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.
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.
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.
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.
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.