First this is a proposal that only makes sense with multi pool routing, so please think of it with that frame of reference in mind.
On PancakeSwap, a successfull inflationary platform token based DEX, their reward for CAKE-BNB is by far the largest, by a gigantic factor. If you examine their pools in general, many are CAKE-X or BNB-X, with the stablecoin-token pairs also taking a moderate chunk.
They can do this because routing kind of merges more of the TVL into a single blob (while generating more fees).
As a side benefit as well, more platform token stays locked in pools.
But why should the pool with least IL get the most rewards?
Well that is looking at it from the wrong perspective, all DEXs pay for liquidity with rewards, the pool with the lowest APR is the best (for the platform) because its ‘buying’ the most TLV with the least amount of rewards. As the pool with the lowest rewards, its currently the best ‘bang for buck’ for Balanced. Increasing the rewards does not ‘waste’ the reward, it turns into larger TLV as yield seeking is an inherently very efficient process.
With BALN-sICX as the central big liquidity pool ala CAKE-BNB, other pairs will just need to pair off one of them.
This is even more apparent for the sICX-bnUSD pool which needs less liquidity to get a good price for DEX users because of pegging. Not saying it needs to be tiny it should be sizable, but we should look to working examples like Pancake and Quickswap to figure out a nice ratio.
CAKE-BNB is 40x, BNB-BUSD is 8x, BNB-USDT is 4x. Adding the stable pairs together their platform-native pair is 3.3 times their native-stable pair rewards.
You might be interested to learn CAKE-USDT and CAKE-BUSD only add up to 4x, the same analogy for BALN would be 10 times the rewards for BALN-sICX to BALN-bnUSD + BALN-stable combined.
This matches up with the BALN-bnUSD rewards being highest, ie. the most expensive liquidity for Balanced to pay for.
Quickswaps farm page is a ugly mess and the search sucks, so I gave up sorry.
Pros that I can see:
- Cheaper TLV for platform ~ more TLV ~ better slippage stats
- More BALN locked in LPs
- BALN-sICX is a more ‘long’ stance which I believe is good to encourage versus X-bnUSD which is a more bearish stance.
- less IL for people that blindly throw their money at pools that clearly do not align with their investment philosophy because it has the largest number. I am divided on this, it may not be a pro.
- Rebalancing will happen a bit more often, but with a lower amount, as a smaller sICX-bnUSD pool will take less to move both ways. (if this is a significant problem sICX-bnUSD can be special and kept higher than industry average)
- If there isn’t enough BALN to fufil demand for the higher rewards in the LP, BALN price will increase. (Is this even a Con?! Fake Con)
Addendum: For those unfamiliar with multipliers, you can just this of them as points and the total rewards allocated to all farms is divided to all farms in the ratio of their multipliers to each other.