# Secret X Shade DeFi Campaign Proposal **URL:** \ **Category:** Secret Governance\ **Created:** [November 21, 2022, 5:22pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648 "2022-11-21T17:22:52Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Carter-Woetzel](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/carter-woetzel/32/3575_2.png) [@Carter-Woetzel](https://forum.scrt.network/u/Carter-Woetzel)\ **Post date:** [November 21, 2022, 5:22pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/1 "2022-11-21T17:22:53Z")
# Secret X Shade DeFi Campaign Proposal ![image](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/6/6fb7b1ce12cc8b9e8f21c9d42fcd5b8fa0f1fa89.jpeg) # Table Of Contents - State of Secret DeFi - A Vision For Secret DeFi - Proposal - KPIs Impacted - Liquidity Projections - Risks - Go To Market - Timeline - Conclusion - Team - History - Contributions * * * ![image](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/b/b57d517c342f28353843f6ad7f2debb9db8ad45c.png) [Secret 2.0 Blog](https://scrt.network/blog/secret-2-0-building-the-next-generation-of-web3-privacy) # State of Secret DeFi Secret DeFi to date has attracted a variety of builders, but fundamentally we have collectively struggled to accumulate and attract sticky liquidity that is key for builders to create layered financial products. In essence, Secret Network unlocks vast variety of DeFi use cases but we need the fundamental building block (baseline DEX liquidity) to sustainably exist before we can attract these builders and use cases. ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/e/ed7c606241b509f9c0911b2d3fcb071436f2d6d6.png) Currently, net TVL across all Secret Network DEXs is ~$4M. This level of TVL makes it difficult to attract both builders and users. To kickstart Secret Network TVL in a sustainable fashion, we believe intimately partnering with the L1 on this initiative will be able to get us back on track for the $20M - $50M TVL range (as just the beginning). Note that there is a precedent for this on JUNO, EVMOS, and Secret Network. # A Vision For Secret DeFi **Fundamentally, Decentralized Finance is incomplete without privacy.** Transactional privacy is key for commerce in our every day lives: - Purchase a product without having other vendors be able to track your purchase metadata - Keep employee payments private - Keep contractor payments private - Tipping - Anonymously donate to a specific cause (perhaps polarizing) - Donate to a person anonymously - Maintaining privacy with app interactions - You think crypto will achieve mainstream adoption meaning everyone will have access to all this information (retailers, banks, potential employers), and you question if they will use the information ethically. In addition to transactional privacy, smart contract privacy (which Secret Network empowers) **allows for novel protections that transparent blockchains cannot provide.** Some examples are as follows: - I want to open a lending position without the whole world knowing my liquidation price point - I want to trade without everyone following my asset movements - I want to lend out an assets privately - I want take a significant position in securing a blockchain through a staking derivative without losing my anonymity The world of private smart contracts opens up a vast array of financial products that will power Web3 and Web2 as we know it. If transparency is a feature, so is privacy. And I fundamentally believe in order to onboard the business, consumers, and institutions of the future, we must bring parity (or improve) the degree of privacy that we all deserve and expect. This is why I am here. This is why many of us are here. Totally transparent blockchains are a future of ubiquitous surveillance. A decentralized panopticon. A desert with no forest coverage. [[Credit]](https://twitter.com/lunar_mining/status/1592894938265845761) Freedom is transformative. Privacy liberates communities. It gives them agency and sovereignty. A future of privacy is possible when builders and users unite - and I firmly believe that privacy is the key to unlocking the full value of a decentralized future. That future is Secret Network with Secret DeFi. # Proposal With the launch of Shade Protocol’s StableSwap on the near horizon, Secret Network has a unique opportunity to attract sticky liquidity to this brand new UI/UX and protocol. Shade Protocol proposes 100,000 SCRT incentives that will be distributed over the course of 4 months towards pools that involve SCRT, stkd-SCRT, and stablecoin pools. Importantly, this 100,000 SCRT would be converted into stkd-SCRT before getting distributed as rewards. # KPIs ![image](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/6/65c05c710efd6f0a5fbb295da877d762734ce16e.jpeg) The primary Secret Network KPIs impacted (net positive) are as follows: - Active wallets - Daily transactions - New Wallets - IBC bridge activity - Secret DeFi Builders - SCRT TVL - Stablecoin liquidity - stkd-SCRT total supply With additional liquidity, new users will be attracted to Secret Network to create wallets, interact with dApps, and to bridge in their assets to trade. Builders will be encouraged by seeing the commitment of Secret Network to DeFi - making it more likely for teams to build and experiment with privacy-preserving DeFi. Finally, the staking derivative will see additional usage, locking up additional SCRT into staking. # Liquidity Projections - SILK/USDC - SILK/SCRT - SILK/stkd-SCRT For the purpose of simplifying TVL projections, we will assume 100% of the rewards go to the SILK/USDC pair. We will also assume that 1 stkd-SCRT = $1 Market will find equilibrium with how much risk it believes any given pool holds. The lower the risk the pool is perceived to be, the more TVL is attracted in relation to the provided APR. We are projecting an upper-bound 20% APR on stablecoin pools using a market rate for perceived risk based on benchmarking against Curve, Platypus Finance. Net TVL = ($Total Monthly Rewards \* 12) / APR Example: $100k \* 12 / 20% APR = $1.2M / 20% APR = $6M TVL | 1 Month | APR | $ of SHD | $ of stkd-SCRT | Total | Daily | Net TVL | | --- | --- | --- | --- | --- | --- | --- | | SILK/USDC | 20% | $75k | $25k | $100k | $3.3k | $6M | | SILK/USDC | 15% | $75k | $25k | $100k | $3.3k | $8M | | SILK/USDC | 10% | $75k | $25k | $100k | $3.3k | $12M | | SILK/USDC | 7.5% | $75k | $25k | $100k | $3.3k | $16M | | SILK/USDC | 5% | $75k | $25k | $100k | $3.3k | $24M | It is important to note that Shade Protocol will be emitting value to more pools than just SILK/sSCRT and SILK/USDC pools - but this shows that ~$100k in incentives partnering with Shade Protocol incentives has the opportunity to attract $5M - $24M in liquidity depending on what APR the pools settle on. Across all stablecoin pools and SILK pairs, Shade Protocol is targeting $25M - $50M in TVL during these market conditions. # Go To Market ![image](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/1/1fcbd1c3466a21f6f44db31faf3d7f79fa0caf91.jpeg) The following are key Go-To-Market items for ShadeSwap to ensure the success of these incentives: - Hosting the Cosmos Stablecoin Digital Summit - Weekly Twitter Spaces - Written articles - Written tutorials - Video Tutorials - Video Promotional Materials - Into The Interchain Podcast w/Cosmos Founders - Dev roundtables - Circulation of StableSwap whitepaper to key DeFi builders - Engaging the Shade Protocol VC community to bring liquidity - Partnering with other protocols to bring external incentives onto ShadeSwap - Additional airdrop (pt.2 - 4) to re-engage ATOM & SCRT DeFi community\*\* # Risks - SILK de-peg event - SCRT sell pressure from incentives - ShadeSwap smart contract risk - stkd-SCRT smart contract risk - KPIs not being achieved due to market conditions or lack of marketing - Secret Network reputation is supporting a dApp with L1 incentives - this can create political conflict among dApps that also want support # Timeline ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/3/35e4b13d8d5182d9daf933ff2424a793596a2453.gif) These rewards will be deployed side-by-side with the launch of ShadeSwap in Q4 2022/Q1 2023. Updates will be given in the forums/twitter as SCRT is converted to stkd-SCRT, justification behind pools selected for stkd-SCRT rewards (if anything changes), as well as when stkd-SCRT gets deposited into rewards contracts. # Conclusion ![image](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/f/fe5109963336a7831e71223816186e44cda417c5.jpeg) **This proposal is an opportunity to revitalise Secret DeFi by signalling to the larger Cosmos and developer ecosystem that Secret Network wants to help create a floor of DeFi liquidity as a public good.** Shade Protocol is committed to growing Secret Network through collaboration, marketing, and integrations. We believe we collectively have a unique opportunity to bring Secret Network technology to the entire world of Web3/Web2. And it starts with taking leaps of faith on builders that are committed to pushing the boundaries of what is possible on Secret Network. Thank you for reading this proposal, we look forward to your feedack! Long live Secret DeFi. -Carter Woetzel (Lead Researcher w/ Shade Protocol) # Team ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/9/9bd35b9126607ec962455cf1501e97e7d5713cd0.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/4/43025450218947b50d4dc8a10599e1198a5bbc68.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/a/ac0e56ec8fdddeee4c3fc2a6db39f3c8a39622a6.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/f/f645b8df884626b9ffd0c4ce5b92490840c50a17.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/e/edcc332f533dd8bf0d0a97379d7219b250e8408e.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/0/0d2218e5a2957a0d41e626abdcac4f37a1a04d9f.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/4/47d055f0c17b0b44ce395192fd7ed5c73d9c3c2a.png) ![image](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/d/d57b3a2c886133d23efa73504c3e755c99d91f26.jpeg) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/a/a1b1a3a4a5a281bae6839c66f775c0336cd644cf.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/5/512576e013c7762fcdff4cb205b1d7d768e5f2bc.png) ![](https://canada1.discourse-cdn.com/flex035/uploads/enigma1/original/2X/6/6ae1825564d6f720151c5c349e1ae8243b865b30.png) # History The Shade Protocol team started its roots in the summer of 2020, forming a validator called “Secure Secrets” - this team of 5 individuals created written and video content, bringing education to the Secret Network community. Over time, this validator has become the 8th largest node on Secret Network. While securing the network, builders Mohammed Patla and Carter Woetzel became passionate about leveraging the privacy-preserving smart contract technology of Secret Network. We saw a distinct need for DeFi with privacy - specifically the need for deeper stablecoin liquidity on Secret Network. Thus, Shade Protocol was born; a vision for an entire suite of privacy-preserving DeFi applications starting with SILK, a stablecoin. Shade Protocol submitted a grant in late August of 2021 - marking the beginning of the journey of actually building out this vision. > > > \# Silk > https://github.com/securesecrets/shade > > \## Project Description > Secure… Secrets will create Silk, the world’s first native privacy-preserving stablecoin built on the Secret Network. Launching in tandem to Silk is Shade - the governance and utility token of Shade Protocol that helps algorithmically maintain the $1 Silk peg. Secure Secrets has already developed a pre-MVP demo that includes Keplr integration, a front-end built on the Griptape framework, Vue3, and secret contracts for minting Silk by burning sSCRT. > > Pre-MVP photos (complete UI overhaul will be on the way): > > !\[image\](https://user-images.githubusercontent.com/16710191/130394630-23b56b35-6307-4e14-bbb8-e9c3a63ced33.png) > !\[image\](https://user-images.githubusercontent.com/16710191/130394649-6c46484a-dfd3-426e-9670-07033abb066c.png) > !\[image\](https://user-images.githubusercontent.com/16710191/130394661-b8ac28f2-9ad4-447a-bbb0-1329124b9d0e.png) > > New Branding: > !\[image\](https://user-images.githubusercontent.com/16710191/130394687-e9c2d3f0-cd1b-43cd-bca5-cb49ec9b4861.png) > > > \## Problem / Solution > Current stablecoins such as TerraUSD have been designed based on protocol level > architecture and incentives - relying on validators to maintain positions despite short term price > volatility in return for inflationary governance token rewards that exist to resolve peg disparities. > While a protocol level design has certain advantages, having the supply of the stablecoin be tied to > validators (as conduits for token expansion) limits the long term viability and effectiveness of the > stablecoin for two reasons: decentralization of the stablecoin expansion is tied to the validator set, > and the total supply of both the stablecoin and the governance token is contingent upon indefinite > inflation so as to properly incentivize validators. Additionally, these systems have no underlying > collateral or intrinsic value outside of the maintenance of the peg and continued demand for the > underlying stablecoin. Finally, there is no stablecoin in DeFi with transactional privacy by default. > Silk is the solution to this problem - built on Secret Network as a native privacy-preserving > algorithmic stablecoin using the SNIP-20 token standard. The Silk architecture is designed using a > dual burn minting process for both the governance token Shade and the stablecoin Silk. Total > stablecoin supply is limited by initial Shade distribution as well as Total Value Burned (TVB) in the > minting process of both Shade & Silk (which are convertible with each other). Native AMM support > in combination with Shade and Silk convertibility resolves peg disparities. > > Additionally, Secret Network has a distinct liquidity problem when it comes to position changes on SecretSwap as it pertains to stablecoins. Slippage ranges from 10% - 1500% depending on position sizes, making it difficult for users to exit into stable value. As a result, the majority of large position changes are in the form of SNIP-20 -\> sETH -\> Binance -\> stablecoin. > > Part of the difficulty with liquidity on DEXs in Secret Network is that the value of the underlying liquidity is competing against a range of DeFi protocols external to Secret Network. While volume begets volume, users are currently actively struggling with this core liquidity issue. > > Solution > As such, this grant team proposes the creation of a native algorithmic burn-based stablecoin that can be natively minted by burning SCRT, IBC tokens, and SNIP-20 tokens. As more value is burned into this ecosystem, the more liquidity that will be available for use on DEXs on Secret Network. In essence, Secret Network will be able to natively generate stablecoin liquidity as opposed to having to pull it in from an external ecosystem. Additionally, Silk will have a significant amount of flexibility with expanding its implementation and capabilities over time as it pertains to integration with Secret DeFi and future Shade Products. > > !\[image\](https://user-images.githubusercontent.com/16710191/130394763-224a35b2-48dd-4a50-bd6a-3b5518830161.png) > > > Contracts 3 & 4 (Conversion Minting) are identical to other algorithmic stablecoin pegs such as TerraUSD / Luna. Silk is not innovating with the peg resolve mechanisms. The significant innovation that is made with this particular MVP iteration of Shade Protocol has to do with the burn-based entry (known as “Entry Minting”) into the Shade ecosystem. > > Alice can burn $50 worth of sSCRT for 50 Silk. Each Silk is worth a stable $1 of value, whereas the value of sSCRT can fluctuate based on larger market movements. Additionally, Alice has the option to burn $50 sSCRT to mint $50 worth of Shade. Arbitrage mechanisms that user’s can execute help maintain the peg at $1, as is demonstrated by the bottom right of the graphic above. Note that these peg arbitrage mechanisms are identical to TerraUSD/Luna which are what keep the stablecoin price maintained at $1 for Silk. > > Burn based entry into the Shade ecosystem is distinctly different from other algorithmic stablecoin alternatives such as Terra because there is no indefinite block-based inflation attached to Shade Protocol. While Terra is limited in its protocol design because it needs a set of validators to execute transactions and resolve peg mechanisms, Shade Protocol does not need tokenomics specifically tied to the underlying validator set on Secret Network. This increases the amount of decentralization as with this iteration of Shade Protocol anyone has the opportunity to directly mint the governance token (Shade) as well as the stablecoin itself. This is a radically new architecture that has never been executed by any stablecoin design to date. This architecture not only creates a supply sink for assets that enter into Shade Protocol, but it also simultaneously increases decentralization of the underlying system. Where Terra is contingent upon inflationary rewards to resolve contraction based events, Shade Protocol instead relies on users to entry mint into Shade or using existing Shade in order to resolve contractionary peg disparities (as opposed to relying on a limited inflation based validator set). > > Silk whitepaper (subject to change): https://32184fa2-0116-41dd-971d-2057a7b58cc8.filesusr.com/ugd/b34138\_a782412307fe4810a7923e7ceeb7b23b.pdf > > \## Detailed product description > > \* Pre-MVP Completed: > > \- Griptape integration > \- Vue3 front-end > \- Keplr integration > \- Mint Silk by burning sSCRT > \- Viewing key page handler > \- Conversion from SCRT on front-end -\> sSCRT > \- Dashboard > \- Testnet total silk minted > \- Shade in circulation > \- Price calls (static) > \- Whitepaper > \- Brand book (not yet integrated) > \- Logos (not yet integrated) > > Broad MVP Deliverables: > > \- Band Oracles integration > \- SNIP-20 Shade Entry Minting contract (2) > \- Shade -\> Silk Conversion Minting contract (3) > \- Silk -\> Shade Conversion Minting contract (4) > \- Front-end price slippage management > \- Shade governance contract > \- Treasury contract (synthesis) > \- Extendability of Shade contracts > \- Implementation of landing page branding overhaul > \- UX user testing > \- Shade Protocol stress testing / modeling > > The end result of the MVP is a fully functioning and test stablecoin that will be launched on mainnet. Additionally, all contracts will be extendable for future Shade Product releases as well as features (such as Global Yield Derivation outlined in the Silk whitepaper). > > This development team will commit to bi-weekly updates on development progress, as well as regular meetings. > \## Go-to-Market plan > Initial Shade Distribution (ISD) once Shade Protocol is ready to be launched with v1 of the mainnet launch (an iteration that occurs after the completion of this MVP) will strongly incentivize individuals to burn tokens to enter into the Shade Protocol ecosystem. This will include a Shade Atom staking airdrop as well a SCRT staking airdrop. Double liquidity providing (Shade + DEX gov tokens such as SEFI or Sienna) will incentivize users to acquire Silk and Shade in particular. Additionally, a % of ISD will be dedicated to minting incentives for those that choose to mint Silk and Shade. Marketing will involve the various BizDev members attached to the core dev team, as well as various external entities and marketing initiatives to draw awareness and demand for Silk and Shade. > > \## Value capture for Secret Network ecosystem > The main KPIs for Secret Network are as follows: > > \- TVL > \- Number of transactions > \- Number of unique addresses > \- Number of developers > \- Size and value of the application layer > > A successfully launched Silk & Shade will bring in a whole host of new users from the Atom airdrop, increased usage for DEXs, attract new liquidity to the Secret Network ecosystem, as well as a distinct supply sink for SCRT because of the burn-based entry of Shade Protocol. A natively generated stablecoin can serve as the basis for a host of Secret Network DeFi applications. Finally, this grant will empower an existing developer team to continue to build and share their expertise with the developer ecosystem. > > > \## Developers > > (1) Mohammed Patla (Project Lead) > (2) Carter Woetzel (Grant Lead / Developer) > (3) Austin Woetzel (Front-end Developer) > (4) Roman Sanine (Front-end Developer) > (5) Guy Garcia (Secret Contract Developer) > (6) Jack Swenson (Secret Contract Developer) > > \## Other Shade Protocol contributors separate from grant > Jeremy (BizDev), Dalton (Marketing), Stephany Wood (Graphics), . > > \* https://www.securesecrets.org/ > > \## Dev’s experience > > \* Mohammed is a full stack developer, with previous experience in ML and AI. He has worked in a team to build solutions for clients like regional police of halton for facial detection systems. He also has embedded and IOT development experience for steam trap detection, where the solution is used by clients all over Ontario. He also has adequate experience in front-end development, backend deployments, and has contributed to open source code on multiple occasions. > > \* Austin Woetzel is a senior process engineer with 6 years of experience at Minco Products. Austin created the staking ROI calculator, the validator ROI calculator, and the Staking Optimizer that has been used 1,000s of times by various community members. Created Keplr integration guide. Also created securesecrets.org website from scratch. Contributions to the main Secret Network website. Completed Griptape implementation into pre-MVP product demo. > > \* Guy Garcia is a senior software engineering student with extensive experience in applying neural networks for machine vision and work experience creating functional web applications from scratch. He used to work for a robotics company in which he created some internal web-apps that kept track of many supply line materials, items and warranties which managed to save the company a few millions. He is currently the AI lead for an autonomous submarine project sponsored by many defense and tech companies. In the crypto space he has already created a few blockchain projects using the Cosmos SDK and has contributed to Cosmos' starport repo. Polygon bridge proof-of-concept contract creator. Created pre-MVP Silk contracts. > > \* Carter Woetzel is the primary author of the Secret Network graypaper, Shade Protocol Whitepaper, Silk Whitepaper, and Synthesis Whitepaper. Lead researcher and economist for Shade Protocol. > > \* Jack Swenson - Secret contract developer. Integrated proof-of-concept Band Protocol into secret contracts. Created product demo front-end and Griptape integration with Austin. > > Secure Secrets is one of the oldest teams in the Secret Network ecosystem, with both the founder and co-founder in the blockchain privacy domain since 2017. Secure Secrets contributes to the opensource Secret Network website, has built out scrt.learn documentation, and has created 65+ pieces of educational community content. While Secure Secrets is relatively young as an organization, we are fully committed to creating valuable Secret Network application-layer products for the Secret Network community. > > \## Team Code Repos > https://github.com/securesecrets > https://github.com/mohammedpatla > https://github.com/AustinWoetzel > https://github.com/FloppyDisck > https://github.com/DrPresident > https://github.com/CarterLWoetzel > > \## Team LinkedIn Profiles > > \* https://www.linkedin.com/in/mohammedpatla/ > > \* https://www.linkedin.com/in/carter-woetzel-16936b136/ > > \* https://www.linkedin.com/in/austin-woetzel-a1713a67/ > > \## Development Roadmap > > This project will require a full 14 weeks to bring from the pre-MVP demo which already exists, all the way to a full mainnet launch. 4 developers at $42.75 an hour \* 20 hours per week \* 14 weeks ~ $47,880. Lead researcher + project manager ~ $42.00 \* 20 hours \* 6 weeks = $5,040. The total cost is ~$52,920 (paid in SCRT). Current price places this around ~33,000 - 35,000 SCRT. > > Cost basis is paid out in SCRT based off of a rolling 2 week average price. > > Detailed Milestones: > > Initial MVP release (weeks 0 - 4) - $13,090 > > \- Band Oracle Integration with SILK price > - Including publishing SILK and SHADE price. > \- Shade - SILK peg mechanism > - Entry minting contracts > - sSCRT -\> Silk > - sSCRT -\> Shade > - Conversion minting contracts > - $1 Shade -\> 1 Silk > - 1 Silk -\> $1 Shade > \- Initial MVP release on testnet and public to community. > \- Testing basic UI integration with new contracts > > > Synthesis and UI (weeks 4 - 8) - $17,374 > > \- UX/ UI overhaul > \- UX testing > - Integration of brand book > - Integration of logos > - Creation of landing page > - Application integration with the three new contracts > \- Implement synthesis treasury into shade protocol. > - Synthesize mechanic to be introduced in multiple contracts (see whitepaper) > - Burn = 1 - X > - Synthesize (% of funds that don’t get burned, and instead sent to a treasure) = 1 - Burn > - Treasury contract for Shade. > - Implement synthesize into entry minting > - Governance contract for synthesis > - Preliminary economic model testing > \- Documentation review > > > Testing and Governance (weeks 8 - 14) - $22,414 > > \- Mainnet Launch v1 with SILK/SHADE stablecoin. > - Airdrop > - Publication of tutorials > - Publication of full documentation > \- Final minting contract testing > \- Final governance contract testing > \- Final “synthesis” contract testing > \- Tokenomics of Shade distribution finalized > \- Final economic model testing > \- Integration of Silk/Shade on AMMs on Secret Network (such as SecretSwap/Sienna) > \- Research for Synthetics Protocol for V2 product launch post-Silk/Shade launch > - Shade Synthetic Asset Protocol > - Synthetic crypto-indexes > - Synthetic commodities > - Shade Governance Updates. > - Shade Burning Mechanism. > - Collateralized Positions, and private pools. > - Global yield Derivation (GYD) > - Contract stress testing > - Ability to collateralize these pools with SILK/SHADE. > - Testing with SecretSwap/ Sienna Swap. > > > \[Full Document\](https://docs.google.com/document/d/1Kv4pKM0JS2nwm59vRbXWP58-oeMKZSR9sxnz9nbscx8/edit?usp=sharing) [SILK Announced](https://scrt.network/blog/shade-protocol-silk-privacy-preserving-stablecoin) Shortly after the creation of an MVP for SILK, Shade Protocol began a $5,000,000 private raise devoted towards software development of the underlying protocol. In February of 2022, Shade Protocol performed a multi-chain airdrop of $SHD (the governance token of Shade Protocol) to $SCRT, $ATOM, and $LUNA stakers. [$5M Private Raise Blog](https://blog.shadeprotocol.io/shade-protocol-raises-5m-20-key-partners-invested/) During this time, SILK began an intensive overhaul of mechanics - trying to iterate on the UST model by adding privacy + a decentralized peg targeting a basket of global currencies and commodities. [SILK evolves post UST](https://blog.shadeprotocol.io/shade-silk-evolved-reaction-to-systemic-collapse-of-ust/) While this development was underway, Shade Protocol closed key grants to begin the development of ShadeLend, ShadeSwap, stkd-SCRT (a SCRT staking derivative), SILK Pay, StableSwap, as well as research into SILK’s basket composition. stkd-SCRT (built by Shade Protocol) launched in March of 2022 - rapidly gaining 1,000s of users interested in a SCRT staking derivative. Currently, this derivative has more adoption than any other SCRT staking derivative. [Shade Staking Derivatives Blog](https://blog.shadeprotocol.io/shade-staking-derivatives/) During the summer of 2022, the collapse of UST brought SILK development to a grounding halt as the model had to devolve back to a more traditional overcollateralized model. SILK had similar model assumptions to UST, such that the vision of a pure algorithmic stablecoin had to be tabled in favour of safety and security. Regardless, development continued. ShadeBonds launched in September of 2022 - the first ever COSMOS bonds product. Shade Protocol acquired a staking position on Secret Network, improving the security of Secret Network. ShadeBonds also included additional smart contracts tied to admin authentication and oracles. [Shade Bonds Blog](https://blog.shadeprotocol.io/timeline-shadebonds-airdrop-part-two/) In November of 2022, the second airdrop was unlocked for qualified stakers along with V1 of Shade staking. This brings us to where we stand today. Q4 aims to bring the following: - SILK - ShadeLend - ShadeSwap - StableSwap - ShadeDAO [https://blog.shadeprotocol.io/shadeswap-stableswap-for-cosmo/](https://blog.shadeprotocol.io/shadeswap-stableswap-for-cosmo/) Currently, all of these are actively under audit. ShadeSwap is on testnet, with ShadeLend to follow shortly. # Contributions Overall, here are some of the key contributions of Shade Protocol to Secret Network: - Open-source core contracts - [GitHub - securesecrets/shade: Shade Protocol is an array of connected privacy-preserving dApps built on Secret Network](https://github.com/securesecrets/shade) - Additional CosmWasm smart contract tooling examples - [shade/packages at cosmwasm\_v1\_upgrade · securesecrets/shade · GitHub](https://github.com/securesecrets/shade/tree/cosmwasm_v1_upgrade/packages) - TVL on SecretSwap & SiennaSwap - Largest SCRT staking derivative - Testing key Secret Network upgrades (CosmWasm 1.0) - Airdrop * * * ---
**Author:** ![Patrick](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/patrick/32/3273_2.png) [@Patrick](https://forum.scrt.network/u/Patrick)\ **Post date:** [November 21, 2022, 6:02pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/2 "2022-11-21T18:02:40Z")
What source would you be seeking these funds from, the community pool? ---
**Author:** ![Carter-Woetzel](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/carter-woetzel/32/3575_2.png) [@Carter-Woetzel](https://forum.scrt.network/u/Carter-Woetzel)\ **Post date:** [November 21, 2022, 6:03pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/3 "2022-11-21T18:03:52Z")
Correct 👍 Open to hearing alternatives - this seems like a solid way for the community to signal their support 🙂 ---
**Author:** ![srdtrk](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/srdtrk/32/3344_2.png) [@srdtrk](https://forum.scrt.network/u/srdtrk)\ **Post date:** [November 21, 2022, 6:12pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/4 "2022-11-21T18:12:29Z")
given that Shade decided to stick with Secret Network whereas many other projects didn’t + they haven’t really asked funds from community pool before + they have been a major source of publicity and job creation on the network. I definitely support this ask and wish them all luck ---
**Author:** ![mumuse](https://avatars.discourse-cdn.com/v4/letter/m/bbe5ce/32.png) [@mumuse](https://forum.scrt.network/u/mumuse)\ **Post date:** [November 21, 2022, 6:13pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/5 "2022-11-21T18:13:21Z")
Support this proposal ---
**Author:** ![Brendan](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/brendan/32/1562_2.png) [@Brendan](https://forum.scrt.network/u/Brendan)\ **Post date:** [November 21, 2022, 6:19pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/6 "2022-11-21T18:19:55Z")
I don’t really have much to say other than that shade has our full support. The team is set to usher in a new era of adoption within the network, and continues to be heads down building. We all wish 100k SCRT was worth more than the current valuation, but the amount is not too huge an ask for such a potential impact. This is an important launch for the network and we need to be throwing out full support this team. ---
**Author:** ![martyvb2](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/martyvb2/32/3168_2.png) [@martyvb2](https://forum.scrt.network/u/martyvb2)\ **Post date:** [November 21, 2022, 6:40pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/7 "2022-11-21T18:40:10Z")
Well said. Kick-starting DeFi projects such as Shade is the best use of the community pool’s funds, imo. I’d be shocked to hear arguments that incentives offered are not well worth the impact. I would love to see a similar bootstrap funding granted to Blizzard Finance as well. The network would greatly benefit from the development of a respectable DeFi ecosystem, which has been neglected for far too long imo. ---
**Author:** ![chopstix](https://avatars.discourse-cdn.com/v4/letter/c/65b543/32.png) [@chopstix](https://forum.scrt.network/u/chopstix)\ **Post date:** [November 21, 2022, 6:46pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/8 "2022-11-21T18:46:18Z")
TL;DR Don’t think we should frontload so much liquidity initially. Opt for sustainable rewards. As $SHD accrues more value via protocol development, it’ll be more and more attractive to hodl rather than sell. I think this is a huge step in the right direction for the secret DeFi ecosystem, however I do have some concerns with such massive infusion of incentives. My initial thought and main concern is this: four months worth of a very generous amount of liquidity incentives may not have the desired effect as the team desire. Here is my reasoning: $75k Of $SHD liquidity over 4 months will have two possible effects: 1. $SHD is being infused into the markets, SHD starts to have heavy sell pressure due to market conditions / confidence in team → TVL starts to stagnate as rewards **and liquidity starts to decline in value…potentially rapidly** 2. $SHD infused into market, Market have full confidence in SHD and cannot get enough → Stake/LP squeezed will cause SHD to go up, and DeFI degens to push liquidity to higher / desired margins. My point is this: We need $SHD and $SCRT/stkd-scrt to continue to be attractive rewards. Heavily infusing it initially may reduce the overall attractiveness of infusing more liquidity. How do we approach this then? Osmosis is a great example. Initially OSMO rewards shot OSMO’s TVL sky-high, but quickly depreciated due to the massive inflation. Once the dust settles, and osmo settled at a price level with strong support, liquidity providers had no issues providing massive amounts of liquidity into a protocol. Take a look at OSMO/USDC initial release → Currently 30m TVL, and had strong growth curve. In conclusion… I don’t think we should use a linear liquidity bootstrapping approach, but rather a curve of some sort. Initial liquidity bootstrapping → Leave as is. Should be a great starter to increase TVL Mid-late stage bootstrapping → Slowly reduce incentives so that inflationary & sell pressure is at least consistent (rather than overwhelming). ---
**Author:** ![martyvb2](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/martyvb2/32/3168_2.png) [@martyvb2](https://forum.scrt.network/u/martyvb2)\ **Post date:** [November 21, 2022, 6:56pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/9 "2022-11-21T18:56:46Z")
Osmosis isn’t the best example for this. Their relatively rapid rise and fall had moreso to do with the extreme overreliance on UST / Luna as a source of liquidity. Once that collapsed, it took Osmo’s price volume and TVL down with it. Nothing changed regarding incentive allocation when they grew their stable pools afterwords. ---
**Author:** ![Jay-ShadowRealm-SCRT](https://avatars.discourse-cdn.com/v4/letter/j/cab0a1/32.png) [@Jay-ShadowRealm-SCRT](https://forum.scrt.network/u/Jay-ShadowRealm-SCRT)\ **Post date:** [November 21, 2022, 7:59pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/10 "2022-11-21T19:59:27Z")
ShadowRealm fully supports this. Strong defi and properly aligned economic incentives for users (mostly stakers) and builders is the only way to Valhalla ---
**Author:** ![winston](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/winston/32/2633_2.png) [@winston](https://forum.scrt.network/u/winston)\ **Post date:** [November 21, 2022, 8:02pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/11 "2022-11-21T20:02:20Z")
Given that ShadeLend is not mentioned, this proposal seems to primarily solve for the acquisition / disposition of SCRT on a DEX workflow: Bridge USDC to Secret with Axelar \<=\> Swap USDC for SILK \<=\> Swap SILK for SCRT or stkd-SCRT` So, I’d be interested in seeing this evaluated against the comparable workflow on Osmosis given the incentives they provide: Bridge USDC to Osmosis with Axelar \<=\> Swap USDC for OSMO \<=\> Swap OSMO for SCRT \<=\> Swap SCRT for stkd-SCRT USDC-OSMO is at 69% APR SCRT-OSMO is at 63% APR Ultimately I have three questions: 1. Under what circumstances will providing liquidity for SCRT (and/or stkd-SCRT) on ShadeSwap yield higher returns for LPs relative to Osmosis? 2. Under what circumstances will acquiring / exiting SCRT (and/or stkd-SCRT) on ShadeSwap cost less for users relative to Osmosis? 3. How will the answers to (1) and (2) change once L1 incentives expire? ---
**Author:** ![skinner](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/skinner/32/3881_2.png) [@skinner](https://forum.scrt.network/u/skinner)\ **Post date:** [November 21, 2022, 8:08pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/12 "2022-11-21T20:08:51Z")
Overall I really like and support the proposal! @Carter-Woetzel I believe your identification of attracting and retaining sticky liquidity/ users as a key pain point is spot on, and I think it can be broken down into 2 main components: 1. How easy is it for the users to find out about Secret (and how it’s better than their current fiat setup), onboard their fiat, & deposit into a trustworthy long-term asset pool? I.e. marketing campaign grabs attention, Kado Pay seamlessly deposits into Secret from the bank, & they are redirected to Shade Bonds and to deposit into a safe 6-month Bond. 2. Does Secret offer enough attractive long-term investment plays to enable users to set and forget about the liquidy with the confidence that they are making competitive yields without having to check often. (I.e. Silk savings account with APRs higher than Traditional Banks). Initial brainstorm on how to realize some of this: - Marketing Campaigns through an email newsletter: For example, when users enter the Shade website or protocol, they can add their email to the newsletter in return for 1 Shade or 10 Silk. If emails and wallet addresses were able to be stored securely and privately (maybe with Akash). I believe this would open up the door to significant user retention campaigns! - Referral Program with Rewards: I.e. you help set your buddy up with a Keplr Wallet and deposit some money into Shade Bonds. Your friend enters your referral code, and you are both rewarded with 3 SCRT. It would be tricky to implement verifying if it is an actual unique friend or if it is someone gaming the system without introducing KYC. However, if pulled off, I think this could bring in a surplus of new users and liquidity. -BTC Savings Vault: Thorswap has just introduced single-side native BTC earn. In terms of long-term holdings and liquidity on Secret, I think this could be revolutionary if Shade is able to partner with Thorwap or implement a similar feature. -Kado Money: Integrate Kado directly to Secret. (Ik Shade Bridge is coming so that might be already included) If fiat can come directly into Secret & Shade and it has all of the financial vehicles you would want with competitive APRs - why ever leave? -SILK Savings w/ auto DCA & Arbitrage included: For the investor that wants a competitive APR over the longer term and doesn’t want to have to check on their investments constantly. Shade could potentially offer a SILK savings pool on an automated schedule DCA into ATOM, BTC, ETH, SCRT etc. Furthermore, a similar pool could offer auto arbitrage (White Whale) where the user is earning an attractive 4% normally on their savings, and when a good arbitrage opportunity is presented, a predetermined % of savings is withdrawn, deployed towards capturing the arbitrage, and the value captured is deposited back into the savings account. I believe some people will always be on the hunt for the highest possible yields (no matter the risk) across all asset classes and, thus, will pull their liquidity out of SCRT when the incentives run out. But if SCRT & SHD are able to provide competitive, trustworthy, low management (set & forget), private, & long-term investment strategies - sticky liquidy will start to pile into the ecosystem. As always, the SCRT & SHD teams continue to absolutely crush it, and I cannot wait to see what is to come! Looking forward to hearing people’s thoughts on any of the ideas I presented above. Cheers 🙂 ---
**Author:** ![skinner](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/skinner/32/3881_2.png) [@skinner](https://forum.scrt.network/u/skinner)\ **Post date:** [November 21, 2022, 8:13pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/13 "2022-11-21T20:13:58Z")
Agreed I think the incentives would be a great kickstart for the SCRT ecosystem. One step further: I would like to hear thoughts on how the incentives will start to transition to real yield at scale once the incentives start to run out. In order to keep the liquidy captured during the incentives phase, sticky ---
**Author:** ![the-dusky](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/the-dusky/32/1630_2.png) [@the-dusky](https://forum.scrt.network/u/the-dusky)\ **Post date:** [November 21, 2022, 11:42pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/14 "2022-11-21T23:42:54Z")
I support this. stkd-SCRT or Die! ---
**Author:** ![chopstix](https://avatars.discourse-cdn.com/v4/letter/c/65b543/32.png) [@chopstix](https://forum.scrt.network/u/chopstix)\ **Post date:** [November 22, 2022, 1:05am UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/15 "2022-11-22T01:05:32Z")
> [@winston](#): > > Under what circumstances will providing liquidity for SCRT (and/or stkd-SCRT) on ShadeSwap yield higher returns for LPs relative to Osmosis? Great question, I think the narrative that SHD should play to as well is the fact that $SHD is accruing value through its products. Something that I believe SHD will strongly outperform over osmo. Less $TKN APR return, but overall more value accrual due to earning more $SHD. Great points & questions btw ---
**Author:** ![chopstix](https://avatars.discourse-cdn.com/v4/letter/c/65b543/32.png) [@chopstix](https://forum.scrt.network/u/chopstix)\ **Post date:** [November 22, 2022, 1:06am UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/16 "2022-11-22T01:06:26Z")
Would love for this to be elaborated as well ---
**Author:** ![AnewbiZ007](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/anewbiz007/32/3806_2.png) [@AnewbiZ007](https://forum.scrt.network/u/AnewbiZ007)\ **Post date:** [November 22, 2022, 7:05am UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/17 "2022-11-22T07:05:33Z")
I definitely support this. DeFi on Secret is a primary need. I would also be open to a similiar round for blizzard, should they ask. My liquidity needs a home. And that home needs to be on Secret Network. ---
**Author:** ![guy](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/guy/32/56_2.png) [@guy](https://forum.scrt.network/u/guy)\ **Post date:** [November 22, 2022, 4:32pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/18 "2022-11-22T16:32:47Z")
Let me start with the conclusion: SCRT Labs supports this and once we sort the open points we’ll gladly vote in favor. Strong yes, especially for Shade who have to date proven themselves again and again as great actors and extremely capable. Also, finding sustainable TVL on Secret is critical. ### What are the guidelines? Now to the details. Clearly, this sets a precedent. There have never been L1 incentives sponsored by the chain and to support a dApp, but we’ve already established that it’s a good idea. With that said, **what are the guidelines we are setting to make sure the community pool (or, if Secret 2.0 comes to be - the liquidity fund), isn’t abused**? I’m aware of two additional teams that are already using this a signal to make a similar ask. Here’s an initial list: 1. What ratio of rewards in the dApp token ($TKN) should the team put? Shade proposes 3x $TKN:1 $SCRT I assume? 2. Team’s likelihood to succeed - a poor product will not onboard and retain users, so throwing money at them would not be useful. Shade has demonstrated strong ability and has a large team, which to me puts the confidence level at very high. This is the most problematic guidelines since it’s qualitative, but we can’t ignore it. 3. Can a team ask for rewards more than once? Only at launch? Whenever? 4. What’s the path to sustainability after the rewards ends. In this case, the window is 4 months. 5. Are rewards given all at once or based on success metrics. For the very least, TVL projections should be present (Shade provided these already, which is great). 6. What else? ### Other questions 1. I’d like to see a concrete breakdown of the actual pools that will get incentivized and their respective APRs based on projected TVL. I also agree with @winston that a comparison to benchmarks is needed (e.g., Osmosis, or outside of it if that doesn’t exist). This is how we always calculated rewards and it’s obviously the right way to go! May have more, but this is for now. **TL;DR** - Strongly in support. Let’s refine the details as this will set a precedent! ---
**Author:** ![Blizzard](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/blizzard/32/3880_2.png) [@Blizzard](https://forum.scrt.network/u/Blizzard)\ **Post date:** [November 22, 2022, 8:18pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/19 "2022-11-22T20:18:31Z")
We are in support of this proposal and will be submitting our own for Blizzard.finance with a focus on traditional assets such as SCRT, ATOM, BTC, ETH, and USDC. Final details are being determined this week. ---
**Author:** ![Carter-Woetzel](https://yyz1.discourse-cdn.com/flex035/user_avatar/forum.scrt.network/carter-woetzel/32/3575_2.png) [@Carter-Woetzel](https://forum.scrt.network/u/Carter-Woetzel)\ **Post date:** [November 22, 2022, 10:27pm UTC](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648/20 "2022-11-22T22:27:55Z")
> 1. What ratio of rewards in the dApp token ($TKN) should the team put? Shade proposes 3x $TKN:1 $SCRT I assume? Typically, DEX x partner deals push for a 50/50 split on $$ amount of rewards unless there is a distinct imbalance in offering. Shade proposed a $3:$1 offering as I think its good to ask for less (when setting a precedent) in order to prove out KPIs & the effectiveness of the campaign. Tldr; scoped experiments are good In the future, if these types of incentive campaigns result in excellent KPIs, I think 50/50 splits are reasonable for partners that are generating excellent results. I think initially, it is good to be weighted towards a conservative ratio. > 1. Team’s likelihood to succeed - a poor product will not onboard and retain users, so throwing money at them would not be useful. Shade has demonstrated strong ability and has a large team, which to me puts the confidence level at very high. This is the most problematic guidelines since it’s qualitative, but we can’t ignore it. Agreed on this front - I believe audits, documentation, open-source code, and contributions should all play a role in the assessment of risk. > 1. Can a team ask for rewards more than once? Only at launch? Whenever? This is ultimately up to the community to decide - if the experiments are effective, I wouldn’t say we should push for one and done. **As per the Secret 2.0 blog post, I think it would be fair to perhaps slow down on these types of incentives once we hit a collective $20M - $50M in TVL on the network.** > 1. What’s the path to sustainability after the rewards ends. In this case, the window is 4 months. The path to sustainability comes from a large # of users and capital trading/using the app repeatedly. Uniswap doesn’t incentivize the majority of its pool as there is enough users creating volume that trading fees alone are enough to incentivize liquidity providers. By offering a best in class UI/UX, a whole suite of DeFi products, **Shade Protocol would aspire to not spending any emissions on liquidity once a properly large user base has been captured.** Protocol Owned Liquidity through bonds also opens the door to this being possible. A similar analogy is with Frontier on Osmosis - other protocols are deploying incentives that are not being matched by Osmo. > 1. Are rewards given all at once or based on success metrics. For the very least, TVL projections should be present (Shade provided these already, which is great). I’d advocate for “all-at-once” in the form of small experiments that get bigger and bigger each time instead of a rolling management of rewards from the L1. I’d be curious what other people think about this. tldr; simplicity is preferred, as long as the experiments start small. > [@guy](#): > > I’d like to see a concrete breakdown of the actual pools that will get incentivized and their respective APRs based on projected TVL. I also agree with @winston that a comparison to benchmarks is needed (e.g., Osmosis, or outside of it if that doesn’t exist). This is how we always calculated rewards and it’s obviously the right way to go! So I want to address this concept in DeFi - **the market determines the APRs of any given pool, not the protocol.** Simple example: - ShadeSwap puts $1000 worth of daily rewards into a pool - One LP provider puts in capital, they are on track to earn 1000000% APR (large number to make the point) because they alone are claiming 100% of the rewards + trading fees - Another LP joins, LP#1 now is earning 500% APR and LP#2 is earning 500% APR because they are now splitting the rewards - This happens rinse/repeat until the market hits an equillbrium. This equillibrium is based on the perceived risk of IL within the pool. Higher APR = a more volatile pair. Lower APR = less volatility. tldr; we can’t definitively say in advance where the equillibrium point for any pool will be in advance - however, we can give projections on TVL based on potential APRs. This is why SILK pools are awesome: **lower APR is good because this means more TVL is attracted with less emissions expended.** Now, to @winston questions: > 1. Under what circumstances will providing liquidity for SCRT (and/or stkd-SCRT) on ShadeSwap yield higher returns for LPs relative to Osmosis? stkd-SCRT pairs should offer a greater yield on a stkd-SCRT / ATOM pool than a SCRT / ATOM pool due to the staking derivative yield. The pseudo equation would look something like this: _staking yield + emissions yield + trading fees - increased in risk from it being a staking derivative pair = APR equillibirum_ This gap is a pretty sustainable advantage on Osmosis. However, for LPs more focused on trading fees, the Osmosis pool will be the better pool until more users are trading on ShadeSwap than Osmosis for sSCRT / ATOM or sSCRT / OSMO. We essentially need to win users over to ShadeSwap as their DEX of choice when on-ramping or off-ramping into or out of SCRT. We do have a path and strategy to do this with our bridge UI/UX. We won’t know until the pools are live, but my gut says the pool APRs will be lower while LPs are simultaneously earning more from one of their assets earning staking yield. > 1. Under what circumstances will acquiring / exiting SCRT (and/or stkd-SCRT) on ShadeSwap cost less for users relative to Osmosis? It will cost less when the liquidity is deeper. Note, we have a path to concentrated liquidity on ShadeSwap such that an ATOM/SCRT pair could be much more capital efficient than what exists on Osmosis. But until that exists, or until the pair liquidity is deeper, users should be biased towards acquisition through Osmosis. > 1. How will the answers to (1) and (2) change once L1 incentives expire? It is the job of Shade Protocol to attract sufficient volume on the DEX for it to be attractive for folks to liquidity provide in the absence of emissions. We plan to do this with excellent bridge + viewing key + permit UI/UX, our privacy offering, as well as our multi-primitive approach. If this is not achieved, than it is a failed app. If it succeeds, it is a massive win for the network. But the success of ShadeSwap does not live or die by L1 incentives, it is enhanced by it. I’m happy to follow up with some TVL projections for pairs such as SILK/sSCRT, sSCRT/ATOM & SILK/ATOM. I **t is important to note that due to the routing contract, it will be highly beneficial for SCRT liquidity to have one exceptionally deep pool tied to SILK that other trades can get routed through.** If the community prefers direct pairs (ATOM/sSCRT, OSMO/sSCRT) we definitely can make that happen, it is just significantly less capital efficient. [Next page](https://forum.scrt.network/t/secret-x-shade-defi-campaign-proposal/6648.md?page=2)