I’d like to continue the conversation from last proposal here: [DAO: QmdD8d9] For Decentraland Daily Active Users: MANA incentives for USDC-ICE LP - #27 by cazala
tl;dr: I proposed incetivizing the MANA-ICE pair instead, so MANA holders that want to participate or who don’t wish to be diluted by this proposal can join without selling MANA. This aligns the incetives better between the both DCL and DG communities, and also benefits MANA by deepening the liquidity in Polygon which currently is very thin.
The counter argument was that Quickswap or other DEXs don’t route trades through ICE or MANA, so users who wish to trade ICE for USDC can’t do it directly from the Quickswap interface, since it can’t route ICE → MANA → USDC.
Even though this is true, in practice the ICE-USDC pair will be arbed to equilibrium with the ICE-MANA pair. So if the price of ICE is higher in the ICE-MANA pair (because there’s single side supply coming from MANA holders, which translates on exchanging MANA for ICE, propping up the price of ICE), bots will arb the price of ICE in the ICE-USDC pool until it’s the same in both pools by trading USDC → ICE → MANA → USDC. Arbitrageurs don’t even need to do the last leg of the trade in Polygon, if there’s better liquidity for MANA<>USDC elsewhere, if the liquidity of MANA in Polygon is a concern for you. There’s deep liquidity of MANA in Ethereum and CEXs.