This proposal considers seeding an official SLING V3 AMM LP on QuickSwap.

Original forum post: https://discord.com/channels/1087517906709000342/1148318426155200604

Link to a PDF copy of the proposal on IPFS: https://pin.ski/44V7Kb4

CID: QmTUpxzrG9LtNqnoWLMJVHdsJJ3knGMTnDcqKYA91r3Ngc

---

Summary

Seed an official SLING V3 AMM LP on QuickSwap. DAO would allocate 100k total liquidity split equally between SLING and USDC.

Additionally, DAO would also allocate 9.000.000 SLING for rewarding liquidity providers over the first 3 months (3M SLING/month, protocol owned liquidity would be excluded from being eligible for farming these rewards).

Author

nexonik

Sponsorships

tabby7227 mikeemb

Proposal Type

Initiative proposal

Community Incentive & Rationale

There have been multiple questions in different chats asking where people can purchase SLING tokens. Given the DAOs successful raise of over 1m USDC during treasury diversification event, some of these tokens could be put to proactive use instead of sitting idly in the wallets.

DAO owned liquidity could provide the treasury with a possible revenue stream (trading fees), decreased SLING liquidity fragmentation over multiple DEXs, decreased SLING slippage for users trying to enter/exit the ecosystem and allow new members to acquire tokens required for governance participation.

Additionally, community members who own unlocked SLING tokens could pair them with USDC to increase the pool’s liquidity in exchange for SLING incentives over 3 months.

Update: It has been recommended to split the liquidity into 2 V3 pools (1 full range, 1 tight range - managed by gamma)

Risks

If passed

• AMM smart contract risk
• Regulatory challenges
• Overall crypto market volatility could negatively impact the pool's performance
• Short term speculators could more easily influence SLING token price
• Less friction for members who no longer want to participate / want to diversify their voting power
• New supply of SLING awarded to LPs could negatively affect the token’s price

If rejected

• It will take longer to kickstart the DAO’s protocol owned liquidity initiative
• New users/communities will be less likely to join if there is high friction for acquiring tokens
• Existing holders won’t have an efficient way to distribute their unlocked tokens
• There will be no additional incentives for individuals for liquidity

Key Terms

DEX

decentralized exchange

AMM (automated market maker)

mechanism for determining price of bought tokens that doesn't require an order book to function

LP (liquidity pool)

a pair of tokens that can be swapped on a DEX

Protocol owned liquidity

instead of relying solely on individual token holders to provide tokens to LP, DAO provides a portion of those tokens

Slippage

loss of value when trading large amounts of tokens

Liquidity fragmentation

having the same token pair on multiple DEXs increases slippage when trading with individual pools compared to trading with a larger, united pool (slippage and liquidity are normally inversely correlated)

Specifications

Actions

• Allocate $25k SLING and $25k USDC to a full range V3 pool on Quickswap
• Allocate $25k SLING and $25k USDC to a tight range V3 pool on Quickswap managed by Gamma
• Allocate 9M SLING (3M SLING/month for 3 months) for LP mining incentives (updated: only tight range pool will be eligible for incentives)
• Create the pools on aforementioned DEX and allow individuals to stake their LP tokens in exchange for LP mining rewards

Measurements of success & desirable outcomes

• Proposal is approved by community
• Successfully create the LP
• Start liquidity mining initiative
• KPI-1: Volume as % of total liquidity
• KPI-2: Fees as % of total liquidity
• KPI-3: # of wallets that got their 1st SLING through the LP
• KPI-4: # of wallets that contribute liquidity to the pool
• KPI-5: DAO LP size as a % of total LP liquidity
• KPI-6: LP volume as a % of total liquidity

Impact on Working Groups

• Moving funds from treasury multisig requires some coordination between multisig signers.
• Creating a new pool, liquidity incentives and migrating to a new pool model after trial period will require some time as well

Impact on economics

• $100k of the treasury will be allocated to an official LP
• 9M SLING will be allocated for mining rewards
• SLING/USDC liquidity would be substantially increased
• DAO treasury could generate revenue from trading fees

Further considerations

What would be the best way of managing V3 liquidity? Are there any passive rebalancing strategies or should it be done through a 3rd party market maker?