Name: DAO to provide liquidity for key h2h assets
Ren h2h is currently implemented. Additionally Maxamilian created the curve pools, if I understand correctly.
There are a few ways to get the ball rolling:
- provide liquidity ourselves
- create a bribe at vecrv-bribes dot llama dot airforce or votium for the curve pools already created this
as a bridge first and foremost ren protocol will benefit from liquidity, simply put, as it will help to drive volume. currently the UI will still only be for slightly more advanced users similarly to how multichain had released back in the day where you have to bridge, then swap manually, while realizing it is not ideal for beginners, it is still worth it in my opinion to get more liquidity than $0, which it currently is.
the darknode operators have been setting aside 7% of each epoch revenue, in my opinion, for this expressed reason, as even back in the day it was often discussed how that was a primary purpose for the money, if I understand correctly.
I am missing the details for the curve pools, on 24Jun Maximilian in discord noted they are created, maybe someone below can help me with the contract numbers I would be happy to edit them in place of this paragraph. Additionally I am missing information on the exact amount the DAO holds currently.
I also cannot say for sure which option yields more liquidity between providing it ourselves versus getting gauge weight votes through curve, my guess is the gauge weight will actually be the cheaper option. If any onchain guru analysts can chime in that would be helpful.
Simply direct a portion of the DAOs holdings to h2h liquidity:
renUSDC/DAI/USDT/EURT/BUSD/MIM on every chain but ETH (n = 24)
provide host chain liquidity renETH/BNB/AVAX/FTM/MATIC (n=16)
some quick math for reference therefore:
providing $1k to each pool would cost $40k
I think a simple vote by the darknodes is in order with varying options to clearly allow them to decide what percent of the DAO treasury goes towards this effort.
Great post SweetNothing. I’m a big fan of providing liquidity to support h2h. This has my full support for $1000 to each pool, or more if the community thinks it is necessary.
in my opinion the best thing to do here is instead of providing $1000 for each pool which wouldn’t really do much of anything, strategically pick 2-3 pools to add a more useful amount towards.
There is sentiment that this amount of funds will do practically nothing as far as creating volume, and I tend to agree, but if we are strategic in which assets we start adding liquidity we may be able to build a bit of a snowball.
To do this effectively i think we would need to identify a l2 or sidechain which is most active with REN already, or where h2h would be most useful for these particular assets.
Along these lines we could spread this out and turn this into a marketing event where the community could hold monthly or weekly votes on social media or discord and as assets that way. Not only would this engage our own community, but would engage communities of other projects.
I’m not sure the liquidity at these levels would have any meaningful effect… but if we use it to drive engagement at the same time maybe the combo is worth the effort.
I agree. One source of volume comes from arbitrage, and in order to successfully arb trade via a curve pool there needs to be a decent amount of liquidity. If we split funding across all of these sources, there will not be enough liquidity in any of them for medium/large players to trade/arb successfully.
We should identify the top pools that would provide the greatest opportunity for trading/arb volume.
I like this proposal. It is a starting point to get pools created even if they are small. We could also reach out to the likes of the Filecoin/ZEC communities and see if they have interest in also adding liquidity.
I believe people are more likely to add liquidity to an existing pool that to create one from scratch themselves.
In my opinion the first priority should be to ensure that all supported chains have solid liquidity for the main native tokens supported by Ren (i.e. renBTC, renDoge, etc.) We saw during the Arbitrum promotional event last month that users would bridge Doge to renDoge on arbitrum and then get stuck due to low liquidity. Getting this liquidity rock solid will allow more volume to flow via Ren. This needs to be seamless before starting to dive into individual H2H assets.
DAO has a couple hundred thousand dollars which is not even close to being enough to cover liquidity needs for one asset in one direction, let alone for 17+ assets and 7+ blockchains, or even just stables.
I get that these proposals come from a good place and have only good intentions, but in terms of liquidity we’re looking at hundreds of millions of dollars or at least tens of millions of dollars if we’re focusing on stablecoins only and “just ok” liquidity.
With current funds at DAO’s disposal providing liquidity is simply not feasible.
What might be feasible, but also for very limited number of assets (1?) and limited number of paths, is incentivizing liquidity for a limited time. I.e. we offer our funds as extra rewards for people who provide liquidity. The idea is that this will be more capital efficient, but the downside is that markets aren’t feeling all that well, no good APY’s for users to farm, which is important because ideally we want to get a return on our investment (in fees) as well as have our LP’s earning their portion of fees naturally (without our rewards), because without that there’s no certainty that LPs will stick around once rewards dry out, which in turn would make all this pointless…
So yeah, without some alpha-whale funding this is basically unreal in current conditions.
What draws investors is generally APY, and currently we have 0% APY on $0. By adding >$0 in liquidity we then by definition will guarantee >0% APY, this is a mathemathical certainty that without any liquidity we will always remain at 0% APY. this is critical to remedy even if someone sees “oh wow i can get 200% apy on $5k of liquidity i am going to jump in while its good since i already hold xyz asset and curve doesnt have impermanent loss”. this can be achieved 2 ways in my mind: a small seed into various pools or the curve bribe which i explained earlier.
adding my own opinion here, i think our best route is 1. advertising that the dao will be incentivizing pools, 2. seed with something like $100k, $10k to each pool, 3. incentivize USDC on 5 chains and USDT on 5 chains