[SIPS-002] A Proposal for a Sommelier Token Airdrop of SOMM to Select Liquidity Providers

Status: Proposed
Author(s): Hooded_Towels
Type: Text
Discussions-to: [SIPS-002] A Proposal for a Sommelier Token Airdrop of SOMM to Select Liquidity Providers
Created: 10/31/2021
Updated: 11/3/2021

Simple Summary

It’s time to open a bottle! Given the open discussions on this forum from community members to be rewarded for their Liquidity Provider activities on Sommelier, the Hooded Towels propose the following new SIPS: Direct the Sommelier Network to airdrop 15 million SOMM tokens, from the 150MM Sommelier Community Pool, to Liquidity Providers of the Sommelier Pairings application, Uniswap Liquidity Providers as well as Osmosis Liquidity Providers based on their participation and liquidity participation levels up to October 31, 2021.

We propose that the Sommelier Network execute the distribution of tokens no later than December 31, 2021.

Sommelier Foundation. If you are interested in the community taking this proposal and conversation to an on-chain vote, please send a signal with 10 SOMM tokens at this Sommelier Address: somm122mg296uvu7yd7v8tzfq3v8ruhrah4vkhfg0gz. We will use this to deposit the 10SOMM required to start the voting period.

Abstract

Sommelier Governance has launched with the Sommelier mainnet. However, the SOMM token remains locked on the Cosmos chain until governance releases tokens into the ecosystem for various activities. Sommelier’s governance system has the opportunity to release tokens to community liquidity providers, Uniswap v3 liquidity providers and Osmosis liquidity providers that are active today.

The Sommelier total tokens created at genesis are 300,000,000. 30% of the tokens from genesis are assigned to the Sommelier Community pool. This means that 150,000,000 tokens are available for the network to distribute to the community to launch and grow the Sommelier economic system. We at the Hooded Towels believe that the Sommelier network should assign 10% of the community pool, or 15 million (15,000,000) SOMM tokens to specific groups that will add the most value to the Sommelier economy and ecosystem. The proposed groups include the following: Sommelier Pairings DApp liquidity providers for Uniswap V2 and Uniswap V3, Uniswap V3 liquidity providers on specific pools, and lastly, a snapshot of the active Osmosis liquidity providers who continue to push the boundaries of the next phase of DeFI.

We propose to distribute tokens based on the following three key requirements:

  • Transaction participation by any unique address on the Sommelier Pairings App

  • Liquidity participation by any unique address on the Sommelier Pairings App

  • Liquidity participation by any unique address in a a select list of Uniswap v3 pools

  • Liquidity participation by any unique address in a select list of Osmosis pools.

We propose that the Sommelier Network execute the distribution of tokens no later than December 31, 2021.

Motivation

This proposal is motivated by the active conversations in the community Governance - The Sommeliers where active members of Sommelier have made their voices heard. If Sommelier respects the community and it’s potential to launch the Sommelier ecosystem, we believe that it’s in the interest of the Sommelier network to document a SIPS proposal and submit this proposal for voting onchain using the Sommelier network.

We believe that acknowledging the active Liquidity Providers of Sommelier, Uniswap, and Osmosis with a token distribution is a win for Sommelier’s network and community.

UPDATED: We have also heard from the community that our proposal may fall short of rewarding the Liquidity Providers that took substantial risk and cost to use the Sommelier APP relative to the target Liquidity Providers that have yet to interface with Sommelier. We have heard this feedback from the community and want to address those interests in our update.

Specification Overview

The Specification Overview is as follows:

This specification attempts to identify the groups of Liquidity providers in the three main groups:

  1. Liquidity Providers on Sommelier IL-Loss App also knowns as Pairings

  2. Liquidity Providers on Uniswap V3 pools

  3. Liquidity Providers on the Osmosis AMM blockchain

We attempt to query the blockchain to snapshot the following metrics of participation:

  • Address participation

  • Liquidity size participation

  • Liquidity duration participation

We source addresses from the following data sources:

  1. Sommelier Dapp Exchange Contracts

  2. Uniswap V3 pools Contracts

  3. Osmosis Liquidity Provider snapshot

If the vote for this proposal passes, the Sommelier network should distribute the tokens via a transparent process that any community member may be able to review and check the resulting logic that generated the reward addresses. We propose that the Sommelier Network execute the distribution of tokens no later than December 31, 2021.

Sommelier Foundation. If you are interested in the community taking this proposal and conversation to an on-chain vote, please send a signal with 10 SOMM tokens at this Sommelier Address: somm122mg296uvu7yd7v8tzfq3v8ruhrah4vkhfg0gz. We will use this to deposit the 10SOMM required to start the voting period.

Technical Specification

We attempt to query the Ethereum and the Osmosis blockchains to snapshot the following metrics of participation:

  1. Address participation

  2. Liquidity size participation

  3. Liquidity duration participation

Address Participation: Defined as any Ethereum address that used the Sommelier application and its underlying contracts to add liquidity to any Uniswap V2 or V3 pool up until October 31, 2021 will receive a participation award of SOMM tokens. The only requirement for participation should be a successful Uniswap transaction to add liquidity.

Liquidity Size Participation: Defined as any Ethereum or Osmosis address that added any amount of liquidity to a Pairings App Position and a Uniswap V3 or Osmosis pool. Distribution awards occur according to the size of the address participation with greater rewards going to larger liquidity provision activities.

Liquidity Duration Participation: Defined as any Ethereum address that added any amount of liquidity to a Sommelier Pairings App on any Uniswap V2 or V3 pool and any direct liquidity on the selection of the toop Uniswap V3 pools, but must have held that liquidity for a certain amount of time. Distributions are awarded according to the duration of the address participation with greater rewards going to longer duration. Liquidity duration calculations were not available for Osmosis at the time of this proposal, but this may change based on the community’s feedback.

We breakdown the proposed distribution of the airdrop of 15MM SOMM tokens into the following Table:

Liquidity Provider Source Proposed Distribution Distribution Type
Sommelier Pairings App 3,200,000 Address Participation
Sommelier Pairings App 2,000,000 Liquidity Size & Duraton
AXS-WETH-03 300,000 Liquidity Size & Duraton
DAI-WETH-03 300,000 Liquidity Size & Duraton
DAI-WETH-005 300,000 Liquidity Size & Duraton
DAI-FRAX-005 300,000 Liquidity Size & Duraton
WETH-sETH2-03 300,000 Liquidity Size & Duraton
FEI-USDC-005 300,000 Liquidity Size & Duraton
FRAX-USDC-005 300,000 Liquidity Size & Duraton
FRAX-USDT-005 300,000 Liquidity Size & Duraton
FTM-WETH-1 300,000 Liquidity Size & Duraton
LINK-WETH-03 300,000 Liquidity Size & Duraton
UNI-WETH-03 300,000 Liquidity Size & Duraton
USDC-WETH-03 300,000 Liquidity Size & Duraton
USDC-WETH-005 300,000 Liquidity Size & Duraton
USDC-USDT-005 300,000 Liquidity Size & Duraton
WBTC-WETH-005 300,000 Liquidity Size & Duraton
WBTC-WETH-03 300,000 Liquidity Size & Duraton
WBTC-PAX-03 300,000 Liquidity Size & Duraton
WBTC-USDC-03 300,000 Liquidity Size & Duraton
WBTC-USDT-03 300,000 Liquidity Size & Duraton
WETH-USDT-03 300,000 Liquidity Size & Duraton
WETH-USDT-005 300,000 Liquidity Size & Duraton
ATOM-OSMO 200,000 Liquidity Size
AKT-OSMO 200,000 Liquidity Size
ATOM-DVPN 200,000 Liquidity Size
ATOM-JUNO 200,000 Liquidity Size
ATOM-XPRT 200,000 Liquidity Size
DVPN-OSMO 200,000 Liquidity Size
AKT-ATOM 200,000 Liquidity Size
JUNO-OSMO 200,000 Liquidity Size
XPRT-OSMO 200,000 Liquidity Size
ATOM-CRO 200,000 Liquidity Size
CRO-OSMO 200,000 Liquidity Size
REGEN-ATOM 200,000 Liquidity Size
REGEN-OSMO 200,000 Liquidity Size
ATOM-IRIS 200,000 Liquidity Size
IRIS-OSMO 200,000 Liquidity Size
ION-OSMO 200,000 Liquidity Size
LUNA-OSMO 200,000 Liquidity Size

Total Tokens Distributed: 15,000,000

Sommelier SOMM Airdrop Distribution(1)

Rationale

This proposal is a UPDATED DRAFT that we hope to open to conversation with the community. Below we summarize the three key behavioral reasons that anchor why we think the Sommelier network should vote on this specific proposal and its implementation:

Sommelier Community “Sommelier needs to be grateful to early sippers and fairly reward them with Sommelier governance tokens for their contributions.” is a reasonable expectation shared by user @vardhanam on the forum here: Retrospective airdrop for Sommelier early users & supporters. We believe that the community call for participation in Sommelier Governance and the Sommelier Economy. Given the community feedback, we think the adjustments we propose will align with the comments of this SIPS section.

Osmosis Liquidity Providers We are aware that Sommelier is a Cosmos SDK chain. Therefore, we think Sommelier should align with the greater Cosmos ecosystem. We think the Sommelier network should encourage the eager Liquidity Providers on Osmosis to help the SOMM token acquire price discovery quickly. A token airdrop to these members should help encourage this activity.

Uniswap Liquidity Providers The Sommelier Network should continue to appeal to the Uniswap V3 community of Liquidity Providers. As Sommelier launches it’s SOMM ERC20 token, we expect Uniswap Liquidity Providers to wake up to the opportunity to participate in the Sommelier ecosystem and will bring their liquidity with them.

16 Likes

Edited: giving almost all airdrop to selected uniswap pools is unfair. Why this top pools are better then other?

I just have question, how were selected Uniswap pools for Airdrop? If someone added lp for other pools, are they not allowed for airdrop?

2 Likes

Uniswap Pools for Airdrop were based on the Pools with the largest volume of liquidity across Uniswap V3 as well as the pools that seem to be the most popular on Uniswap Pairings app. If you go to the Pairings App, the Uniswap v3 pools listed show up at the top of the list.

If someone LP to Uniswap V3 pools NOT listed, they will get participation tokens only. This avoids the problem of dropping tokens to big whales in small pools.

I support the proposal. Looks fair and has a good reach to attract many people to SOMM. Are those unbonding on Osmosis during the snapshot also included?

1 Like

No. Just the TOP Uniswap V3 pools by liquidity. They are also the top Liquidity Pools on the Sommelier App when you click the dropdown here: https://app.sommelier.finance/

1 Like

This looks fantastic, thank you @Hooded_Towels !
I agree with this proposal (if that means anything without being in Foundation and voting with 10 SOMM).
Cheers :wine_glass:

3 Likes

We are the Hooded Towels! We are cute too!

1 Like

Just I dont get one thing - why do we need to incentivize top liquidity providers on UniV3 and Osmosis? How this ppl participated in Sommelier community? I don’t really see their contribution @Hooded_Towels

5 Likes

Is it okay that ~93% of airdrop distribution (Uniswap V3 + Osmosis) goes to people who don’t even know about your project? And it turns out that to early adopters (real Sommelier App users) goes only 0.1 * 0.07 = 0.007 (0.7%) of the whole community pool?

6 Likes

This is ridiculous. We need to mainly be grateful to Sommelier early adopters and not just top whales from Uniswap!
I offer to give most of the allocation to Sommelier Pairings users.:wine_glass:

7 Likes

When i read this proposal i first thought okay i can dig that. Seems fair. Then i came to the last part and noticed out of the proposed drop of governance tokens 92.7% are allocated to people who have had not interest in the protocol or have tried it out in any way.

THIS IS BONKERS.

2 Likes

Remember: Pairings users are also Uniswap v3 Liquidity providers of the top pools. As such, they get rewarded two times, by this proposal, whereas the others who are ONLY on Uniswap OR on Osmosis get rewarded once only.

You need to take your time and read the proposal again, I think…

Are you kidding? Are you wrong? 7% Sommelier App Users and 93% for Osmosis + Uniswap Liquidity Providers … On the contrary, you encourage the use of another platforms, not your own App.
I have 3 small pools during last 2 month in Sommelier Pairings App. I am very disappointed with you. So sad.

2 Likes

among all Uniswap v3 Liquidity providers our community is a grain of sand

That’s why the community is the only group that gets participation tokens. All others must prove that they are active LPs.

You do realize that all Sommelier users are Uniswap V3 user as well yes? They get tokens TWO TIMES?

I did. I disagree with the numbers.

Leans way to heavy onto Osmosis LP dumpers and Uniswap whales. Changes needed sers.

  1. Allocate more tokens here. Like a lot more. Its the true believers.
  2. Allocate around 10% of the airdrop to Osmosis LP’s.
  3. Scratch the uniswap drop or at a minimum change it so its not proportional.

Yes, that’s understandable. But you have to change the proportions.
For example -
50% for Liquidity Providers on Sommelier
30% Liquidity Providers on Uniswap V3 pools
20% Liquidity Providers on the Osmosis AMM blockchain

now 7% for Sommelier Users it looks humiliating

2 Likes

You should definitely write this up as a new proposal SIPS-003 and share with the community your rationale.




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