BIP-9: Implementation of Automated DAO-owned Uniswap V3 Strategy using Arrakis Vaults and PALM

Overview:

As a DAO, we want to increase liquidity for our protocol while maintaining control of the liquidity pool. Currently, there are a few Uni V3 pools, but they lack sufficient liquidity. In order to address this issue, we propose exploring the use of an automated DAO-owned Uniswap V3 strategy. The proposed strategy utilizes the Arrakis protocol, which provides automated strategies for V3 positions. These positions can be managed privately or publicly using Arrakis vaults. The proposed strategy uses the PALM managed strategy, which automates position adjustments to maximize liquidity.

Proposal:

We propose implementing an automated DAO-owned Uniswap V3 strategy using Arrakis vaults and the PALM strategy on Ethereum Mainnet and Arbitrum. The proposal will be done in tandem at the same time.

The PALM strategy allows the DAO to contribute a relatively small amount of USD into the pool and a large amount of LORDS. The PALM protocol then automates position adjustments to maximize liquidity. This will ensure that our positions stay in a tight, concentrated range, making our protocol more attractive to liquidity providers. This continues until a 50%/50% spread is reached, at which point a different strategy could be implemented.

Read more here:

https://mirror.xyz/0x916563f8476b988855af0b8b8A3D56072E1917FA/wC6L4XJdmuBCXNB1XHBGzCbzxIKvVTdiSoSgDqHWF6I

Implementation:

1. Arrakis vault is created of 15kUSD + LORDS equivalent in a 10% / 90% spread.
2. Managed by PALM to until a 50%/50% spread is achieved. Arrakis fees of:

• 1% management fee taken quarterly from the pool
• 50% of fees taken

Total Cost:

30,000 USDC ~1,800,000 LORDS - (From the LP fund - https://scroll.bibliothecadao.xyz/economics/lords)

Arbitrum Pool:

15,000 USDC (in ETH) ~900,000 LORDS (or equivalent at time of creation)

Mainnet Pool:

15,000 USDC (in ETH) ~900,000 LORDS (or equivalent at time of creation)

It is worth noting this is not sunk cost. This is LP owned by the DAO and can be withdrawn at anytime if need be. When Starknet has uniV3 another proposal will be created to deploy the capital there.

Visibility of the vaults including performance will be possible via Arrakis.

3 month renewal

After 3 months we will review the PALM strategy to see if we should continue or maintain our own Arrakis strategy which members of the DAO will explore in this 3 month period.

Timeline:

Week 1

• Implementation and alignment with Arrakis around PALM Week 2
• Deployment of Arrakis vaults on both networks at the same time