CIP-XX Improve the liquidity efficiency of cBridge

Celer Improvement Proposals
#30

Hi all,

I just restructured the proposal with the first step into a votable one. @mdong shall I create a snapshot vote for this?

CIP-12 Improve the liquidity efficiency of cBridge - Step 1

This proposal focuses on the first step of improving the liquidity efficiency of cBridge.

Step 1: Align Liquidity Incentives with Overall Demand

Although not directly tied to the transition, this step should be implemented regardless. The current LEF indicates that the reserve liquidity significantly exceeds the liquidity actually required. Based on daily volumes and demand, we suggest the following liquidity reward reduction schedule to better align with the real demand for cross-chain bridging. The Adjust Ratio is defined as the ratio between the new liquidity reward emission rate and the previous one.

Proposed Adjust Ratio Arbitrum One Avalanche BNB Chain Ethereum Mainnet Polygon Optimism Astar Aurora
USDC 0.2 0.2 0.3 0.3 0.2 0.2 0.05 0
USDT 0.2 0.2 0.3 0.3 0.2 0.1 N/A 0
WETH 0.2 0.1 0.2 0.3 0.2 0.2 N/A N/A

Note that we propose Aurora should be removed from the support of liquidity pool-based model because of its minimal usage.

This step should proceed irrespective of the Peti model switch, given the current excessively low LEF. Adjusting the liquidity rewards can generally improve liquidity efficiency, and by decreasing overall liquidity, it creates more room for professional liquidity providers operating under the Peti model. The proposed adjustment schedule is extremely conservative and highly unlikely to affect current bridging usage. In fact, we suggest that the ideal LEF should be around 1.5 (ten times the current value), necessitating a total liquidity reduction of approximately 10 times. However, the adjustment itself is not that drastic to avoid any unforeseen issues. Following this adjustment, we recommend that the community continually evaluates the LEF and makes necessary adjustments on a monthly basis.

#31

This is similar to the Synapse’ proposal where professional market makers and involved. I think Nima Capital would be a great partner in step two of such a proposal. Can we invite them into the discussion and see if they would like to support the initiative?

#34

I don’t think I should be taking the credit for this well-thought-through community proposal. Feel free to submit a snapshot vote for this one. Thank you for the contribution.

#35

This is very much true. :+1: I think liquidity efficiency is gonna be a trending topic in this market condition.

1 Like
#36

I agree with the proposal’s aim to improve liquidity efficiency by adjusting liquidity rewards. The suggested reduction schedule seems reasonable, providing ample space for professional liquidity providers within the Peti model. Regular evaluations and adjustments will help ensure optimal liquidity management going forward.

#37

I agree with this proposal. Aligning liquidity incentives with actual demand is important for improving cBridge’s efficiency. The proposed adjustment schedule appears reasonable and gradual, allowing for evaluation and necessary adjustments.

1 Like
#38

Looks legit! Fully support this proposal :joy:

#39

I’m satisfied with what Celer already has right now, I’m more concerned of safety, giving to what happened on anyswap

#40

I’ve been using Cbrdige for more than 6 months ,they know what they are doing!

#41

well said on" liquidity efficiency"

#42

Can’t wait to see this happen!

#43

good proposal, you got my support!