[Temperature Check] Uni v3 - Liquidity Concentration and 50k IDLE Deployment

Summary

This proposal will concentrate part of the current Uniswap v3 deployment (28k IDLE and 11 ETH) into a 土 4x price range, and deploy an additional 50k IDLE out of range to improve the oracle’s resiliency.

If the proposal passes the Temperature Check, it will be followed by an on-chain vote.

Motivation

Uniswap v3 allows LPs to provide liquidity in a particular range, increasing capital efficiency and reducing slippage.

Currently, we have 22 WETH and 56k IDLE in UNI v3 full range. The goal of this treasury operation is to deploy half of this liquidity (11 WETH and 28k IDLE) into Uniswap v3 with a range of 4x above and 4x below the price of IDLE, which would help the IDLE/ETH Uniswap V3 pool to have 2x concentrated liquidity and a ~50% reduction in slippage in that specific range.

At the time of writing, the liquidity deployment in a 土4x range would entail the following prices: $0.28 < $IDLE price = $1.10 < $4.40.

Table 1.1 - ROI and fees with different price ranges (last 30 days)

Strategy	ROI	APR	APY
Full price range (unbounded)	0.30%	4.10%	4.20%
土4x $IDLE price range	0.90%	11.8%	12.5%
土2x $IDLE price range	1.50%	20.0%	22.1%

The liquidity deployment 土4x the price range requires minimum efforts and less impermanent loss, as the deployment would cover a wide range.

Table 1.2 - Current Slippage on Uniswap v3

Pool size	Slippage
$10k	10.5%
$50k	36.9%
$100k	53.8%
This deployment will allow reducing the current slippage also on DEX aggregators as well while increasing the resilience of IDLE’s UNI v3 oracle.

Table 1.3 - Hypothetical Slippage on Uniswap v3 after liquidity concentration

Pool size	Slippage
$10k	7.8%
$50k	27.6%
$100k	40.3%

This snapshot includes also another 50k IDLE out-of-range deployment, 5x-10x above the current price (between $5 and $10). The position will be manually rebalanced, in case the token price reaches the $5 boundary.

This deployment would accommodate high-size swaps with lower slippage while strengthening the resiliency of the Uni v3 oracle against manipulation attacks. Given that the target range is far from the current price, this action represents a single-sided IDLE deployment with no impermanent loss.

More info about this proposal is available here.

Specification

Actions:

• Treasury League multisig will concentrate 28k IDLE and 11 ETH into 土 4x price range (no on-chain actions).
• Route 50k IDLE from Ecosystem Fund to Treasury League multisig, which will deploy funds into 5x-10x price position in Uniswap v3.

Voting Options

Please cast your vote on one of the following options: FOR: Approve Liquidity Concentration and 50k IDLE Deployment in Uni v3 AGAINST: Vote against Liquidity Concentration and 50k IDLE Deployment in Uni v3 DISCUSS MORE: Discuss more the proposal

This poll is available for both $IDLE token holders and stkIDLE holders. The final $IDLE voting weights will be calculated using the approved calculator.