TIP 10: POL Reallocation

Simple Summary The proposal is to take advantage of the recent crypto market downturn, and our heavy weatherproofing of the TLX POL in mostly delta neutral positions, to build up TLX/WETH liquidity during this period for the POL.

Specification The POL should be rebalanced from the current 31/69 split between TLX/WETH and wstETH/WETH1S respectively, to a 75/25 split. This should be achieved by redeeming $468k of wstETH/WETH1S, swapping half for TLX and half for WETH, and depositing it into the Velodrome pool. This should be done incrementally with a DCA. This should be done some time within the next 3 months.

Rationale The TLX POL exists to support the growth of the TLX Finance Protocol. Currently this is distributed with 20% allocated to the TLX/WETH Velodrome pool ($181k), and 80% to the delta neutral strategy of the wstETH/WETH1S Velodrome pool ($718k). The large allocation to the wstETH/WETH1S Velodrome pool was an effort to weatherproof the POL allocation, making it more resilient in times of market downturn and providing working capital to react accordingly.

This weatherproofing as put the POL in good position to be able to capitalise of the recent market movements and use it as an opportunity to grow the liquidity of TLX. With staking rewards sitting at 144% currently, and TLX dropping in price with is paring with WETH and the recent crypto market downturn. It offers a great opportunity for the POL to build up TLX/WETH liquidity at a cheaper rate than is has been able to previously.

If the price of TLX increases, a proposal could be raised to reallocate POL back to a delta-neutral favoured allocation.

It's important to note that this proposal is for a change to the existing holdings of the POL. And new funds coming in will still be distributed in the current ration of 65/35 for TLX/WETH and wstETH/ETH1S respectively.

Test Cases

• The DCA script should be mainnet fork tested before being implemented.
• The script should be tested with a small amount prior to the full allocation to ensure working correctly.
• After the reallocation is complete, a sanity check should be done to make sure the currently allocation is in line with expectations.