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
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!
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?
It benefits BIT holders to generate some staking-like yield. This is handy since the previous farming program has stopped for a while.
It creates deeper liquidity on Uni-V3 for BIT token.
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!
I think this is an awesome idea. A16z explains well in this article the benefits of becoming an LP and how AMMs work.
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.
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.
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
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.
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”.
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.
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?
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?