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): 0.001
Upper bound (ANT/ETH): 0.002
ANT required: 201,100
ETH required: 380

*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.

Look forward to the 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.