SIP-11: Demeter v1 Launch Spec

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Voting will be open Sept. 7 at 5:01PM ET to Sept. 10 at 5:01PM ET.

Author(s): Sperax Core Team
Reference: Roadmap, Demeter Concept Farm with Partner L2DAO
Created: Aug 15, 2022
Labels: #Other

Simple Summary

Demeter protocol is a new protocol for DAOs to launch and manage decentralized exchange liquidity - without needing to know how to code.

V1 of Demeter gives users the power to launch incentivized liquidity pools on Uniswap v3. When using Demeter, users benefit from engineering support, marketing support and financial support.

Future versions will support custom liquidity shapes on major DEXs such as Balancer, Saddle, Sushiswap or anything veSPA holders prefer.

Abstract

Demeter automates the fundamental aspects of launching and managing decentralized exchange liquidity for the DAOs native token:

  • Engineering support to launch and manage the farm
  • Marketing support to make the community aware of the new farm
  • Financial support through SPA incentives

This product is a public good for the exploding Arbitrum ecosystem. Without needing to know the nuances of a Uniswap farm launch, the newest DAO now has the tools to launch a successful campaign and compete with the big guys.

The fee to use the contracts will be $500 used to burn $SPA. Pools launched with Demeter with trading pairs against $USDs or $SPA won’t be charged this fee.

Motivation

On Arbitrum, Uniswap has less liquidity than Balancer and Sushiswap. This is because Sushiswap uses the simple Uniswap v2, x*y=k approach. This is simple because all LP tokens are the same, but penalizes the LP because they are forced to provide liquidity from 0 to infinity. With Demeter, DAOs can launch a v3 farm without knowing how to code.

Killed yield farming… until Demeter!

Incentivized liquidity pools on Uniswap V3 lets DAOs benefit from concentrated liquidity - the same TVL offers less slippage compared to diluted liquidity. This directly translates to a lower emissions budget for other protocols.

Growing USDs TVL

Demeter protocol will not charge any fee for launching farms against USDs or SPA. USDs currently doesn’t have a lot of liquidity against other tokens, a joint incentivized liquidity campaign would lead to an increase in USDs trading pairs, USDs liquidity and protocol TVL.

Overview

To launch a v3 farm, DAOs are currently expected to write complicated v3 farm contracts, get the contracts audited, incentivize LP deposits with only their native token, then promote this new pool… So the community figues they’ll use Demeter instead.

The Demeter protocol provides three fundamental components of growing decentralized exchange liquidity:

  1. Building secure contracts

  2. Marketing the new farm

  3. Economic incentives to participate

Engineering Automation - The Audited Demeter Farm Factory contract will generate the pool and farm contracts for the Demeter user.

Marketing Support - Protocols that launch their farm through Demeter benefit from being whitelisted on the Demeter active farms dashboard. This exclusive list features all of the farms that are actively distributing rewards that were deployed with Demeter. Farmers will regularly look to this dashboard for new projects and become users of these protocols.


Economic Support - When pairing against USDs or SPA, Demeter users receive financial benefits from two sources.

  1. $500 fee waived
  2. Fixed SPA emissions from the SPA gauge, boosting farm APR

Technical Specifications

Steps for launching a farm:

  1. User inputs Pool parameters and checks if the pool exists
  2. If pool exists user inputs mandatory farm parameters, pays the fee (if applicable)
  3. Once the farm is live Reward token managers can input the Reward distribution parameters

Uniswap Pool Parameters

  1. Token address
  • Token A
  • Token B
  1. Fee Tier

Farm Parameters

  1. Price range for the LP

  2. Cooldown Period for Locked Liquidity

  3. Reward tokens

  4. Token addresses

  5. Token address managers; Each token will have its own token manager

  6. Reward distribution rate per second for each token

1. For all liquidity providers
2. For lockup liquidity providers (If cooldown period is greater than 0)
  1. Start date time stamp
  2. Status
  • Live (All reward token distributions are live)
  • Paused (All reward distributions are paused, LPs do not earn any rewards during this period.)
  • Closed (Farm admin has closed the farm, all liquidity providers including lockup users can now unstake their liquidity pool tokens from the farm)
  1. Factory Stamp/Signature (The SPA gauge smart contract and the front end will be able to detect if the farm has been launched using the farm factory contract; only farms deployed using the factory contract are eligible to receive SPA emissions through the SPA gauge.)

Reward Management

Each reward token will be assigned a reward token manager. Farm admin cannot update the reward token manager once the farms are deployed.

Maximum number of reward tokens possible would be 4.

Reward token managers can do the following:

  1. Add reward token balance
  2. Remove reward tokens (Any rewards already accrued to LPs cannot be removed)
  3. Update reward distribution rate (Only future distribution rates can be affected through this.)
  4. Pause reward distribution (Only impacts future reward distribution)
  5. Transfer reward token management to another address

Protocols can call functions through non-EOA addresses and manage the farm. This is for multi-sigs or DAO’s to manage the pool and farm.

Protocols do not have the power to add or update the token reward manager for the SPA token. Once SPA gauge is launched, this functionality will be passed on to the SPA gauge.

Farm Management

NO one can make changes to the farm contract once deployed.

Farm admins can do the following:

  1. Pause the farm (No new deposits, no distribution of rewards, allow withdrawals (including lockup LPs) and claim rewards based on whatever is accrued)
  2. Unpause the farm (The reward distribution rate remains same as before and the admin/managers should be able to make changes to the distribution rates and the other parameters when the farm is paused.)
  3. Close the farm (Once the farm is closed, all liquidity providers including lockup users can now unstake their liquidity pool tokens and claim the accrued rewards from the farm)
  4. Apply to become part of the SPA gauge
  5. Add new Reward tokens
  6. Transfer ownership to another address

Fees

Flat $500 fee to launch the farm,

Pair with USDs or SPA for fee to be waived.

The fee collected belongs to the SPA stakers and can be transferred directly to the wallet address where all Sperax protocol fees are collected.

Fee’s Can Be Paid In:

DAI, USDC, USDs, SPA

Initial fee: USD 500

This will be subject to governance. For fee payment in SPA we would need to use the SPA price oracle to determine the price of SPA.

ARCHITECTURE

This section should show a diagram that illustrates the overall architecture

.

CHAINS

Below are the supported blockchains where Demeter can be deployed. Additional blockchains will be added in v2

Arbitrum
Optimism
Polygon
Ethereum

  • Yes
  • No

0 voters

5 Likes

Very exciting! Well done guys and gals! One step closer to realizing the impact Demeter will have an Arbitrum and other chains.

1 Like

Be the most active DEX in Arbitrum.

1 Like

Highly trust success of this proposal.

1 Like

Love it! This seems like a wonderful plan!

1 Like

Very exciting, voted!
just a question about the chains: Demeter v1 can be deployed over 4 chains. Will be? Ethereum chain mean Demeter v1 will work on L1 chain and investor can use it over erc-20?

2 Likes

Amazing. Both an innovation and a public good. It will let users of DeFi on Arbitrum to enjoy deeper liquidity: Demeter will drive the development of the entire Arbitrum ecosystem.

2 Likes

Can Demeter be deployed on multiple chains while SPA and USDs is only on Arbitrum?

1 Like

Good question. First of all, SPA and USDs will be multi-chain in the future. Moreover, Demeter protocol per se does not depend on either SPA or USDs. That is, Demeter can work just as perfectly even if there is no SPA nor USDs on a chain. Hope this answers your question.

1 Like

Demeter V1 can be deployed to any EVM-compatible chain, regardless of being L1 or L2. Demeter V2 will be even more general and we are working on it right now.

For Ethereum, “yes” to all your quesitons :)

2 Likes

Yes as @JoeY clarified, Demeter protocol will work on all chains which are EVM compatible and have Uniswap v3. Fee collection mechanism would be different. In chains where there’s no liquidity for USDs and SPA, fees will be collected in USDC and will be transferred to the arbitrum chain or chains where there’s liquidity for SPA.

2 Likes

count me on a VERY excited YES

I always have looked at the multichain topic, so having this mentioned here so we can deploy on ETH/Polygon/BNB(?) right away adds excitement.

4 Likes