FIP-36 LaaS in partnership with Ondo Light Framework

• Forum Thread

Summary

Launch a Liquidity-as-a-Service in partnership with Ondo Finance.

Current liquidity mining schedules are not sustainable. Projects and investors alike are becoming increasingly aware of the harm liquidity mining does to the long-term growth of a project, and are looking for solutions. Fei Protocol is in a unique position to solve this problem, while simultaneously expanding its reach and providing additional value to current Fei ecosystem participants.

Motivation + Context

LaaS proposes to use Ondo’s unique liquidity vaults for this offering. These vaults are structured financial products that allow different parties to take on different risks when they contribute liquidity to a common AMM pair.

Community approved projects can deposit their project token into an Ondo liquidity vault with a flexible duration, and Fei Protocol will match their deposit with an equivalent amount of FEI. The tokens are deployed as liquidity onto DEXs, such as Uniswap or SushiSwap.

This arrangement provides immediate liquidity, and essentially doubles the liquidity (for example: 5M supplied by ABC DAO + 5M FEI). Double the liquidity creates a healthier market with less slippage for users interested in buying the token. For the pilot group, the duration will be 6 months, done in 6 vaults, each of 35d duration, each opening one month apart. So there’s some overlap in liquidity at all times, and it is never remove it completely, effectively resetting every month. After the subscription window, the Ondo vault returns all remaining FEI to Fei Protocol at the end of each term, plus a small fixed fee, and returns all remaining project tokens back to the project. If there is a subsequent term, the adjusted positions are placed in the new vaults. The project keeps trading fees and assumes any impermanent loss. LaaS can be a source of revenue for DAOs, rather than a sunk cost. Even with negative price action, LaaS can still cost less than traditional liquidity mining incentives. This worksheet models scenarios to determine the sensitivity based on various assumptions and market conditions.

TRIBE Incentives

To attract a stellar launch group, this proposal proposes to add TRIBE incentives for the first three months of the subscription period at 10AP per 1M in liquidity provided by the partnering protocol. This will strengthen the relationships with other projects and support our mission to support DAOs, as they will also generate a position in TRIBE.

Framework

Similar to FIP-13a Framework for FEI lending deployments

• High Maturity (>1bn FDV, token live > 1yr) - Up to 25m - e.g., Aave, Compound, Sushi
• Medium Maturity (> 250m FDV, token live > 1 month) - Up to 10m - e.g., Rari Capital, FutureSwap
• Low Maturity (FDV > 50m) - Up to 5m - e.g, PoolTogether, Notional

This framework is a bit subjective, but it will provide guardrails that allow LaaS to develop and iterate faster. .

If approved by the community, future deployments can be made based on this framework without explicitly snapshotting each integration.

A follow-up proposal will follow a more detailed framework as soon as we have more data points at our disposal to tighten the offering.

Proposed Changes

• Provide up 50M FEI for LaaS
• Add TRIBE incentives at 10AP per 1m in liquidity provided

Voting Rules Voting will last 2 days and have a quorum of 10M TRIBE.

Please remember that snapshot votes can be changed, but not withdrawn until the end of the voting period.

The two options for voting:

• Approve the LaaS Framework
• Don’t approve the LaaS Framework