Hey all - I just checked the “BitDAO: Treasury” wallet and examined the BIT/wETH position on Uniswap V3. I noticed that it only has LP gains of 0.92% ($170.38K) since inception in over 400 days of existence. Who can we meet with to discuss deploying this capital in a much more efficient manner? I can easily see this pool earning 5-7x more.
Awesome thoughts here Bryan, I think some important info to highlight here is the difference in Univ2 vs v3 and that Vaults have the ability to enable highly sustainable yields. I am impressed to see that the BitDAO community has made the switch to Univ3 and are able to see the importance of it as the most capital efficient AMM in the space. The main issue that I see the Vaults solving here is that today, the liquidity in the $BIT/$ETH pool is spread evenly, mimicking a Univ2 pool. This basically takes away all of capital efficiency the Univ3 pool could provide and instead makes it function almost identically to its predecessor in Univ2 (50/50 liquidity spread across the entire Constant Product Curve) as seen in the image below: Uniswap Info (Check out the liquidity tab)
Instead, the Vaults concentrate liquidity around market price using the “Greedy Strategy” enabling higher fees to be earned by the Liquidity Providers (in the case of this proposal, BitDAO and other $BIT holders). Check out the difference in the $BOBA/$ICHI pool on Univ3 using the $BOBA vault to manage their liquidity: Uniswap Info (Check out the liquidity tab again)
Would love to hear people’s questions/thoughts on this idea and how it has been working so far!
Thanks for sharing. In summary, LVR is all about thinking about liquidity losses associated with ending up with a token mix that is different from your deposit asset mix. The $BIT vault will resist losses and increase gains by a) avoiding over-selling $BIT, and b) concentrating the $BIT liquidity when inventory is healthy.
Hi there. The BitDAO Discord and Telegram channels are open and available for further description and discussion of proposals posted here in the Discourse forum. In the past, BitDAO ambassadors have hosted AMAs with proposal authors and projects. If there is interest, these can be coordinated in the #aembassy channel in the Discord.
Great point there, this could serve as a major advantage right now since the current BIT/ETH LPs are sitting at a large range and it would serve having concentrated Liquidity as the proposal suggests. So not only would we be generating yield from this, but it would also lower factors like slippage for your average-day investors.
There has not been community consensus on whether to allocate the treasury to yield generating products (onchain vaults, centralized platforms, funds, etc…). In hindsight, some products of interest did not have good outcomes, and we are lucky BitDAO assets were not exposed.
Current Market Conditions
My personal view is that currently there is high systemic risk due to: 1) difficulty in calculating a fair price and slippage for Alts (which affects protocols which rely on oracles, liquidations mechanics, etc.); and 2) the pressure of projects to compete on go-to-market timings and financial product innovations resulting in many novel products that have not yet been empirically battle-tested. 3) web of borrowings and collateral assets across entities and other “degen-box” type activity.
The risks scale with capital deployment size as there are liquidity concerns when unwinding positions.
Due to the above reasons I am generally not in favor of BitDAO deploying to innovative yield products at this time, including the current proposal.
Regarding BitDAO’s current Uniswap v3 position authorized by BIP-10: the spirit of this proposal was not to earn yield - instead to provide to provide a baseline level of DEX liquidity on a platform familiar to the most amount of users, and being a reliable source of liquidity by maintaining that position for long periods of time without adjustments.
I have spent the last couple of days thinking about your viewpoint. I have a few clarifications.
difficulty in calculating a fair price and slippage for Alts (which affects protocols which rely on oracles, liquidations mechanics, etc.);
There are no external oracles or liquidations. It does rely on the ratio of assets in the pool during deposits and is able to do that for any token because of the security provided by single asset deposit.
the pressure of projects to compete on go-to-market timings and financial product innovations resulting in many novel products that have not yet been empirically battle-tested.
There is no market timing. The system simply adjusts liquidity based on deposit asset percentage to avoid over-selling the deposit asset. These settings have been extensively backtested and used in production for 11+ months.
web of borrowings and collateral assets across entities and other “degen-box” type activity.
There is no borrowing, collateral, leverage, or liquidation. The system only has three primary functions: deposit, withdraw, and rebalance. The rebalance function can only set one or two Uniswap V3 positions.
Are you open to a call to further discuss the system and its benefits for BitDAO? Or to deploying a limited amount of non-BIT assets as a test?