Summary
This RFC would like to gather feedback surrounding the re-deployment of another protocol-owned position on Uniswap v3, as the current LaaS incentive from Ondo Finance is coming to an end and has proven to be less effective than anticipated (exact numbers to follow once available).
It is suggested to deploy our own MTA/ETH position on Uniswap v3 and select a range that allows us to enter the position with 100% MTA or close to 100%, and have the pair slowly convert to ETH as MTA appreciates in value.
Abstract
Since we began thinking more on PCV, we tried several different options, including Ondo Finance’s LaaS, as well as Gamma Strategies actively managed Uniswap v3 position.
We came to the conclusion that Ondo Finance’s offer is very heavily dependent on a stable performance of MTA, while the Gamma offer is only slowly getting traction via the Gamma dial on our Emissions Controller.
Previously, we also directly competed with Gamma Strategies due to our own MTA/DAI pairing, and arrived at the conclusion that deploying our own MTA/ETH pair on Uniswap v3 would also stop the competing aspect of these pairs, and instead have them work together for a deeper liquidity offering.
As Gamma offers relatively tight ranges, we would deploy this new pair with a larger range to ensure constant liquidity, while also avoiding selling off any more MTA below a certain threshold.
Initially, we would like to target a range between 0.0002 MTA/ETH and 0.0010 MTA/ETH and deploy 1,000,000 MTA from the TreasuryDAO, of which the majority will come from the return of MTA via Ondo Finance’s tranches, with the rest being provided by the main treasury.
Motivation
In order to keep our liquidity in-house and not spend incentives to get someone else to deploy on our behalf, we have previously consulted with different protocols to do this on our behalf, with varying success rates.
Given the track record, we believe it be most wholesome to the mStable project to once again deploy our own liquidity on Uniswap v3 and consolidate the current effort with Gamma Strategies on one very strong pair, with easy entry and exit opportunities across the DeFi ecosystem.
The manual process involved combined with the unavoidable realization of some impermanent loss from Ondo Finance made us realize that their offer is currently too risky, given the economic and geopolitical sentiment we have today.
Instead, we want to try to solve this issue once and for all with a bullish range deployment of MTA on Uniswap v3, which also will give the treasury a lot of upside exposure to ETH, and will eventually arrive at the position owning only ETH, which can then be further utilized in the space as we deploy an even more bullish fresh MTA position on Uniswap v3, and at which stage the Gamma position should hold a much healthier portion of MTA than is currently the case.
Pros
- Own all of our deployed liquidity ourselves
- Even if we experience more impermanent loss, we won’t be forced to liquidate due to the maturity of tranches (Ondo Finance)
- We consolidate our entire liquidity positions in the ecosystem in one pair that is extremely versatile
Cons
- Need to ensure a sensible Uniswap range is picked, as to ensure a bullish token appreciation over time vs ETH
- Might involve regular micromanagement to ensure the position is in range for deep liquidity until Gamma’s position is big enough on it’s own
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 weeks 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.
