Enhancing ANT Liquidity on Uniswap V3: A strategic proposal for capital efficiency and greater decentralisation

Aragon DAO
1

This proposal was part of the Eagle Ops teams OKRs for this quarter drafted by the team. Not sure how it fits in to the discussion but better depth on DEX’s is better for everyone.

Background

As of the time of writing, there is no ANT liquidity present on Uniswap V3. This can have significant implications for our community, especially when considering the advancements offered by Uniswap V3 over its predecessor.

Uniswap V3 is primarily known for innovations such as concentrated liquidity, where liquidity providers (LPs) can specify price ranges for their liquidity, leading to potential greater capital efficiency. This is a significant upgrade from V2, where capital was often spread thinly and not utilized as efficiently.

Our lack of liquidity on Uniswap V3 has consequences. For instance, if someone wants to swap ETH for ANT using Uniswap, the slippage for larger trades (e.g. 24 ETH) often exceeds 5%. This high slippage may be driving users towards centralized exchanges to execute the trades and this could potentially result in fewer people holding ANT. Ultimately, reliance on centralized exchanges makes the Aragon project and ANT more centralized that it needs to be and more exposed to counterparty risks.

Proposal

To mitigate these issues and enhance our presence on Uniswap, we propose that when the Aragon DAO has funds it agrees to provide capital to Uniswap V3 within specific bounds and capital amounts, as and when it has sufficient capital to do so. Or the AA can choose to do it as well.

To obtain a slippage of less than 1% on a 24 ETH to ANT trade, we estimate the following capital would be needed between the bounds defined below:

Lower bound (ANT/ETH): 0.0012
Upper bound (ANT/ETH): 0.002857
ANT required: 248,946
ETH required: 468

*Updated as we were working on 0.0001 boundaries, 0.001 should be sufficient.

Limitations & Risks

Market Volatility: ANT is volatile and may significantly deviate from within the bounds defined above reducing token liquidity.

Availability of Funds: The proposal assumes that Aragon DAO will have sufficient capital to provide the liquidity required. The actual availability of funds may be a limiting factor.

Evolving Landscape of DeFi: The DeFi landscape is rapidly evolving. New developments, changes in regulations, or shifts in user behavior could impact the effectiveness of this strategy.

Reliance on Uniswap V3: While Uniswap V3 has impressive features, by allocating funds to it, we would be exposing ourselves to related smart contract risks with the potential to lose all capital placed into the pool.

Amendment 2

The Eagle Ops team would like to carry 200k over from phase 1 to phase 2, resulting in the following:

Phase 1 - Convert 100k USDC into 50/50 ANT/wETH & deploy on Uniswap V2

Phase 2 - Deploy an additional $1.84m into the 50/50 ANT/wETH pool on Uniswap V2

Phase 3 - Deploy liquidity on Uniswap V3, based on the aforementioned proposal

The team will put the different phases sequentially up to vote, starting with phase 1 which will go to vote in the next 48 hours

Look forward to further discussion.

3 Likes
2

This seems kinda out of scope for the current discussions we are currently in. I think its best to revisit this at a more appropriate time

3

Think something like this is defiantly still in scope. All discussions are around ANT and value, increasing the DEX liquidity is a big part of that.

4

I think before focusing on univ3 liq we should put our focus onto figuring out design/implementations on getting ANT to book value.

Univ3 should in the scope post implementation. imo.

5

Treasury vote to transfer funds to the DAO has yet to be upheld. This should be of priority rather than univ3, cheers.

6

Thanks for the opinion @AntHolder, not going to close the conversation, this is an important discussion. It can run alongside the BV discussions and makes sure there are assets available for DEX pools if other proposals such as locking or buybacks are implemented.

Look forward to hearing others thoughts

4 Likes
7

I think everyones goal is to have ANT trade more fairly in terms of value

Would love to see concentrated liquidity added at that fair price, but wouldn’t want to see us pegging price below that by providing liquidity there

On that note - are there any market making agreements or such that the AA is involved with? The sell pressure on binance is quite weird

1 Like
8

It would be useful maybe to do this once BV is agreed upon, we can then just pool the v3 liquidity around BV +/- some %

9

I think there needs some time to count up all the assets and liabilities first - this is not that big of an issue as of now as one can use binance as liquidity and transfer to their own custodial wallet - only people who cant are those who dont want to KYC for whatever reason.

Also where would this ANT come from, are we just adding more to circulating supply? maybe we could use some of the bought back ant from whatever processes to fund this liquidity.

I agree that i would prefer far less reliance on centralised exchanges eventually. But lets focus on one thing at a time.

10

Thank you for the detailed proposal, @AClay. OCC supports the proposed action of increasing ANT liquidity across DEX venues. Overall accessible liquidity decreases volatility and enables better voice and exit. Furthermore, Aragon owning a sizeable percentage of the pool for some time helps the project maintain integrity when needed.

A few clarifying questions:

  • were other venues explored, and why were they discarded (Sushi and Balancer are places where ANT pools exist)
  • we presume the range will be adjusted before liquidity is deployed (at the time of writing, ANT/ETH is at 0.00175 (much closer to the upper bound of the range)
  • is there a specific plan for replenishing liquidity if the position goes out of range?
  • What are the pool size and the daily trading fees revenue (currently or at the time the action was evaluated)
2 Likes
11

Thank you for asking these relevant questions @OnChainCoop
We would like to provide some more insights

Other venues were explore but we chose to reposition with the largest and most battle-tested DEX. (not excluding other DEXs in the future)

Correct, when we reach phase 3, the ranges will be adjusted accordingly

Thanks for raising this point, we are planning to provide more insights into that when we spin phase 3 of this proposal, up for a vote.

We will start with putting Phase 1 up for a vote. (300k allocation to ANT/wETH pool on Uni V2)
This is a snapshot of the current ANT/wETH pool on Uni V2

image
image1399×539 67.1 KB

1 Like
12

I actually believe this is rather in scope. Especially since ANT treasury is heavily ETH weighted a proposal like this could make sense to provide liquidity on-chain, whereas atm most liquidity is on CEXs which goes against the ethos / idea of decentralization, at least IMO

1 Like
13

Ok, when this votes goes forward what is the correct avenue to vote on? I see various different front ends and would like to support the vote when it comes up

14

The Eagle Ops team would like carry 200k over from phase 1 to phase 2, resulting in the following:

Phase 1 - Convert 100k USDC into 50/50 ANT/wETH & deploy on Uniswap V2

Phase 2 - Deploy an additional $1.84m into the 50/50 ANT/wETH pool on Uniswap V2

Phase 3 - Deploy liquidity on Uniswap V3, based on the aforementioned proposal

We are planning to spin this proposal up for a vote on Monday.

2 Likes
15

not really sure how this can be voted on without further detailing how this will work.

Much more clarity is needed

16

Hi this makes sense, but this is still not specfic. 50/50 could meant $100k each side at market price which I assume is what is meant?