[Proposal] Provide liquidity for BIT-ETH on Integral SIZE, a cost-saving and capital efficient liquidity venue for $BIT on-chain

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Proposal Title: [Proposal] Provide liquidity for BIT-ETH on Integral SIZE, a cost-saving and capital efficient liquidity venue for $BIT on-chain.

Authors: Integral Team

Date: 5/12/2021

How will your proposal, if activated, benefit BitDAO?

  • Deepen on-chain liquidity for BIT-ETH

  • BitDAO’s treasury and community members can trade USDC, ETH, SUSHI, CVX, and more tokens (in the near future) on Integral SIZE in large quantity with zero price impact and low fees.

TLDR

BitDAO recently passed BIP-10: BitDAO Owned Liquidity for $BIT to provide liquidity on Uniswap V3. Integral is proposing to be an alternative venue for BitDAO in order to deepen on-chain liquidity for BIT-ETH. BitDAO community and treasury can enjoy zero price impact trading on Integral SIZE.

Summary

Integral SIZE is a DeFi primitive to facilitate large on-chain trades. It allows traders to execute token swaps at 30-min time-weighted-average-price (TWAP) with zero price impact relative to price oracles provided by DEXes such as Uniswap.

We previously responded to the initial version of BIT-10 here and would like to formally propose Integral SIZE as an additional venue for BIT-ETH pair and explore this further.

Details

We propose that BitDAO to allocate $2.5mm BIT and $2.5mm ETH in the BIT-ETH pool on Integral SIZE to deepen the on-chain liquidity of $BIT token.

We show the benefits of having a BIT-ETH pool on Integral SIZE by comparing the following two hypothetical scenarios. For simplicity, we assume that:

  1. there is $60mm total capital for BIT and ETH, and
  2. it’s a 50/50 DEX. Note that the current implementation of full-range liquidity on Uniswap v3 is similar, if not identical to Uniswap v2 50/50 DEX.

Scenario 1: Put $60mm in the BIT-ETH pool on Uniswap v3 with full-range liquidity.

Scenario 2: Put $30mm in the BIT-ETH pool on Uniswap v3 with full-range liquidity AND $30mm on Integral SIZE.

Under Scenario 1, a trade of $300,000 would cause 1% price impact. A trade of $1,500,000 would cause 5% price impact. This is assuming no fees and no sandwich attack.

price impact

Under Scenario 2, traders who would like to transact in large quantities of BIT can save a lot of transaction costs by trading on Integral SIZE.

  • Assuming the $30mm pool on Integral SIZE is 50/50, a trader can execute a swap between BIT and ETH up to $15mm with zero price impact relative to the 30-min TWAP based on the price oracle from Uniswap v3.
  • Scenario 2 is much more capital efficient for BitDAO and beneficial to its community members who trade BIT.
  • Further, BitDAO’s treasury and community members can interact with Integral SIZE within Gnosis Safe App. (Details below)

Additional Benefits

BitDAO’s treasury and community members can trade USDC, ETH, SUSHI, CVX, and more tokens (in the near future) on Integral SIZE in large quantity with zero price impact and low fees.

  • Price impact saving. Integral SIZE currently offers execution of USDC <> ETH, CVX <> ETH, and SUSHI-ETH at 30-min TWAP with zero price impact based on price oracles from DEX such as Uniswap.
  • Fee saving. Use SUSHI-ETH transactions as an example below. The fee saving is less extreme for USDC-ETH swaps.
    • 1 bp on Integral SIZE.
    • 30 bps on SushiSwap and Uniswap.

More about Integral SIZE

Integral SIZE is a decentralized exchange built for large trades of ERC-20 tokens. It allows trades to be executed at 30-minute TWAP with zero price impact. (Details below.)

Key features:

  • For Traders: zero price impact of large trades (including less liquid tokens).
  • For LPs: passive accrual of yield while achieving mean zero IL.
  • Rely on an external price oracle (such as SushiSwap) for price discovery over time.

What are the projected outcomes?

  • BitDAO can transact large amounts of BIT and other coins with zero price impact and minimal fees.

  • Further deepen on chain liquidity for BIT

Specifications:

Twitter: https
://twitter.com/integralhq

Latest Blog: https
://integral.link/post/myth-or-reality-zero-price-impact-trading-in-defi

Documentation: https
://docs.integral.link/size

Discord: https
://bit.ly/3vFGihK

Gnosis Safe: https
://docs.integral.link/size/concepts/advanced-topics/use-size-on-gnosis-safe

Website: https
://integral.link/

Announcement: https
://twitter.com/IntegralHQ/status/1506254024764403715?s=20&t=lU83at0GwVJR4cbvtbz97g

Whitepaper: https
://assets.integral.link/pdfs/SIZE-Whitepaper.pdf

(Sorry, had to break the links!)

Next Steps? If this proposal is accepted, what are the immediate action items?

  • BitDAO allocates $2.5mm BIT and $2.5mm ETH in the BIT-ETH pool on Integral SIZE to deepen the on-chain liquidity of $BIT token and to provide a venue of zero price impact and minimal fee trading for BIT token traders.

Review Process

The BIT Community and delegates might discuss and verify the following before considering proposals.

Personnel

  • Is the team credible?
  • Are they qualified to do this work?

Technical

  • Does the proposal make sense technically?
  • Does this fit into, or compliment, other projects in the BitDAO ecosystem?

Temperature Check Poll

Would you like to see this proposal go to vote?
  • Yes
  • No
  • Needs work

0 voters

4 Likes

Thanks for proposal.

It’s not clear about how you can ensure zero price impact for any trade ? Also, it will help, if you can dwell more about why & how you are better alternative than any other DEX in the market.

2 Likes

Because Integral SIZE adjusts its internal price state lazily (via an external price oracle) without the requirement of trading to convey price updates, the design mechanism eliminates the systemic role of arbitrageurs’ profit in typical AMMs, and its resulting impermanent loss on LPs.

This also allows for no price impact since trades submitted on SIZE will have no effect on the ratio of the assets in the pool, rather the protocol calculates the 30 minute TWAP and it is executed at that price. As a result, LPs on Integral SIZE would not be harmed by adverse flows and on average enjoys mean-zero ILs.

2 Likes