SIP-57: Introduce protocol owned liquidity

Author: Sperax Core Team Created: October 16, 2023 Labels: #Product-Features, #Liquidity-mining

Summary

Introduce protocol-owned liquidity via sales of SPA bonds using the bond protocol and treasury tokens.

Overview

With SIP-56 the protocol aims to reduce emissions significantly. This could lead to a reduction of incentives for liquidity providers of the SPA/USDs farm. With the current market conditions, it is important to have deeper liquidity for SPA token and not completely rely on non-sticky external liquidity providers.

Having protocol-owned liquidity will also allow the protocol to earn from the volatile crypto markets and reinvest the earnings back into the improvement of liquidity for the protocol. Also providing liquidity in a tighter range will allow the protocol to have greater liquidity depth.

Technical Specifications

SPA tokens will be auctioned using the sequential Dutch auction method, vesting over 7 days and with a maximum discount to the current price of 5%. Maximum USDs purchased in a month will be in the range of 1,000 USDs per month. In case the bond market fails, the discount can be further increased up to a maximum of 10%.

The USDs tokens will be paired with the required amount of SPA tokens from protocol Treasury to provide liquidity on Uniswap v3 within the tight range of 0.001 USDs/ SPA to 0.006 USDs/ SPA. All fee earnings would either go back to the protocol Treasury or be reinvested into providing liquidity.

Voting

For:

Implement protocol-owned liquidity

Against:

Do not implement protocol-owned liquidity