Hello, Giveth DAO Team –
I wanted to reach out with an amendment to this proposal for the DAO to consider.
I am the user who initially discovered and reported the 1-Tick problem, and I see that my wallet address is the last and smallest one on the proposed suspend list.
So I wanted to take a moment to provide some additional background on the issue, because I think there is a substantial difference in the way I have approached the V3 Liquidity pool versus the accounts that were methodically abusing it, and I would like to ask the DAO to consider removing my wallet from the list.
For starters, one of the criteria for selecting the addresses was that they “Didn’t earn significant rewards from other means” beyond V3 staking. In truth, I’ve been staking GIV over on the Gnosis chain since the end of November, just after launch. So I was involved well before February, even though it may not be obvious just by looking at the mainnet transaction records.
But in February I noticed that the Uniswap and Balancer pools on mainnet were advertising 3000-4000% rewards, so I moved my GIV over to mainnet for the 6x higher returns. I tried Balancer first, but its returns dropped that same day, so I switched to Uniswap.
The following chart shows how the next two months played out. I have sorted my transactions by date order, because it makes the story much clearer.
DISCOVERY PHASE
After I first staked in the Uniswap pool on Feb 1, I noticed that I was getting significantly lower returns than I had been making over in Gnosis staking, and that started me digging into whether I had done something wrong when placing my initial stake. I reached out to the GIV team to see if there was a problem or known bug, and I also tried re-staking differently to see if that fixed it.
After about a week of back and forth, and after looking at the V3 pool and the transactions in it, I discovered an account that was stacking liquidity on 1 tick, and thereby appeared to be capturing the vast majority of the liquidity rewards. (It was the 0x213439b642dbb9d5ee7bafdafb1f33f9ab8b7e35 account that is currently at the top of the proposed suspend list.)
I reported this discovery to the GIV team on Feb 9, and then tested the theory to see if staking 1 tick resulted in maximized rewards. It did.
STAKING PHASE
Now that we knew what the problem was, I set up my staking aiming for 5-10 ticks of liquidity. That was concentrated enough to get good rewards, but not so concentrated as to feel like it was being unfair to other users. Meanwhile, the GIV team tried to see if they could discourage the 1-tick users by periodically buying & selling to move the tick. Unfortunately, by the end of the month it became apparent that it wasn’t scaring away the 1-tick users.
THE ANNOUNCEMENT
On March 2, an announcement was posted on the Giveth Forums explaining the problem, and suggesting that we should close the V3 pool.
DOGFIGHT PHASE
Now that the 1-tick trick was widely known, the V3 pool became much more chaotic. More accounts began staking concentrated liquidity, and the tick point began to move much more wildly.
At this point, I had to decide whether to pull out of the pool entirely, or to compete more aggressively with the 1-tick users. Since by now it felt like I was in a personal battle with the 1-tick whales, I decided to fight fire with fire, trying to keep them from monopolizing all the pool rewards.
This was the only time in the process when I did any significant amount of 1- and 2-tick bidding.
WRAP-UP PHASE
Things finally calmed down in the last week. With the end in sight, the number of staking accounts declined as funds were withdrawn from the pool. That made it feasible to dilute the remaining liquidity over a wider range again.
CONCLUSION
I hope this extensive post-mortem convinces you that I approached this situation from a very different perspective than the 1-tick whales. They attacked the V3 pool early on and monopolized the liquidity from the shadows. I kept the GIV team informed as I explored the problem, then tried to be a good pool participant after I diagnosed the problem and shared my results with the team.
I also feel it’s important to note that most of my GIVStream rewards were earned without using any 1-tick tricks at all. As of March 3, prior to doing any 1-tick staking in the Dogfight, I had already accumulated 99,600 tokens in my GIVstream through ordinary moderately-concentrated liquidity.
With that in mind, I would respectfully ask the DAO to remove my wallet address from the “Suspend” list, so that I can continue to harvest my GIVstream over the next 5 years. My current plan it just to harvest the stream every 3-4 weeks if gas is cheap, and deposit the earned GIV into the Balancer pool.
Thank you for your consideration, and I will abide by the DAO’s decision without complaint.