Minswap Labs has been working on Minswap V2 since before it was [announced in November 2023 at the Cardano Summit](https://x.com/MinswapDEX/status/1720439970249212011). This new Smart Contract brings a set of improvements in scaling, composability, new features and more which you can find [here](https://t.co/hPz82uiwNw).

Migration to a new Smart contract requires two main verticals:

- Detailed instructions around the V2 contracts and the ways Liquidity can be migrated, as well as migrating DAO owned Assets.
- Detailed incentives strategy to encourage V2 adoption using Farming Rewards and discounted Batcher Fees.

## Scope of Change

1. Approve the launch of Minswap V2 contracts
2. Approve the 2 Liquidity Migration options given to LPs
3. Approve migration of DAO-owned POL to V2
4. Approve the Yield Farming Allocation strategy to incentivize V2 migration
5. Approve a 50% Discount on Batcher Fees for 3 months after Launch

## Key Elements

### Launching V2 contracts

Minswap V2 was audited twice, once by CertiK, and once by Anastasia Labs. In addition, a 30-day Bug Bounty was completed where Cardano developers had the chance to review the code, report bugs and get compensated. Here are the key resources for Minswap V2:

- Resources:
    - [GitHub Code](https://github.com/minswap/minswap-dex-v2)
    - [Testnet Link](https://testnet-preprod.minswap.org)
    - [CertiK Audit Report](https://github.com/minswap/minswap-dex-v2/audit-report/certik)
    - [Anastasia Labs Audit Report](https://github.com/minswap/minswap-dex-v2/audit-report/anastasia-labs)

- Bug Bounty Findings: one minor level finding and one medium level finding were found. They have been addressed and updated in both Audit Reports above.

### Liquidity Migration
Liquidity migration to Minswap V2 can be performed in two ways:

- **Automated Migration**: Users perform two transactions (withdrawal and deposit) via an interface. Migration supports LPv1 in both Wallet and Farm. Users can cancel transactions anytime.

    - **LPv1 in Wallet**: Withdraw LPv1 -> Deposit to Pool V2 -> Receive new LPv2.
    - **LPv1 in Farm**: Withdraw and Harvest LPv1 in Farm -> Withdraw LPv1 -> Deposit to Pool V2 -> Receive new LPv2.

- **Manual Migration**: Recommended for large token amounts due to potential slippage and price volatility between V1 and V2 pools.

### DAO-Owned Liquidity Migration

**Assets**: DAO owns [30% of MIN/ADA liquidity and other LP tokens](https://minswap.org/pol/) (e.g., FLDT/ADA, INDY/ADA). All DAO-owned LP assets will be migrated to V2 after deployment.

### Yield Farming Point Allocations
- After the establishment of the new Liquidity Pools in V2, an automated system will adjust the reward allocation points between V1 and V2 based on their respective Total Value Locked (TVL). It is important to note that the dynamic adjustment of allocation points will apply to all farming rewards including MIN, ADA and project token rewards. This approach ensures that these key incentives align with market Minswap’s strategic objectives, maintaining fairness and competitiveness in rewards distribution.
- The automated system will last for 2 weeks. After the initial 2 weeks, the same system will apply, but with 50% less farming rewards on V1. After 4 weeks, rewards will fully switch to V2.

### Batcher Fee Discount
- **Fee Experimentation**: A Fee Committee has been informally set up to study Minswap V2 Fees. We suggest a period of experimentation for the 3 months after Minswap V2 launch where Batcher Fees are discounted 50%. Meaning the current 2 ADA Fee will be 1 ADA. The MIN Discount will apply in the [same way as before](https://x.com/MinswapDEX/status/1570798169503703052), with the max discount being 25%. In other words, the batcher fee will range from 1 ADA to 0.75 ADA based on how many MIN tokens users hold (maximum discount of 0.25 ADA for 50,000 MIN).

- **Post-Discount Period**: Once the 3 month period is over, a Proposal will be posted on the Minswap Forum to present the findings of the Fee Discount, establish a Fee management strategy and a Fee management committee with several responsibilities.