With Uniswap v3 now live, it is time to talk about ways to take advantage of the new features and opportunities it offers the mStableDAO.
Today, 5k MTA are allocated weekly to incentivize liquidity provision on our MTA/WETH pair on Uniswap v2, and this proposal seeks to put to repurpose these rewards into an actively managed v3 position by Visor Finance with the same weekly amounts allocated instead to their MTA/ETH Hypervisor. This will keep the MTA tokens custodied by the mStableDAO, whilst also providing trading fees that will be a source of income into perpetuity.
Over time, these 5k weekly emissions will accrue to a large pool of capital, addressing MTA/ETH liquidity and generating returns from fees. Once a sufficient amount of liquidity has been established, the rewards can then be repurposed to “higher” goals for the mStable protocol.
The proposed change would stop emitting the currently active 5k weekly MTA rewards and instead re-deploy them into a MTA/ETH vault on Visor Finance (not yet deployed on mainnet).
Any fees collected through providing liquidity on the market via Visor Finance will be automatically compounded back into the position.
Currently, the mStable protocol does not incentivise a MTA/ETH position on Uniswap v3. There is a legacy Uniswap v2 counterpart that is less capital efficient compared to an actively managed Uniswap v3 position.
Managing a Uniswap v3 position is challenging due to multiple factors, which is why we have chosen to suggest the position be managed by Visor Finance.
The collaboration with Visor Finance will also allow anyone else to deposit ETH and MTA into the Hypervisor vault once released, and thus benefit in the same way from the Uniswap v3 deployment and active management of this pair.
- Better capital efficiency & more liquid market for MTA/ETH that compounds over time
- Deployed MTA stay in custody of the mStableDAO (or it’s subDAO)
- Creation of an MTA/ETH position on the Visor Finance platform that is usable by anyone
- Collaboration with Visor Finance for potential future mutually beneficial endeavours
- Minimal interference to reward emission
- Potential temporary disruption by the removal of rewards on the Uniswap v2 position
- Risk of increased impermanent loss on the pair due to concentrated and tighter liquidity ranges
- Smart contract risk associated with Visor Finance
We are very excited to bring this proposal forward to Meta Governors to discuss, and are looking forward to what everyone has to say about this idea of reallocating these rewards and migrating from Uniswap v2 to Uniswap v3.
Pending no significant objections, this proposal will be taken to a public Snapshot vote on the 16th of August 2021 and will remain open for 5 days to give adequate time for a concurrent discussion here on the forum.