Treasury: Deploy 10,000 USDC on Timeswap

Introduction:

Post our collaborative strides with Trader Joe during the Arbitrum Adventure 2, the Lodestar team has actively engaged with various innovators within the Arbitrum ecosystem.

A recent dialogue with the Timeswap team has culminated in a consensus to explore a joint venture, thereby considering the establishment of a LODE-USDC market on Timeswap as a strategic move forward.

What is Timeswap?

Timeswap is a DeFi protocol that offers oracleless lending and borrowing, enabling users to create money markets for any ERC-20 tokens while offering non-liquidatable loans with fixed terms, oracless and a permissionless structure.

All transactions within Timeswap are fixed-term, offering certainty of interest rates once a position is opened. Additionally, users may exit their position earlier, at the price of a slippage.

The platform's interest rates are determined by the market through a generalized AMM, ensuring unbiased rates without reliance on historical data.

Each market on Timeswap is isolated, protecting participants from risks in other pools, and only overcollateralised loans are possible to maintain security for lenders.

In Timeswap's ecosystem, there are three core market participants: lenders, borrowers, and liquidity providers (LPs):

• Lenders supply capital to pools, enabling borrowers to take out loans, and in exchange, they receive fixed interest, with a portion of this (10%) going to LPs as transaction fees.

• Borrowers access these pools to take loans by locking in collateral and paying a fixed interest upfront; this collateral is returned upon repayment of the principal plus interest. Borrowers also contribute to LPs' fees, with 10% of the interest they pay being allocated as transaction fees.

• Liquidity Providers, on the other hand, provide liquidity to these pools, accepting single-sided exposure, and earn their income from transaction fees paid by both lenders and borrowers. This tripartite relationship sustains the Timeswap ecosystem, ensuring liquidity and facilitating fixed-term, overcollateralized loans without the need for liquidation processes.

Link to Timeswap docs: https://timeswap.gitbook.io/docs/introduction/introduction

The request

We are deliberating on a strategic alliance with Timeswap, which entails injecting 10,000 USDC from our DAO's Treasury (address: 0xed093F9720B2507C9B54FC117ecB2618910734dd) into the Timeswap LODE-USDC Liquidity Pool. This endeavor will not only accrue interest as a liquidity provider but will also strategically position us as the fallback purchaser in the event of a downturn in the LODE's market price.

Given our modest funding and the current low liquidity of our stablecoin, embarking on this venture is not without risk. However, the potential benefits include increased utility for our LODE token and the opportunity for our members to engage in new leveraged-farming strategies.

Should the LODE value decline below the Transition Price by the end of the maturity epoch, the Treasury would act as the ultimate buyer. We propose the authorization to execute a Sell order on Trader Joe’s Liquidity Book under such circumstances, which aims to recuperate any losses by liquidating the accumulated LODE tokens for USDC.

Proposal

• Initiate a LODE pool on Timeswap and engage in joint marketing endeavors with our new partners. Parameters such as transition price and maturity is under discussion with the Timeswap team and will be shared here to gather feedback from the community
• Allocate 10,000 USDC from the Treasury to seed the initial liquidity over the next 5 epochs and bootstrap the market
• Should the LODE price fall below the pool's Transition Price, at which point the treasury would become the buyer of LODE, the DAO is to be permitted to establish a Sell order on Trader Joe’s Liquidity Book to recoup its stablecoin losses