Minswap’s ambition to be the preeminent DEX on the Cardano platform is contingent upon its ability to offer optimal liquidity in pivotal trading pairs. Historically, on other blockchain platforms, stablecoin pairs have been the most traded, driving significant volume and user engagement. However, our stablecoin liquidity pools, notably ADA-IUSD, ADA-DJED, ADA-USDT, and ADA-USDC, need enhanced support. We propose channeling the batcher fee revenue to bolster these liquidity pools and capitalize on the potential trading volume they can attract.
Benefits of the Proposal:
- Stabilizing Key Trading Pairs: Boosting liquidity in stablecoin pairs guarantees smoother transactions, reduced slippage, and a superior user experience. This is likely to entice a larger user base to Minswap for their stablecoin transactions.
- Optimizing DEX Operations: By increasing the liquidity of these pairs, Minswap can potentially capture a larger share of the trading volume in the Cardano ecosystem, leading to more fees and a healthier operational framework for the platform.
- Ensuring Fair Distribution: Adequate distribution among the stablecoin pairs based on liquidity and projected demand will be a balancing act.
- Potential Exposure to Risk: There’s an inherent risk in placing a significant amount of POL in positions tied to the performance of these coins. Any potential failure or instability in one of these coins could have ramifications for the DEX.
3.**Directing funds to this porposal would leave the MIN token price decline (which the author finds worrysome as adressed on another porposa https://forum.minswap.org/t/proposal-to-utilize-batcher-fees-for-min-buyback-and-burn-mechanism/4540l) to solve itself and could lead to Minswap losing its dominant position in the DEX space (see post for further details)
- Funding Source: Use the batcher fee revenue as a dedicated source of funds for the stablecoin liquidity pools.
- Allocation Strategy: Strategically distribute funds among ADA-IUSD, ADA-DJED, ADA-USDT, and ADA-USDC based on trading volume, not just within Minswap but also considering other DEXes. This strategy will require strategic updating to remain relevant.
By redirecting the batcher fee revenue to boost our stablecoin liquidity pools, Minswap positions itself to capture a significant trading volume inherent to these pairs. This proposal serves as a strategic move to cement Minswap’s standing as a dominant DEX on the Cardano platform. We urge the community to support this initiative for the continued growth and resilience of Minswap.