MDP23.2 - Strategy for Incentivized Liquidity Provision on Balancer Finance

Summary

In line with MDP23.1, the mStableDAO wants to gather feedback and decide on the preferred strategy from Meta Governors on the liquidity position they would like the Asset Management subDAO to use for the BAL tokens.

The mStableDAO is proposing to begin accruing BAL rewards from the 80/20 BAL/WETH pool on Balancer Finance, as this is currently the only worthwhile pool incentivized on the platform on Ethereum Mainnet.

Other pools were suggested, but Balancer Finance stopped incentivization of these pairs since then, so they have been omitted here.

Specification

This proposal assumes the successful passing of MDP23.1, and now seeks to decide on how to put the BAL tokens in question to use.

Once a decision on the strategy has been made, it is proposed to have the current Cat Herder liaison with the lead signer from the subDAO (@jwpe) on a bi-weekly basis to determine the right schedule on harvesting and compounding rewards, keep a curated transaction history of all events relating to this venture, and inform the wider mStable community and it’s stakeholders on the results on a quarterly basis in form of a Transparency Report designed for this purpose.

In its current form, it is proposed to harvest and compound 100% of all BAL rewards from the position back into the same position via single-sided liquidity entry at a time that has desirable market conditions for BAL compared to the rest of the pool allocation, as to maximize opportunity.

Rationale

This proposal aims to:

  1. Find consensus on which farm to utilize on successful passing of MDP23.1
  2. Outline the strategy the Asset Management subDAO is going to use for this particular farm
  3. Generate a transparent process that has had the historic input of all Meta Governors prior to deployment of this strategy
  4. Include the best opportunity in the DeFi space to utilize our BAL token allocation

Further discussion points

  • As this marks the first round of hopefully many such proposals, we also encourage feedback on the process itself, and how it is received and how it can be improved upon.
  • It is assumed that this strategy will be utilized until either:
    1. The current opportunity runs dry
    2. A more lucrative opportunity appears on the Balancer platform or elsewhere
    3. Economic feasibility to maintain this position is no longer given
    4. A proposal be passed to change the current strategy

This proposal should be seen as a direct follow-up to a successful passing of MDP23.1, and will only be considered should the first part of the MDP close in favour.

We’re very excited to finally kick off with our first round of incentivised liquidity provision venture, and are looking forward to hearing what Meta Governors have to say in the coming days around this idea and utilization of our treasury assets.

The option with the most votes will be executed, even if it doesn’t reach a majority.

Pending no significant objections, this proposal will be taken to a public Snapshot vote on the 13th of September 2021 and will remain open for 5 days to give adequate time for a concurrent discussion here on the forum.

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Harvesting and compounding is what I would do personally as well. Once the opportunity dries out we could just leave it there to continue accrue swap fees. However, the fees are quite low and we might consider divesting into another opportunity. One thing to keep in mind is the high gas price, it might be worthwhile to wait for a lump sum to accrue first. I am not sure how much could accrue in 2 weeks. But i think this decision could be made by the subDAO without further votes.

Definitely agree @Dimsome and we’ll be extremely mindful of only harvesting and compounding when it makes economical sense to do so, even if it means waiting an additional week or two in the process.

The Snapshot Vote for this proposal is now live and open for voting until Saturday! :partying_face:

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Thanks for putting this together m09. At this point I think this is the best option for our accumulated BAL tokens. Let’s revisit when LM runs out on that pool :slight_smile:

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