[Proposal] Reallocate Public Uniswap v2 MTA Rewards to Managed Visor Finance Position

Summary

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.

Abstract

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.

Motivation

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.

Pros:

  • 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

Cons:

  • 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

Next Steps

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.

1 Like

I think this is a great idea, fully support the initiative. The only question that I have is, why Visor? I have nothing against them, nor am I for a different protocol necessarily, would just like to understand the pros/cons to Visor specifically, given there are a few managed/automated uni v3 protocols out there.

Thanks for kicking this off @mZeroNine!

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Thanks for posting this @mZeroNine, Im also strongly in favour of this. Looking further ahead to when we transition to a gauge style for allocating MTA rewards per cycle, I’d expect to see this as an ongoing option.

To your point @lonetree, from what I can see the choice was made due to the fact there aren’t really any other alternatives. Thats from a limited search though. Can you link a few of the other options you mention? Would be good to dig into them.

Overall the impression I’ve gotten from Visor has been one of competence and professionalism, along with a slick UI, so I judge it a worthy option for mStable’s needs in this context.

2 Likes

Question:

The ‘deployed MTA stay in custody of the DAO’ part, I presume that means that the MTA for the pool will come from the DAO. Is that MTA coming from the stuff that’s been bought back over the past couple of months? And who is supplying the ETH side of the pool?

Hi there, and thanks for the question!

This part means that the MTA will be put into a private NFT Vault contract that is custodied by the DAO, and not put directly into the liquidity position, like is usually the case with AMMs. That is one of the key features and developments that Visor Finance offers, and more information around this can be found in their documentation.

The weekly MTA deposits would come from the 5k emissions that are currently going out as public rewards for providing liquidity on the MTA/WETH Uniswap v2 pair, so we would simply stop emissions there and put these 5k MTA into the Vault instead.

Visor Finance has agreed to supply 10k worth of ETH in the position to bootstrap initial liquidity, but it is possible to provision single-sided liquidity into the pair, so it is our intention to do so. Please see below for more information regarding this, coming from the FAQ of Visor Finance:

I hope this helps, and please continue to let us know your opinion and questions around this proposal, as this can potentially become a big part of MTA liquidity in the ecosystem!

3 Likes

As a long time supporter and early investor, I can attest to Visor’s competence. It’s a young project, but their growth and resilience over the last few months has been a joy to watch. Among the Uni3 active management products, Visor is the only one to use custom NFT Vaults, was first to market, and sponsors their own research arm, Gamma Strategies. For me, the investment into applied research - much of which will be openly shared for the good of defi - speaks highly of how they conduct business and their commitment to defi writ large. Visor realized early that Uni3 pool management was going to be a hard hut to crack, but they were willing to put in the work.

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There were a few other projects/protocols that I was aware of (ie popsicle.finance, charm.fi, mellow protocol) but after reading Visor’s documentation and reviewing their app, I have no doubt they are the best option at this time. The fact that these vaults are also self-custody, and we’re not depositing the MTA in an external LP pool is really something special. Especially if we’re already in talks with the Visor team and are able to foster a partnership or collaboration, then by all means, we should be moving full steam ahead on this. If 6m/yr down the road we want to reevaulate based on performance and ease of use of other protocols, we can certainly do so, but I see no reason to not move forward with Visor at this time. :rocket: :man_astronaut:

cc @mZeroNine

I think the proposal is a great idea that benefits both communities. For mStable, there will be more liquidity for the token and for Visor, more TVL to manage. There’s been a lot of buzz in Visor Finance especially recently and the team has done a fantastic job in continuing to deliver.

Thanks for the great feedback everyone! This proposal is now live on our Snapshot page, and will remain open until Friday, the 20th of August.

Have a great start into this week, and looking forward to see you put your Ledgers to good use on this! :rocket:

1 Like