Deploy WETH/wstETH LP liquidity on Jellyverse on Sei

Overview

This proposal outlines a recommendation for the DAO to allocate $2m WETH of Protocol Owned Liquidity (POL) into the wstETH-ETH LP on Jellyverse on Sei. The intention of this proposal is to further grow the DAOs Protocol Locked Liquidity (PLL), as WETH on Sei is deployed via Hydra, whilst also enabling the DAO to earn yield in a reasonable and sustainable way.

If the wstETH/WETH LP is deployed on Sei, the capital is locked within Stargate’s pools and minted on Sei. Doing so enables the DAO to earn yield on that locked liquidity and also generate yield to grow the Stargate DAO’s treasury whilst supporting a partner that has subscribed to adopting Hydra.

Jellyverse is a comprehensive DeFi ecosystem and an exclusive partner of Balancer, serving as the official friendly fork built on the Sei Network. It features a decentralized exchange (JellySwap), a staking protocol (JellyStake), and a synthetics protocol (jAssets)—all designed to provide a seamless and efficient DeFi experience.

Proposal

The DAO has expressed the strategic value and importance attached to growing the protocols PLL through its adoption of HEP-1. Through the growth of HydraChains the protocol is able to grow PLL. In turn, this means the DAO emits less $STG incentives.

This proposal intends to grow Stargate’s PLL whilst also allowing the DAO to earn yield on its existing holdings. To do so it is proposed that the DAO deposits $2m WETH into the wstETH-WETH pool on Sei.

Execution

The DAO will bridge $2m WETH over to Sei, locking 100% of that collateral into Stargate’s pools. Once done, the depositing liquidity into the wstETH-WETH pool will be executed as mentioned below.

The Stargate DAO will aim to swap 50% ($1m) of the WETH minted into wstETH on Sei by breaking it into two tranches. The first tranche will be made, swapping $500k of WETH into wstETH in the wstETH-WETH pool (est ~2 weeks from wstETH-WETH pool launch). Once the first tranche has been swapped, $1m of 1:1 wstETH and WETH will be deposited into the LP. The second tranche will be executed 2 weeks after the first tranche, performing the same transaction of swapping the second $500k of WETH into wstETH before depositing the second $1m of 1:1 wstETH and WETH into the LP.

The Stargate Foundation will ensure any necessary audits have been completed.

Allocation Breakdown

The table below breaks down the recommended allocation, denomination of the deposit and where it should be directed:

|Pool|Action|Capital Allocation| | --- | --- | --- | |wstETH-WETH on Jellyverse|Liquidity provision|$2m|

The recommended allocation should come from the following DAO wallets:

|Asset and Amount|Assets deployed currently|Wallet address| | --- | --- | --- | |2m ETH|Stargate V2 pools|0x65bb797c2B9830d891D87288F029ed8dACc19705|

This breakdown ensures an efficient use of POL and DAO assets which are currently idle.

Conclusion

This proposal indicates that the DAO should use some of its currently idle assets to

a) Create PLL through depositing to a strategic HydraChain

b) Generating yield on those assets in the form of swap fees and other rewards