[MIP-20] The Hermes Maiagration

I. Introduction

We are proposing a strategic realignment of our liquidity pool from Hermes/Metis to Hermes/ETH. This is a community-led initiative in anticipation of our upcoming transition to Arbitrum, a Layer 2 solution that utilizes ETH for gas, and is aimed at mitigating exposure associated with having our entire liquidity paired with Metis.

This proposal outlines the rationale, benefits, and implementation plan for this migration.

II. Background & Rationale

Our decision to transition from Hermes/Metis to Hermes/ETH is underpinned by several key factors:

Gas Efficiency : Our transition to having liquidity rooted in Arbitrum in V2, which uses ETH as gas, will significantly decrease transaction-related gas fees, making it more cost-effective for our users. This is particularly beneficial for smaller transactions, which can otherwise become prohibitively expensive due to high gas costs.

Reduced Dependence : At present, our entire liquidity is paired with Metis, which exposes us to the risks inherent to Metis. By diversifying our liquidity pool and pairing with ETH, we can mitigate this risk and enhance the stability of our platform.

Immediate Implementation Feasibility : There is no compelling reason to delay the migration of liquidity until V2. The transition to Arbitrum and the pairing with ETH can be implemented promptly, allowing us to reap the benefits of this strategic shift sooner.

III. Details

We propose to begin the migration process from Hermes/Metis to Hermes/ETH before the launch of V2. This strategic move aligns with our commitment to cost-efficiency, risk mitigation, and community-driven decision-making. We believe that this transition will significantly enhance the performance and stability of our platform, benefiting our users and the broader Hermes community.

IV. Implementation Plan

The implementation of this migration will follow a clear and efficient roadmap:

Initiation : Upon approval of this proposal, Maia DAO veHERMES votes for emissions to the Hermes/Metis gauge will be redirected to the Hermes/ETH gauge. Post-migration, there will be no votes from Maia DAO's veHERMES for the Hermes/Metis gauge. Announcements will be made to ensure liquidity providers are aware of the timing.

Figure 1: Current veHERMES votes by Maia DAO as of 7/24/2023

Execution : At the next epoch after approval, 1/3 of Maia DAO's veHERMES votes currently going towards the Hermes/Metis gauge will be redirected towards the Hermes/ETH. The following 2 weeks an equal number of votes will be moved to Hermes/ETH. After 3 weeks, the migration will be complete.

Figure 2: Visualization for migration by week per vote per gauge

Monitoring and Adjustment : Following the migration, the team will continuously monitor Hermes liquidity. If needed, further adjustments can be made through community vote.

V. Conditions & Support

While the migration may seem like a formality, it is a significant decision that should be made with the consensus of our community. Therefore, we propose to initiate a voting process for this migration. This process will ensure that our decision is made democratically and with the best interests of our community in mind.

VI. Next Steps

With the completion of RFC stage, the snapshot vote has been initiated for community members to express their stance on the proposal. This voting period will span 3 days (72 hours), and community members will be presented with two voting options.

Option 1: Affirmative Vote (“Yay”) - Indicates acceptance of the proposal in its current form.

Option 2: Negative Vote (“Nay”) - Signals the need for further discussion and refinement of the proposal.

The decision will hinge upon the majority consensus. If an affirmative majority (“Yay”) prevails, we will proceed with the implementation of the proposal as described in the outlined Implementation Plan. Conversely, if a negative majority (“Nay”) emerges, we will re-engage in community discussions, assimilate additional feedback, and strategize for improvements, with the aim of presenting a more refined proposal that aligns with the community’s perspectives and the ecosystem’s needs. This iterative process ensures that each significant decision we make is thoroughly deliberated and scrutinized, offering ample opportunities for community-driven revision and enhancement.

VII. Conclusion

In conclusion, this proposal presents a strategic realignment of our liquidity pool from Hermes/Metis to Hermes/ETH. This initiative is not about choosing sides between Arbitrum or Metis, but rather about making a decision that we believe will serve the greater good of our platform, its users and for DeFi as a whole. By diversifying our liquidity pool, we aim to enhance the stability and resilience of our platform, while also preparing for future developments in the Maia DAO ecosystem. We are confident that this transition, carried out with careful planning and consideration, will contribute to the continued growth and success of our platform. We appreciate your support and look forward to working together for the benefit of the entire Hermes and Metis community.