[ARCHIVED] BIP-15 Deposit to a "Greedy" $BIT Vault

Context

This proposal was suggested by an influential member of the BitDAO community. We have revised it based on the helpful feedback of others.

Based on this encouraging discussion, ICHI has already taken the following steps:

  1. The $BIT vault has been deployed by ICHI.
  2. ICHI DAO will vote on a proposal to back a 15% IRR (internal rate of return) for this vault for the first 12 months.

BitDAO community members may begin deposit to this vault at and earn more $BIT by taking the following steps:

  1. Go to https://app.ichi.org/
  2. Scroll to the $BitDAO vault and click ‘Earn’
  3. Connect your wallet (ie, Metamask) and sign an approval and deposit transaction

Proposal

We propose that the BitDAO also makes a treasury deposit to this vault to earn yield and create deeper $BIT liquidity.

Proposal Options

Option 1: 20M $BIT Deposit

Option 2: 10M $BIT Deposit

Option 3: 5M $BIT Deposit

Option 4: 1M $BIT Deposit

Option 5: No Deposit - Do Nothing

If Option 5 (no deposit) receives 50+% of the vote, we will do nothing. Otherwise, the amount of $BIT will be the token-weighted average of Options 1, 2, 3, and 4.

[Discussion] Click here to view the original forum post.

10 Likes

Hey! I’m Ben from the ICHI community. We are really excited to partner with you all on this! Looking forward to seeing what comes next :slight_smile:

4 Likes

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.

3 Likes

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!

3 Likes

Unfortunately I couldn’t add images to show the above.

I also forgot to add - check out app.ichi.org to see how the current vaults have been performing!

Could someone from the BitDAO community provide some tips on refining the proposal? Are there relevant AMAs, Discord channels, or other means to drive Q&A or a discussion?

Good idea.

  1. It benefits BIT holders to generate some staking-like yield. This is handy since the previous farming program has stopped for a while.

  2. It creates deeper liquidity on Uni-V3 for BIT token.

5 Likes

Hey there

Slater from Composable Corp here, the company that develops Blueberry. We partner with ICHI vaults to increase their liquidity by allowing leverage on pools.

Big BIT supporters could add significantly more liquidity through the Blueberry system, boost their yield further, and still leverage the improved active management of ICHI vaults.

Hope this moves to a vote!

4 Likes

I think this is an awesome idea. A16z explains well in this article the benefits of becoming an LP and how AMMs work.

1 Like

Hi,

I think that LVR as a metric defined here (screenshot below) from this work by a16z is great way to measure the health of an AMM for LPs. I see that some already posted a link the the article above.

2 Likes

Thanks for sharing. In summary, LVR is all about thinking about liquidity losses :chart_with_downwards_trend: 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. :star_struck:

3 Likes

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.

3 Likes

The proposal has been updated based on all the feedback and is ready for voting. Please take a look and propose any last minute changes.

Vote is scheduled - here is the link: Snapshot

What are the risks? tks

feel free to check out their docs in their site

Background
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.

Conclusion
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.

Note1
On a personal level, I think ICHI has some interesting innovations, and generally agree with their hypothesis that “Balanced Liquidity Provision is Unprofitable, and [Concentrated Liquidity] is too complex”.

Note2
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.

2 Likes

This post was flagged by the community and is temporarily hidden.

This is a wild time in crypto. I can see why you would be hesitant given all that has happened this year.

We pulled the vote given the low voter turnout and the chaos in the market this week. It would be great to work towards the community consensus prior to reposting it.

I have a few additional insights regarding the risks you mentioned if you’d like to hear them?

3 Likes