
During the bull market, stablecoin liquidity is the hardest to attract due to the high funding rates and borrowing demand. Fluid has very high organic borrowing demand as long as there’s enough stable coin liquidity. Stable liquidity attracts more lendings of ETH, wstETH, WBTC, cbBTC which then protocol utilizes to provide different services like wstETH-ETH leverage strategy, weETH-wstETH leverage strategy. Growing WBTC & cbBTC will allow the introduction of eBTC and LBTC leverage strategies and deepen the liquidity of all these assets allowing for more DEX pools & higher caps for existing DEX pools without destabilizing the market.
We propose (for the next 30 days):
- Start distributing $1M in INST (150k INST) rewards on fUSDT & fUSDC (75k INST each) on top of the existing $1M stablecoins rewards.
- Start distributing $200k in INST (30k INST) rewards on the borrowing side of WBTC & cbBTC <> stablecoins markets to attract BTC lenders.
- Start distributing $100k in INST (15k INST) on USDC-ETH DEX pools to bootstrap this market.
To speed up the process, the team will start distributing rewards before the proposal passes. If the proposal doesn’t pass then the team will bear the cost of the distributed rewards.
Conclusion
This proposal increases the rewards to attract liquidity, thereby promoting Fluid as the best venue for lending, borrowing, and trading.