Tokenomics - L2 Liquidity Deepening

Title: Tokenomics - L2 Liquidity Deepening

Author: Icedcool🏴#4947

Discord Vote: Link

Forum Post: Link


TLDR

  • In Balancer L2 we have a liquidity depth of $46,419 (2184423 BANK and 5.4556 ETH)
    • This translates into high slippage for AMM operations on Polygon.
  • We need sufficient liquidity on every chain $BANK is implemented on to enable BanklessDAO operations.
  • To resolve this we would like to migrate 50k of liquidity from L1 to Polygon Balancer
    • Sushiswap Liquidity (705,194.04 BANK and 7.49 ETH ≈ $24,122.29) - (50/50)
    • Balancer Liquidity (1217788 BANK and 3 ETH ≈ $25,878) - (80/20)

SUMMARY

BanklessDAO has the Balancer pool on Polygon which has a volume(usage) of around $1,000 daily. Currently we have a liquidity depth of 46k on L2, which is resulting in high slippage for people using and trading on L2. BanklessDAO needs to support the liquidity depth for operational usage on all chains, and so plans to migrate 24k of liquidity from Sushi (low usage) and 26k from the Balancer L1 pool for a total of 50K liquidity to support depth on Polygon L2.

This proposal is to gain approval from the DAO to migrate this liquidity to enable Polygon operations.

SPECIFICATIONS

  • Sushiswap Liquidity (705,194.04 BANK and 7.49 ETH ≈ $24,122.29) - (50/50)
  • A portion of Balancer Liquidity (1217788 BANK and 3 ETH ≈ $25,878) - (80/20)

IMPLEMENTATION

Implementation steps would be as follows:

  1. BDAO multisig would unpair the Sushiswap liquidity.

  2. The multisig would unpair a portion of the Balancer Liquidity (1217788 BANK and 3 ETH ≈ $25,878)

  3. The multisig would then migrate the total amount of assets to Polygon via the Treasury Guild Bridging Service (TBS) to the Polygon multisig (X ADDRESS)

  4. FInally the multisig would deposit the assets into Balancer pool at an 80/20% ratio.

  5. The Sushi assets (50/50) would be auto balanced to the 80/20 ratio.

Post implementation the liquidity depth will be at roughly 100k worth of depth, which should enable Polygon Operations and usage.


This vote will be active for 7 days, and pending the approval of this vote will go to snapshot for DAO wide approval.

Vote:

Tokenomics - L2 Liquidity Deepening
  • Approve
  • Deny

0 voters

4 Likes

Thanks for drawing this up, @Icedcool. Seems like Balancer is our go-to as an organization. Let’s get this to Snapshot.

2 Likes

Great proposal - the only pushback is that if we’re optimizing for liquidity, the 80/20 pool isn’t the best route as only 20% of the pool is in ETH.

3 Likes

This is amazing
We need to work on this
It’s an awesome proposal

1 Like

Yea, I agree.

My thinking was, in order:

  1. Deepen liquidity on L2
  2. Do analysis on usage and performance
  3. If more ideal, migrate to uniswap with better fees, and ranged positions through arrakis.
1 Like

I too want deeper liquidity on Polygon. Agree with @Icedcool approach - first fix the liquidity issue, then optimize.

1 Like

I’m really keen on this. Participated in the balancer rewards program at the start of the year on polygon but ended up getting cold feet over impermanent loss after a while.

Getting adoption on L2 I think is key because of the L1 barriers for lower value transactions. Even moving a few thousand BANK onto L2 is pretty inefficient.

L2 as the default working layer for the DAO is a great goal to work towards. +1 all the way. I’d like to know a bit more about that 20/80 split problem the ETH exposure poses that lucas mentioned. Will try tuning into the tokenomics calls from now on.

2 Likes