Use Treasury to Mint & Deposit alETH

Simple Summary

Use a portion of the treasury ETH to mint alETH on Alchemix to provide liquidity in the alETH call pool.

Background

Premia recently announced adding ALCX/DAI and alETH/alUSD options markets. Alongside this announcement Premia passed a governance proposal to include these new markets in the increased liquidity mining incentives.

Alchemix also passed AIP-33, a governance proposal to deposit 3,000 ALCX into the ALCX/DAI market to increase liquidity.

Specification and Implementation

Premia owns approximately 12,172 ETH in the treasury as of 1/22/2022. (yes, you read that right. it’s a massive treasury 🤯) The purpose of this proposal would be to use 400* ETH (~$1,000,000) of the treasury to mint 200 alETH and deposit into the alETH call pool. This would roughly match the Alchemix proposal of 3,000 ALCX which was ~$1,000,000 at the time AIP-33 was written.

In addition, Alchemix stated, “While not part of this [AIP-33] proposal, if the community wants to expand the size of these markets at a later date, we can consider offering ALCX incentives to LPs for our aleth and alcx markets, or LPing with alETH to help boost liquidity for the aleth options.”

This could set the stage for Premia to participate in new incentivized markets which could greatly increase and diversify the treasury with each new options market.

*The amount and duration of the deposit would ultimately be determined by the Premia team. (because they are giga🧠 and have gotten us this far)

Motivation

This proposal has the benefits of:

1. Setting the standard for the level of commitment and good faith effort Premia has when integrating new options markets.
2. Incentivizing utilization and better options pricing for the new markets.
3. Adding PREMIA liquidity mining rewards to our own treasury.
4. Potentially, earning ALCX incentivization rewards further diversifying our treasury.
5. Indirectly investing a portion of our treasury as the collateral repays its own loan. This keeps the team from spending time running their own node.