The RAI Mint + LP strategy requires that participants mint RAI and provide RAI/ETH or RAI/DAI liquidity on Uniswap v3 at the same time in order to accrue retroactive rewards. The RAI/ETH Uniswap v3 pool for this program is here and the RAI/DAI one is here.
NOTE: from 9th of August 2021 onward, Uniswap v3 RAI LPs should concentrate liquidity around the RAI market price, NOT the redemption price.
You do not accrue rewards if:
You provide RAI/ETH or RAI/DAI liquidity without minting RAI (e.g buy from the pool and LP)
You mint RAI without adding RAI/ETH or RAI/DAI liquidity
The RAI market price is outside or shifted off your liquidity band
You accrue less rewards if:
If the RAI/ETH or RAI/DAI price shifts, resulting in the position owning less underlying RAI compared to your debt
Your debt goes down due to repaying your debt or liquidation
The exact relevant metric used for rewards is:
ETH price: $3000, RAI Price: $3.02
First, deposit 3 ETH to mint 1000 RAI (Collateralization ratio around 300% and liquidation price around $1500). Then deposit the 1000 RAI along with 1.5 ETH into a Uniswap V3 RAI/ETH. Let look into 2 options for LP price range:
From $2.97 to $3.07 DAI = $0.10 wide range
From $3.015 to $3.025 DAI = $0.01 wide range
Since the second option is about 10 times more concentrated, it will return 10 times more FLX rewards. However, if the price move above $3.025 or below $3.015 the second option will not give any rewards.
The rewards will be distributed considering how much each LP concentrates liquidity around RAI's market price. To visualize this, let's take the example of Alice (red), Bob (purple) and Charlie (green) who LP in the RAI/ETH pool.
You can see that:
Alice accrues the most rewards because she concentrated liquidity really close to the current RAI market price
Bob is not accruing any rewards because none of his liquidity includes the tick where the current
market price is
Charlie is accruing some rewards but less than Alice because he has a wider liquidity distribution around the market price
To maximize rewards, LPs have to concentrate liquidity closer to the market price (at the risk of higher impermanent loss).
You must use the same address to mint RAI and provide Uniswap v3 RAI/ETH or RAI/DAI liquidity
The Uniswap v3 RAI/ETH or RAI/DAI LP tokens must stay on the same address that you used to mint RAI and provide liquidity
If you open multiple Safes with the same address, your total RAI debt will be the sum of all RAI minted by each of your Safes
If you have several LP positions with the same address, the total sum of the liquidity will be considered for rewards.
Only positions from the official Uniswap V3 NFT manager are supported (used by the official UI at https://app.uniswap.org/#/pool). Positions directly minted on the pool contract are not supported.
If your Safe gets liquidated, the amount of minted RAI you have decreases by the amount of RAI that got confiscated