TIP-157: POL position on Optimism using PALM

id	Title	Status	Author	Description	Discussions to	Created
TIP-157	POL position on Optimism using PALM	Draft	Svenska (@svenskafr)	Build a POL position on Optimism using Arrakis PALM solution	discord	2023-07-30

Simple Summary

This TIP proposes to create a Protocol Owned Liquidity (POL) position on Optimism.

Abstract

Currently, THALES has a POL position on Arbitrum but has none on Optimism. Given the success of the ~3 months old Arbitrum POL position, a dedicated POL position on Optimism can be of interest.

This new tool will complement the current program distributing incentives to liquidity providers via Arrakis & Velodrome.

Motivation

In addition to current LP incentive program with Arrakis & Velodrome, a POL position on Optimism can be built to increase THALES liquidity, without spending additional incentives and securing an independent liquidity position for Thales treasury.

Arrakis, current Uni-V3 managing infrastructure protocol used by Thales on Optimism, launched their Protocol Automated Liquidity Management (PALM) product few months ago to help protocols build their POL position (more info).

So far, the Arbitrum POL position facilited ~96% trades of THALES on Arbitrum, helped with price impact while generating ~$5k fees.

Thales treasury can use PALM by depositing 90% gov token (THALES) and 10% base assets (WETH), then with the market making strategy of PALM liquidity is provided while moving towards a asset composition of 50/50 once this is achieved.

Useful information regarding PALM :

• Fees: Arrakis takes a yearly management fee of 1% on the TVL (0.25% every quarter) and half of the trading fees that the pool generates and the protocol using PALM makes the other half.
• PALM presentation: https://mirror.xyz/0x916563f8476b988855af0b8b8A3D56072E1917FA/wC6L4XJdmuBCXNB1XHBGzCbzxIKvVTdiSoSgDqHWF6I

Specification

This TIP entails the Thales Treasury DAO and Thales Protocol DAO to facilitate the creation of the PALM vault on Optimism with the Arrakis team and fill that vault with 22 ETH and 675,000 THALES tokens.

PALM autonomously manages liquidity through the vault to support both buy and sell volume and Thales keeps ownership of this liquidity pool.

Test Cases

N/A

Implementation

TBD

Copyright

Copyright and related rights waived via CC0.