Seed GEAR/ETH Liquidity

Forum thread - https://gov.metafactory.ai/t/proposal-6-seed-gear-eth-liquidity/121

Summary

Run experiment on Sushiswap to see the affects of GEAR/ETH vs ROBOT/ETH on GEAR pool. Seed pools with $25k GEAR from treasury + $25k of ETH bought with DAI from Wells Fargo business loan ($50k of liquidity in total).

Description

Since we don’t really know what the effects of having GEAR liquidity will have on the market we’re going to reframe this as an experiment. First we will run this experiment with GEAR/ETH run it again with ROBOT/ETH and compare the results of distribution and volume.

Experiment Parameters:

• DAO will seed each liquidity pool with $50k for 1 month
• First experiment liquidity pool is remove immediately after time period ends
• 1 month wait between the two experiments to establish new control variables
• First pool is GEAR/ETH, second pool is ROBOT/ETH
• Both experiments will occur on Sushiswap

Primary Hypothesis

Providing liquidity on a tier 1 DEX will increase demand/distribution of ROBOT token

Comparison of token distribution of similarish new/small DAOs (feel free to propose others to look at):

|DAO | Liquidity | # of Holders | |-|-|-| |ROBOT| $3.2M| 651 | |GEAR| $0 |56| |NFTX |$11M |5,005| |YAM| $3M| 7,587| |HAUS| $563k |1469|

As you can see we have comparable liquidity but much lower distribution to other alt DAOs. This could very well be because of the high swap fees and higher slippage which we’ve intentionally placed but it could also be that we are the only token not listed on a a tier 1 DEX on their home chain (Honeyswap is the best on xDAI afaik).

Obviously we want to keep the vibe and all these new token holders might not be about the MetaFactory life. While this isn’t quantifiable for the experiment we probably want to factor in dopeness of new DAO members when evaluating results of this experiments.

By making wider distribution of GEAR the goal we are saying we want the DAO to sell off GEAR and accumulate ETH. We can use this to calculate the Customer Acquisition Cost which would be CAC = Impermanent Loss on GEAR + gas fees / # of new GEAR holders - 1 (exclude SLP). We could get fancy and incorporate the price increase of ROBOT and treasury balance over the course of experiment into CAC calculation to see if this is profitable move for the MetaFactory as well.

Goal: Increase total ROBOT holders by 50% over the course of the experiment

(GEAR holders are included in the total since they implicitly hold ROBOT)

Secondary Hypothesis

Listing GEAR/ETH on Sushiswap will generate more volume for the GEAR pool than listing ROBOT/ETH on Sushiswap

Since GEAR is mostly denominated in ROBOT there is an arbitrage opportunity between GEAR NAV and the price on Sushiswap. If the Primary Hypothesis is correct there should be higher prices for GEAR or ROBOT on Sushiswap that will need to get arbed providing swap fees to GEAR LPs. Current daily volume on GEAR is ~$75k 1 and we need $300k on the GEAR/ETH pool to get it listed on Onsen so we need a 300% more volume on the new GEAR/ETH pool than we have on GEAR today.

Goal: Average daily volume for last 7 days of experiment is 60% higher than 1 month before the experiment.