As was mentioned in PSP-BPΔ1-5 by @dydymoon Liquidity Mining is not sustainable long term from a protocol treasury perspective. Adding an additional 1,000,000 PSP into the Bancor Pool will allow us to expand our liquidity while protecting ourselves from secondary asset exposure and Impermanent Loss.
Context
If PSP-IPΔ14 is Passed it will increase the depth of liquidity on DEXs and would not cost the DAO a premium like it would through having to sell half of it’s PSP for ETH or an OHM Pro Bond.
Goals
Increase the $PSP Liquidity owned by the DAO.
Insure the DAO’s Liquidity from Impermanent Loss.
Rationale
The PSP Pool on Bancor currently holds 2M $PSP in Liquidity of which 1.5M PSP belongs to the DAO. Bancor Liquidity Holds key advantages over traditional AMMs, IL Protection, and Single Sided Liquidity Pools. This allows for the treasury to create liquidity and earn passive yield risk free. For these reasons and more it makes sense for the DAO to further allocate.
There is right now 1.1M PSP Worth of Space in Bancor, This proposal would fill the majority of that. After this the DAO could also seek to get a co-investment raise on the PSP Pool.
The Proposed Budget is 1,000,000 $PSP which will remain under the DAOs control should it want to re-allocate it in a more lucrative way. This 1,000,000 $PSP would take up 9% of the 11 Million $PSP POL Budget.
Voting Options
Accept the use of 9% of the POL Budget (1,000,000 $PSP) to Increase the DAO’s Bancor POL.
Reject the use of 9% of the POL Budget (1,000,000 $PSP) to Increase the DAO’s Bancor POL.
Gonna just reply to this to ask if anyone is opposed to this proposal/has anything to add? I personally do not see much wrong with it, as it would basically be an extension of one of the first proposals, PSP-IPΔ3: Bancor Allocation Addendum
Maybe we could just add a section stating that the funds cannot be moved for at least 30 days to ensure IL protection, but other than that this feels pretty straightforward, a great source of protocol-owned liquidity
Maybe we should evaluate the volume observed so far on Bancor first? This is a follow-up proposal to increasing an existing budget. Last time I checked Bancor volume on PSP was really low, around 50k USD per day. Maybe it’s a matter of liquidity, maybe not
Bancor might not have the biggest volume but it is sourcing our liquidity more fees per volume since they are higher than UNI/Sushi. I think Looking at fees generated would be better.
Also on V3 Launch, Whitelisted Pools (that’s us) will get a dual LM BNT budget. if we launch a small campaign on Bancor we would get 50,000 BNT match in rewards to LPs.
Can read more about it here, but this is a good yield generating opportunity for PSP LPs aswell as the treasury since they’d be collecting what is currently about 225,000 USD worth of BNT Rewards.
has there been any discussion of all V1 pools being ported to V2, or would a new proposal be needed to get it there?
All V2.1 Pools will be ported in a 1 click manner to V3. The V3 contract upgrades will resolve gas issues dramatically, also the migration will be low cost.
Still though, as inefficient as it might be, I do not see any negative externalities of parking unused $PSP on Bancor after the 90 days, so I guess the big question is whether we wish to commit 1M for 3 months? Or is there another opportunity cost I am missing
It’s also worth noting that on V3 Launch we will have near-instant IL Protection (7 day unlock) and V3 is extremely close to launching although I cannot give firm dates.
I’d be keen to move this Vote soon and should still leave enough PSP for the initial OP Campaign. As the price of PSP rises the Space will lower so It’s important we enter in sooner rather than later.
This proposal can be tried to increase the liquidity of the PSP owned by the DAO. However, to achieve the desired results, it is also necessary to strengthen marketing to increase the number of users used.
