OIP # 5 - Rebalancing Aerodrome Liquidity

Summary

This proposal authorizes the Odos team to actively manage and rebalance $ODOS liquidity on Aerodrome to optimize token liquidity, fee generation and protocol revenue. The goal is to reduce idle capital, restore on-chain liquidity depth, and support sustainable DAO revenue without causing undue market impact. This proposal result will be evergreen, allowing for continuous, incremental rebalancing in alignment with market conditions. However, any significant deviations from this plan (e.g. larger reallocations of greater than 10% of the liquidity pool at once or strategy shifts involving increasing the pace / reducing the pace of rebalancing) will still require separate DAO approval.

Motivation

The Odos DAO currently has ~$100K of protocol-owned liquidity deployed on Aerodrome. At present, the position is entirely out of range, meaning it is not earning any trading fees or yield. With an APR of 4,717%, the DAO stands to lose approximately ~$10,000 per month by not actively managing this position. A simple, dynamic model highlighting calculation this can be shown here.

Additionally, because the liquidity is out of bounds, on-chain liquidity for $ODOS is significantly reduced, which negatively impacts user trading experience and protocol perception.

Without rebalancing:

• The DAO forfeits a meaningful source of revenue
• Capital efficiency is significantly reduced
• On-chain liquidity becomes artificially shallow, increasing slippage for traders
• $ODOS token holders indirectly bear the opportunity cost of idle treasury assets

Rebalancing Strategy

• Timing: Will target daily, but may skip certain days based on volatility, to reduce price impact
• Sizing: Rebalance incrementally, up to $1–2K USD per day (but often less based on market dynamic)
• Mechanism: Adjust the liquidity range to ensure active fee capture
• Execution: All rebalancing will be done transparently via onchain transactions, with weekly summary reporting provided by the DAO made available in a Dune dashboard

This approach ensures:

• Minimal sell pressure on $ODOS
• Sustained on-range liquidity for efficient trading
• Ongoing passive revenue through fees and yield

Revenue & Liquidity Impact

Based on our modeling, APR conditions will likely drop after the liquidity is fully migrated. However, the DAO can still expect to recover $5K–$10K per month in otherwise lost revenue. This income can be used to:

• Support marketing and growth
• Reinvest in additional liquidity or buybacks
• Sponsor trading competitions / partnership incentives
• and more

In addition, rebalancing will restore meaningful on-chain liquidity depth for $ODOS, helping maintain tight spreads and low slippage for traders.

Benefits

• Recaptures passive revenue for the DAO
• Improves capital efficiency of treasury assets
• Restores active, on-chain liquidity for $ODOS, improving execution quality for users
• Minimizes negative price impact from rebalancing
• Enables more marketing / growth efforts

Next Steps

• Upon passing this proposal, the team will begin daily monitoring and rebalancing of the Aerodrome position
• New reporting dashboards will be shared in the Dune treasury dashboard