In response to PTIP 61 (PTIP-61: Provide Single-Sided Liquidity to Uniswap V3) which showed strong support for the protocol deploying a liquidity solution on Uniswap V3, The Treasury Working group wants to move forward with a liquidity solution for the POOL token on Polygon. Doing so will allow us to hone our community V3 knowledge, such that if we decide to deploy a much larger scale solution on Mainnet, we will be able to develop the most efficient and effective plan to do so.
Why should we add POOL liquidity to Polygon?
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Previous attempts for protocol owned liquidity with Olympus PRO and Ondo LaaS have been deemed unsuccessful and the protocol is looking for the most effective liquidity solution to support the token
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POOL liquidity on Polygon is particularly shallow resulting in large slippage which makes it unattractive to trade or make any sizable swaps
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We can use the experience as a stepping stone to a more comprehensive cross-chain liquidity solution
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We can effectively diversify our treasury in the process, shall the price of POOL increase
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We will generate fees for the protocol
What do we need?
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We are asking for 25k POOL from the treasury to be managed with the TWG gnosis safe on Polygon. We think 25k POOL is a reasonable custody risk for the treasury, and only increases the total POOL supply on Polygon by approximately 25%.
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In the case where the community wants us to provide liquidity below the current price we will need a paired asset/s to accompany POOL. For this we recommend we use half of the accrued Aave rewards on Polygon which equates to 18,573 MATIC.
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We anticipate gas costs to be extremely minimal, allowing us to more actively manage the positions while we work towards a more comprehensive longterm solution
How will we do it?
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Liquidity on V3 is supplied in a user defined range. As an example (solely for illustrative purposes) - if we deploy a pair of POOL/USDC with a range of $3-$15, at POOL price < $3 we have 100% POOL and at > $15 we have 100% USDC ^3
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The three assets we are considering for pairing with POOL are USDC, WETH, and MATIC
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We will create three ranges: a TWAP attack prevention range, a broad liquidity position supporting a significant price increase, and a concentrated trading liquidity position
Timeline
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By 45 days we will report on the operation and advise future steps for the DAO and protocol owned liquidity on a higher-level
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We ask for 90 days to manage this position. At the end of the 90 days we will report the results and return the held assets to treasury or propose a specific plan for continuation
Questions/Polls
- Do you entrust the TWG to custody the proposed 25k POOL for liquidity on Polygon using our 4/6 Gnosis safe?
- Yes I support
- No I oppose and can explain why
- Unsure
0 voters
PTIP-61 proposed providing single sided liquidity, where the protocol only adds POOL above the price, effectively selling POOL as price goes up. What this does not accommodate is the possibility of a downward trend in price. To provide liquidity below the market price we need to add the base asset of the pairing (amount dependent on price, range, and POOL amount). To avoid a scenario where we are chasing the price going down with a liquidity range above price, we recommend we use our MATIC reserves to build some support liquidity below the price at deployment.
- Do you approve of the TWG utilizing half of the MATIC reserves (18,573) to set up ranged liquidity positions to include liquidity below market price?
- Yes I support
- No I oppose and can explain why
- Unsure
0 voters
Any questions or comments please do not hesitate to post in this thread! Do you have experience providing liquidity on Uniswap V3? Please share your opinion and perspective!