Projects that migrate from Ethereum to Cardano need access to liquidity to function properly (think AMM DEXs. They only work properly if they have enough liquidity to match trades)

Having enough liquidity available can be difficult for new ecosystems such as Cardano which only just recently launched its smart contract and where EVM compatibility will only be available in Milkomeda in Q1 2022.

To ensure we have enough liquidity to make it feasible for projects to migrate, we can provide an incentive for projects to move liquidity to Cardano through Milkomeda

Having sufficient liquidity on Milkomeda will increase the number of projects that are feasible on Milkomeda and therefore increase the number of projects that migrate

1. Ethereum users don't take advantage of the liquidity incentive (we end up having funds leftover)
2. Ethereum users remove the liquidity they provide once the incentives dry up

Here is our thoughts on the risks

1. We think that with our connections, we can get enough users onboard
2. This proposal is meant to help bootstrap the ecosystem. The idea is that by the time this incentive dries up, multiple projects have launched on Cardano through Milkomeda providing their own incentives that will make up the gap (for example, how SundaeSwap / Minswap provide yield farming as incentives)

We can make use of the funds as soon as the proposal gets approved. Milkomeda already has multiple bridge partners such as Nomad that allow people to bridge assets to Milkomeda so there is no technical blocker to providing this incentive.

How long the incentive lasts is hard to predict because it depends on how much liquidity we attract, but we aim to have it last at least long enough to give time for projects to leverage the liquidity to bootstrap their own protocols

The full budget will be used as liquidity providing incentive to users bridging assets from Ethereum to Milkomeda

The Milkomeda project has many developers and people working in marketing / bizdev (many of which are at dcSpark). Since launching Milkomeda on a devnet, many projects have already announced they are deploying on Milkomeda such as

@API3DAO

@MultichainOrg

@CelerNetwork

@occamDEX

@nomadxyz_

@blueshiftfi

@realmilkyswap

Our team will continue to work hard to encourage projects to deploy on Cardano through Milkomeda and increased liquidity will help a lot with that.

Number of Ethereum projects that deploy on Cardano through Milkomeda that depend on liquidity availability (such as AMM DEXs)

TVL of projects on Milkomeda that depend on liquidity

Ethereum users take advantage of the liquidity incentive program which leads to a higher TVL for Milkomeda projects that depend on liquidity

New proposal