Great insights here @8bitporkchop @Cippo
It seems like we all generally agree on the structure’ fundamentals of the smart pool, but I’d like to do a quick recap to summarize where we’re now and add some color.
- Assets/Weights Composition. Looking at the related Snapshot and the sentiment here, @8bitporkchop’ 90/10 IDLE/ETH proposal is the way to go. I agree with the rationale, as it would dampen IL. As reported in this article, this is IL at different pool’s weights:
However, this wouldn’t optimize in terms of slippage, and in our scenario, it’d be ~3% at $200k pool’s net worth for a $1k trade. I would think this can disincentivize price discovery there, but depends on the purpose we want to give to the SmartTreasury (more buyback machine, or more liquidity provider).
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Pool Inception. Seems like the discussion is here; @Cippo is suggesting that we should convert 90% of the Treasury funds (when it reaches a min threshold, say $5-10k? Treasury is growing ~$100/day now, and will be more with growth) into $IDLE with a market-buy. But if Balancer does that automatically, as @8bitporkchop reported, we might then go straight with sending fees to the SmartTreasury in ETH once it reaches the threshold (with a gas price check). @8bitporkchop I saw in Balancer Discord your convo about the function
joinSwapExternAmountIn()(kudos for it) and for forwarding fees into an existing pool that function seems to be a nice solution, great!
Still TBD:
- Trading Fees. @8bitporkchop suggested to start with 2%, I’d say it’s fine but we should be flexible on adjusting it as it depends on the nature we want to give to the pool. And the incentives we want to put in place for arbitrageurs to trade against us. Does anyone have more inputs about it?
- Parameters Controller. With Smart Pools we can have fixed or flexible parameters, and get setup at inception (and then managed by a Controller). Parameters are, as discussed, token composition, swap fees, and weights. Would like to hear your opinion on how we can handle it. I generally think we should find a flexible solution here.
Next step would be to formalize this proposal with all steps/scope (both with pool’s setup and connection to treasury). We would like to suggest a grant framework for it next week (starting with something light for first proposals, but iterate on it to adapt with community needs – this is a good read for this topic).
Qs for you:
- What is the main purpose you guys want to give to this SmartTreasury? You would see it more as automatic buyback machine (fees buy $IDLE to rebalance weights), token issuance machine (source $IDLE that the protocol needs for incentives simply by withdrawing them from the Smart Treasury), or liquidity provider (guarantee liquidity to allow to trade against the protocol)?
- In the first post for this thread, community grants were funded by the SmartTreasury. I think we would need to define some priorities on that, eg (but not limited to) improve protocol layer (new supported assets/downstream protocols), incentivize collaborations (partners programs), improve material (documentation, guides, tutorials), or do promo/marketing? Feel free to add whatever you can imagine that actually adds value, but I would love to hear your opinion about it!
EDITs: fixing broken images + typos