This is a proposal by the core team to move the Community Treasury managed liquidity from Quickswap to an Uniswap (Polygon) position managed by Gamma (formerly Visor).
Main arguments:
a 65% range managed Uniswap v3 position will roughly double the liquidity depth. Calculation provided by the Gamma team: USDC / THX Calculations - Google Sheets
the new Uniswap v3 THX/ETH pool will be opened up on the Gamma Dashboard frontend so that people can earn optimized yield
Additional benefit (and optional):
considering the deeper liquidity gained with the managed position, it will allow the Treasury to retain ~$20k USDC from the original pool without hurting the liquidity depth. This amount could be used to diversify into $BAL/$veBAL and vote for the THX/USDC Balancer pool to increase $BAL rewards to liquidity providers. This step is optional and discussed in more detail in this proposal: Diversify ~$20k Community Treasury USDC into $BAL/veBAL
Excluding point 3) which has it’s own considerations, we don’t see much downsides to this plan except increased smart contract risk @ Gamma.
To put these into perspective; Gamma currently manages $7M in liquidity and is VC backed. Our Uniswap position is about $375k (already on Gamma) and our Quickswap pool is $300k. Together these two pools are about 60% of our non-$THX token liquidity and would be close to 10% of liquidity managed by Gamma.
In our opinion both percentages are significant so we should be cautious, however the Treasury is already exposed to the Gamma smart contract risks. Going forward it would be wise to not keep increasing this percentage. In other words; any new Treasury liquidity positions should be on other protocols (e.g. Balancer) or non-Gamma managed.
Next steps
Please indicate if you agree with this proposal below with a green checkmark ( ) for yes or no with a red stop sign () and elaborate on why and give any suggestions to tweak the proposal.
This proposal will be open for till the 17th of June for discussion. Considering no major additional risks are identified and a green checkmark majority is reached, the move will be proposed and executed by the multisigs. Point 3) will be considered separately.
Removing some liquidity altogether is indeed always on the table if the Community Treasury can find a good use for the funds! We also could consolidate everything into Balancer (Polygon) and Uniswap (mainnet) however this will lead to less arbitrage opportunities and hence less fee income for the treasury (currently estimated at ~$20k a year)
You probably mean migrating? No don’t think there is negative impact, we have a good relationship with the Balancer ecosystem but none with Quickswap (or Uniswap)
Working with Gamma is a positive step in my opinion; opening the pool on their front-end gives more eyes on our protocol and gives LPs that for some reason don’t like Balancer the opportunity to earn a couple of % APR (= higher than on Quickswap)
No absolutely not, it was the core team that reached out.
Personally can’t think of much else… The $BAL/veBAL onboarding is a significant potential upside. I will post the proposal for that today.
This gets my provided we have enough funding to start marketing soon, hoping we can bring up the value of THX, before we start pricing and accepting equity, offers for the token for this upcoming seed round.
Which is based on market conditions, transaction size and vesting terms.
Tokens are quite cheap just on market face value, if there will be a small discount or a small premium on the market price as available through Coingecko.
Great arguments to double the liquidity depth and looking forward to use the Gamma Dashboard. With the APR on Balancer being this high I don’t see any advantage for using quickswap at this moment. Happy to migrate the funds to a LP with a different interface.
I think that splitting liquidity on polygon is a bit too much for a project with low volume.Users that can handle Uniswap can also handle Balancer and its way mor userfriendly this way. There will still be arbitrage oppertunities between THX on ETH Uniswap and Polygon Balancer.
Deeper liquidity would give the option to enter with an larger amount of capital without moving the price too much.
Are you suggesting we should move/merge the Polygon liquidity from Quickswap to Balancer? That’s interesting point we could explore… My concern would be that Balancer is relatively unknown to (retail) users. See also next point on volume.
Not sure the data agrees, Balancer on Polygon is relatively small volume wise. According to Coingecko last couple of days we see daily volumes on Polygon roughly as such
Balancer ~$1.5M
Quickswap ~$15M
Uniswap ~$50M
To summarize the motivation behind this proposal; Balancer gives low impermanent loss pools to the project (80/20) with high APR rewards, and a managed Uniswap position can give relatively deep liquidity for a low capital allocation, plus the highest DEX traffic/volume on Polygon. Quickswap has no clear benefits. Two pools on Polygon give more arbitrage opportunities which is healthy for the Treasury because it earns swap fees, which will be boosted in a managed Uniswap position.
We will leave this open till this Friday (8 July) to discuss this some more!
Youre welcome I understand Balancer is less popular but thats mainly becasue most projects dont have their main pool on Balancer and maybe its less attractive for bots? But any real user that wants to buy THX will have no problems buyin and/or selling compared to Uniswap.
But I also understand the arbitrage part so if thats thats the main reason you should go for it
Good point! I don’t know actually what drives Uniswap Polygon volume. Could be narrow pools of stablecoins or perhaps pegged assets like MATIC/stMATIC? Agree real users will manage to buy on Balancer as good as on Uniswap. It would be a good idea to explore the possibility to move all liquidity to Balancer at a later stage. Ideally after observing the performance of the Uniswap pool versus Balancer.
Arbitrage is one of the benefits Deeper liquidity than now, exposure on the Gamma frontend interface for higher LP yields and retaining of (a bit of) Treasury liquidity are all of the immediate benefits.
To finalize for now; we will leave the discussion open till this Friday, and assuming that all responses remain in favor proceed to ‘next steps’.
) for yes or no with a red stop sign (
) and elaborate on why and give any suggestions to tweak the proposal.
No don’t think there is negative impact, we have a good relationship with the Balancer ecosystem but none with Quickswap (or Uniswap)
Happy to see this move forward!
I think that splitting liquidity on polygon is a bit too much for a project with low volume.Users that can handle Uniswap can also handle Balancer and its way mor userfriendly this way. There will still be arbitrage oppertunities between THX on ETH Uniswap and Polygon Balancer.