🧊 [RFC] Gamma Liquidity Migration

Summary

This RFC would like to gather feedback surrounding the current Gamma position the TreasuryDAO holds in order to receive managed liquidity on Uniswap v3 for the MTA/ETH pair and discuss next steps regarding a potential migration to v2 of Gamma, or a sunsetting of the engagement based on initial community feedback received.

Abstract

Gamma has recently upgraded some of their pairs to v2 (essentially providing a better overall strategy), and it is now an opportune time to discuss what to do with our current Gamma v1 position. Currently, we are engaged with Gamma by having a MTA/ETH pair deployed on their platform which is actively managed by them to provide concentrated liquidity on Uniswap v3.

With the upgrade to their next version and with some initial concerns around the usability of this position brought up by the community, we should now decide on how to proceed with this opportunity moving forward.

We should find consensus on whether or not to migrate to v2 with our position or claim back the position and sunset the opportunity with Gamma.

Migrating the position will require a small adjustment in the current setup of smart contracts, to allow for the sending of MTA from the Emissions Controller to the upgraded contract, and also require a migration of the existing position from what I was able to gather from the Gamma team.

Sunsetting of the opportunity will require the removal of the Emissions Controller dial, as well as the claiming back of the position from Gamma back to the TreasuryDAO once the dial has been removed.

For more information regarding what Gamma has planned for 2022, please see this dedicated blog post.

Motivation

With the recent critique brought up by @dimsome on the effectiveness of the liquidity on Gamma, and the timely arrival of the upgraded version of Gamma and it’s new features, it is now time for Meta Governors to decide on how to proceed with this opportunity for the foreseeable future.

This RFC also coincides with the current discussion for deploying of our own liquidity on Uniswap v3 moving forward, but should be seen as distinct from it, as we won’t be actively managing the liquidity deployed there, and both pairs are not competing with each other.

Therefore, we should come to consensus on whether or not we wish to continue receiving actively managed liquidity by a 3rd party provider or not.

Of particular note here is as well is that the Ondo Finance LaaS engagement has ended a while ago, and additional liquidity is required to continue offering sufficient depth on the MTA token. In theory, the amount of MTA required will be strictly dependent on whether or not we continue to pursue this sort of actively managed position or not.

Pros

  • Resolve the ongoing debate around the Gamma position
  • Have a clear way forward for mStable’s liquidity on AMMs for 2022 and beyond

Cons

  • Developer work will be required for this regardless, which will impact the work that can be done for mStable v2

Next Steps

It is suggested that the community comment on this RFC in the coming days, and bearing no significant opposition or change in ideation, we would move ahead with this RFC in the coming week and create a formal draft proposal on Github to be used for review.

Meta Governors are encouraged to provide as much feedback as possible until then, so we can create the best possible outcome for mStable and its users.

1 Like

Yeah I would really lean towards closing our Visor Position. They didn’t have the best track record and as mentioned in the other thread I don’t think this position does anything for us.

I would be keen to consolidate the MTA that we want to put up as liquidity in the market into one position that is then managed by the Asset Management Subdao. And by managed I mean adjust the position maximally on a quarterly basis if there is the need or if the market moved a lot.

In the end, we want to create a liquid market for MTA and by putting the position together in one could create this that would then also allow us to earn fees.

This is in my opinion way better than bonds, because with such a position we sell as MTA goes up, while with Olympus Bonds the price gets lower and creates a downward pressure.

Hey @dimsome. I’m Brian from Gamma Strategies, and I just wanted to address a few of your points made in your last post.

One of the points that you mentioned was with regards to the width of the ranges. There’s a couple reasons for why we choose those ranges. One is that the pair is open to the public for deposits, so our goal is to maximize profitability to our LPs. In order to do so, we look to maximize fee returns while limiting impermanent loss. The current strategy that we’re running on the MTA-ETH pair is our Autoregressive strategy, which dynamically adjusts the ranges to widen during periods of high volatility and narrow in times of low volatility. Utilizing wider ranges, while increasing slippage on trades, will incur lower IL when MTA and ETH prices diverge.

So, in summary, we utilize wide ranges during volatile times and narrower ranges during less volatile times, and those ranges are set automatically by our algorithm. For projects in which there is no public liquidity and we manage solely the project’s liquidity, we have used narrower ranges consistently. But the ones who choose to go that route are content with suffering more IL to lessen slippage for their traders.

With regards to our v2 contracts, one of the changes is that we mint ERC-20 LP tokens directly to the LPs’ wallets. This makes the LP tokens a lot more composable for Olympus Pro bonding and/or staking contracts. So I think this will potentially increase the amount of liquidity going to v3 which will lower slippage for traders. Even with wider ranges, the v3 position should outperform in terms of lowering slippage than a higher amount of liquidity on v2. Currently there’s around 600 MTA going weekly to the Gamma liquidity position in terms of liquidity deposits. A better use for them may be in the form of staking rewards to acquire more liquidity for the position and decrease price impact for traders without harming the profitability of the position.

Happy to take your comments, questions, or concerns with regards to anything I mentioned above. Thanks!