Title: BanklessDAO <> Tokemak
Proposal Champion: Icedcool#4947
Date: October 21st, 2021
Summary
BanklessDAO has challenges with the $BANK token of liquidity depth and deployment. Right now we have fractionalized liquidity across Uniswap, Sushiswap, and Balancer.
Insufficient liquidity results in poor pricing and volatility. This negatively impacts exchanges looking to offer the best possible pricing for the token, and the individual, hoping to avoid slippage due to the price impact of their trade. Additionally, in the future BanklessDAO interacting with other projects’ tokens require reliable liquidity.
As BanklessDAO grows we need to continue to address the issue of liquidity.
Through Tokemak we can solve that problem and deploy liquidity quickly and effectively using the platform.
Currently the platform supports:
- Sushi
- Uniswap (v2 at start)
- Balancer
- 0x
In the future they will support more AMM’s and plan to deploy to multiple L2’s.
The integration of BanklessDAO and Tokemak, would enable the quick and efficient deployment of liquidity, create a token swap opportunity for the DAO to be exposed to the valuation of TOKE, as well as give BANK holders a novel opportunity to single sided stake their bank on the TOKEMAK platform, enabling further liquidity for the BANK token.
Important Additional Info
Difference between Tokemak and OHM, TLDR:
-
Tokemak allows quick and easy deployment of liquidity to different AMM’s through their platform, and single sided staking of tokens. TOKE holders can direct liquidity, and BanklessDAO will be able to direct liquidity to it’s choice of AMM above.
-
OHM creates a market to buy LP tokens (Eth/BANK liquidity) for BANK at a dynamic price.
BACKGROUND
The current state of DeFi is comprised of fragmented, unpredictable, and expensively sourced liquidity. Providing 50/50 paired liquidity is expensive for an individual, and has the looming risk of impermanent loss. Traditional market making solutions are opaque for native DeFi builders, highly centralized, and expensive. Finally, reliance upon whales to provide liquidity results in a perpetual state of uncertainty.
Tokemak enables users to both provide liquidity and control where that liquidity goes.
Liquidity Providers deposit single-sided assets into individual Token Reactors and/or Genesis Pools (ETH, USDC), and earn yield in the form of TOKE, Tokemak’s native protocol token.
Liquidity Directors stake TOKE into individual Token Reactors and vote how that liquidity gets paired from the Genesis Pools and to what exchange venue it gets directed. They too earn yield in the form of TOKE.
TOKE can be thought of as generalized or tokenized liquidity. TOKE holders are able to generate liquidity on demand for whatever tokens they want, on whatever exchange they want, by controlling and directing Tokemak’s TVL. This is done through single sided staking on their platform of the token (BANK) then directing liquidity with TOKE via their front end.
Tokemak has several different mechanics and guardrails in place to mitigate IL risk to ensure that Liquidity Providers can always claim their underlying assets deposited, 1:1. These mechanics involve some risk to TOKE stakers, but only as a last resort.
The protocol captures fees from providing liquidity across DeFi. Over time, this will allow Tokemak to build a strong reserve of various assets in Tokemak’s PCA (Protocol Controlled Assets). In the end, the PCA is controlled by TOKE holders through decentralized governance.
It offers opportunities for exchanges to reinforce their liquidity and for market makers to leverage the PCA to create deep liquidity for a specific project.
MISSION & VALUES ALIGNMENT
Tokemak provides invaluable infrastructure for BanklessDAO as it grows and migrates from L1 to L2’s. The support that the platform would provide for liquidity to the BANK token, would enable the tokens use both internally to the DAO, and externally as other platforms begin to integrate with BanklessDAO.
With the Tokemak platform managing the liquidity for BanklessDAO, the DAO can focus on onboarding 1 billion people into crypto without having to worry about the liquidity of the token.
SPECIFICATION
- $3,000,000 in notional value, swapped in BANK for TOKE(details below)
- Kick off a token swap with a 30-day MA for BANK and TOKE
- EXAMPLE:
- BANK 30-DAY Moving Average = 0.090165
- TOKE 30-Day Moving Average = 60
- Swap 33,272,334 BANK <> 50,000 TOKE
- EXAMPLE:
FINANCIAL IMPLICATIONS
To kickstart a Tokemak Reactor, BanklessDAO will need to do a token swap of $3,000,000 in notional value of BANK for TOKE. This will be a backing for the platform to minimize slippage and risk to single sided BANK stakers.
SUCCESS METRICS OR KPIS
- Deep Liquidity in the chosen AMM of BanklessDAO
- Ability to quickly deploy to different AMM’s, and later L2’s.
- No or low slippage for trades (buy or sells)
- Staking opportunity for BanklessDAO members(BANK holders)
- Treasuries (DAO, and GUILDS) and BANK holders could stake BANK for TOKE rewards
- Increased treasury value from token swap (TOKE)
- BanklessDAO would gain exposure to the TOKE token value, and if the platform does well and accrues value, the valuation of TOKE would increase.
NEXT STEPS
Sentiment Poll
- For - Execute swap with Tokemak for BANK reactor ignition - dependent upon C.O.R.E voting results.
- Against - Do nothing
0 voters
