Remove Idle Smart Treasury and deploy 200k IDLE into Bancor and Uni v3

Authors

Treasury League - @Davide @raghav1997

Abstract

This proposal will redeem liquidity from Idle Smart Treasury (210k IDLE and 14 WETH) to deploy 187k IDLE into IDLE/BNT pool on Bancor and 23k IDLE + 14 WETH into Uni v3 full-range pool.

Idle DAO will benefit from Bancor single-sided liquidity deployment and impermanent loss protection, while reducing slippage on DEX.
Furthermore, the DAO will increase the robustness of Uni v3 oracle, allowing more users to safely interact with $IDLE lending platforms.

Motivation

Bancor deployed the first-ever automated market makers (AMMs) on Ethereum in 2017, and currently manages $1.3b in total liquidity. Bancor Protocol was audited multiple times, and its DAO launched a $100k bug bounty program via Immunefi.

Although Bancor suffered a $23.5m loss in 2018 and self-exploited a critical vulnerability in 2020, the TVL is $1b+ since one year, with no security concerns.

The IDLE/BNT pool currently has $100k in liquidity, half in IDLE and half in BNT. Bancor DAO is voting on increasing the depth of the pool to 250K BNT (snapshot will end on January 5th, and it will be valid if the poll will reach 35% quorum and 66.7% supermajority).

At a conservative rate (3$/BNT), this single-sided liquidity deployment will be worth $750k.
This liquidity provision will empower the pool to receive the same size of IDLE liquidity, able to reach a total of $1.5m.

This proposal aims to deploy 187k IDLE from the current Smart treasury (Balancer pool) to the IDLE/BNT pool and earn a yield from that deposit.
At the time of writing, this token deployment could result in ~$900k pool liquidity.
$IDLE token holders will be able to further deploy single-sided liquidity up to ~$600k.

Bancor features

Bancor lets users provide liquidity on one side and offers 1% impermanent loss protection every day the liquidity stays in the pool. After 100 days of liquidity provision, 100% of the liquidity will be protected. If there aren’t sufficient tokens in the pool to fully pay-out impermanent loss compensations in the staked token, part of the insurance may be paid out in an equivalent value of BNT.

A larger IDLE/BNT pool will result in having approximately 2x the liquidity currently held in Sushi IDLE/WETH pool, without the burden of incentivizing liquidity provision (Idle DAO already distributed 180k IDLE during a 6-month program) or owning the other asset of the pair.

With ~$900k TVL, the potential slippage will be as follows:

Amount Bancor Slippage vs Sushi vs Paraswap
$10,000 2.3% 3.9% 3.4%
$50,000 10.2% 16% 11%
$100,000 18.6% 27.5% 19.7%

The slippage reduction will be extended to Paraswap too, as the DEX aggregator will simultaneously route the funds across multiple AMMs.

This liquidity deployment can represent the first step of a liquidity expansion strategy, with Bancor DAO providing more BNT.
Bancor community already discussed and approved liquidity extensions up to 2m BNT, more than $6m on a single side.

Once the pool is migrated to Bancor V3, there will be no cap on liquidity deployment from Bancor’s side (infinity pool). No proposals will be needed to increase the liquidity.
Furthermore, Bancor V3 will also enable auto compounding rewards and instant impermanent loss protection. The team will offer 1-click migration from V2.1 to V3, allowing a smooth pool update.

The 10% fee stream routed into the Smart treasury will be addressed to FeeTreasury, increasing its share to 20% of total performance revenues.

Uni V3 Full-range liquidity deployment

14 WETH and equivalent IDLE value (~23k IDLE at the time of writing) now sitting into the Balancer pool will be deployed in UNI v3, covering the full price range.

Idle DAO already funded UNI v3 pool with $120k in October, unlocking the Fuse listing.
That oracle is currently used by Euler too, lending primitive with isolated markets.
More liquidity into the Uni v3 will strengthen the oracle resiliency against manipulation attacks.

Next steps

We are going to leave this thread open for discussions and in about 3 days, if there are no objections, we will proceed with the Temperature Check. In case of approval, an on-chain proposal will follow.

10 Likes

Hello :wave: Idle Finance Community,

I wanted to link the sister proposal in the Bancor DAO for the trading liquidity increase on the $IDLE-$BNT pool:

this proposal went live on Snapshot in the Bancor DAO this week and already passed:

https://snapshot.org/#/bancornetwork.eth/proposal/0x263df361ef968440553d0352767e303adc948f389218d5c3acb7dff5d1c65dda

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Our requirements are 35% quorum and 66.7% supermajority.

This has now opened up roughly ~370K of single-sided IL protected capacity on Bancor for $IDLE :muscle::

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I also want to mention that we have had other projects also stake a portion of their treasuries in the Bancor protocol. This includes the following:

  1. UMA, roughly ~$570K (~40K UMA tokens) for initial deposit (etherscan)
  2. Harvest.finance, roughly ~$500K for initial deposit (etherscan) but now up to ~$2.87m after subsequent $FARM deposits (~17103 $FARM tokens total).
  3. Barnbridge, roughly ~$1.4m for initial deposit (etherscan) but now up to ~$1.7m after subsequent $BOND deposits (~110K $BOND tokens total)
  4. Paraswap, roughly $284K for initial deposit (etherscan) but now up to ~$450K after subsequent $PSP deposits (~1.5m $PSP tokens total)

We are also working with the KeeperDAO community who recently approved staking 6400K $ROOK from their treasury on Bancor.

Happy to answer any questions from the community. Thanks!

9 Likes

Thanks @glenn for the update, we are glad to see that Bancor DAO approved the Snapshot and deployed BNT liquidity!

It’s now the turn on the Idle side, Temperature Check phase! :classical_building:

:arrow_right: Poll for $IDLE holders: HERE
:arrow_right: Poll for $IDLE Stakers (stkIDLE holders): HERE

:alarm_clock: Polls will close on 2022-01-13T18:00:00Z.

The final $IDLE voting weights will be calculated using the approved calculator.

Cast your vote :writing_hand:

6 Likes

Adding KeeperDAO

  1. KeeperDAO, roughly $790K (~6400K $ROOK tokens) for initial deposit (etherscan)

Also, thanks for getting the temp check proposals out!

7 Likes

The snapshot is over!

With all the votes in favor, the proposal will be included in the next IIP :tada:

6 Likes