Work with Alchemist to Provide BAL Rewards & Retain LBP Liquidity

Motivation

Alchemist are the awesome team behind Copper Launch, which utilises Balancer Liquidity Bootstrapping Pools to function. In the last couple of months, their project has helped drive more than $70m in trade volume through Balancer pools, and Balancer has successfully retained liquidity for the GRO project after its LBP on Copper. GRO has consistently been in the top few highest volume Balancer pools on ETH mainnet since its 80/20 pool was deployed.

Separate to Copper Launch, the Alchemist team have developed Crucible: an innovative smart contract wallet, which enables users to subscribe to reward programs & store their tokens securely within an NFT container.

When an LBP is completed, a key objective for Balancer is to retain the token’s liquidity on an ongoing basis, so we become the primary liquidity for their token. Alchemist have proposed building out a feature which allows LBPs to convert into a standard Weighted Pool after launch, with rewards issued via their Crucible product.

In order to retain these pools after an LBP, we need a mechanism to be able to issue BAL rewards via Crucible, otherwise projects are liable to migrate to competitors who do offer rewards instead. In exchange for providing BAL rewards, Alchemist will offer Balancer as the only exchange to do a migration to after an LBP, within the Copper Launch UI.

Specification

The liquidity mining committee proposes that we run a 12 week trial, with Alchemist granted 2,500 BAL per week from Balancer’s Ecosystem Fund, to distribute via their own reward programs, exclusively for projects which run LBPs.

Alchemist will work with LBP projects to design appropriate reward programs, and each reward program BAL is used to incentivise will be matched by at least an equivalent $ value in the project’s token (taken as the average sales price during the LBP for the LBP project’s token, and a 7 day TWAP for BAL).

The liquidity mining committee will retain the power to veto:

• Rewards for any post-LBP projects it believes may be a direct competitor to Balancer, or established to undermine Balancer in any way.
• Rewards for any project it believes is not high enough quality to warrant BAL rewards.
• Rewards for any project where the amount of BAL is deemed to be excessive, given the amount of liquidity likely to be attracted to Balancer by the program.

30,000 BAL will be distributed from the ecosystem fund to a 3-of-5 multisig wallet, with solarcurve, bakamoto, andrea, mike b & xeonus (fulltime Ballers) as signers, which can then be allocated on to crucible reward programs each week.

The 2,500 BAL distributed each week does not need to be used immediately by Alchemist, and will accrue for distribution in future weeks if left unused. The program will continue for 12 weeks or until the full 30,000 BAL is distributed, whichever takes longest.

Dependencies

None.

Risk Assessment

The primary risk is that Alchemist mis-use the BAL. As a team committed to building for the long term, and as an important partner building on top of Balancer V2 which will want to secure rewards in the future, I see this risk as low. The 3 of 5 multisig wallet would be used as a mechanism to ensure any single rogue actor could not divert the funds intended for this program.