I hope you’re all doing well. I wanted to initiate a focused conversation regarding the important topic of improving liquidity in our community. It’s critical to ensure that our token pool is accessible and vibrant for both existing and potential participants.
In the previous thread, several valuable ideas were mentioned, including incentivizing liquidity provision with LP tokens and exploring the possibility of the DAO treasury buying back tokens from the open market. These suggestions are a great starting point for our discussion.
To move forward, let’s brainstorm additional strategies that could help us enhance liquidity. Here are a few ideas to consider:
Collaborating with other DAOs or projects: We could explore partnerships or collaborations with other decentralized autonomous organizations (DAOs) or projects that have strong liquidity pools. This could potentially create shared benefits and strengthen liquidity provision for both parties involved.
Educating and supporting potential liquidity providers: By providing clear guidance, educational resources, and support, we can empower community members who are interested in becoming liquidity providers but may be unsure about the process. This can help remove barriers and encourage more participation.
Hosting liquidity-focused events and workshops: Organizing virtual events, workshops, or AMA sessions dedicated to discussing liquidity provision can create awareness and educate our community on the benefits and risks associated with participating in token pools. This can also serve as a platform for sharing best practices and addressing any concerns or questions related to providing liquidity.
Exploring innovative liquidity mechanisms: Let’s think outside the box and explore novel liquidity mechanisms that could attract more participants. For example, we could consider implementing yield farming strategies or liquidity mining programs that reward participants for providing liquidity to the token pool.
I invite all stewards and community members to share their thoughts, suggestions, and any other strategies they believe could be effective in enhancing liquidity in our community. Your insights and diverse perspectives are invaluable as we work towards a stronger and more accessible token pool.
Further links in the ENS foundation docs page lead to more articles:
The last article states:
The British Virgin Islands are second cheapest and second easiest. At the time of this writing, they do not have a VASP regime in place, but they have announced they will have a VASP regime at some point in the near future. From the lawyers I’ve spoken with, the rumors are that it will be relatively stringent. But creating a DAO in a jurisdiction that is just about to create new regulations can create risk that is ideally avoidable.
Based on my initial research, the Caymans appear to be the best option. They do have a VASP regime, but it’s relatively light touch. There are some reporting requirements, and registration with the Cayman Islands Monetary Authority is required if you issue a token, but it’s generally quite friendly. The Cayman also relies on established British common law, so if you do face legal trouble, you’ll have some sense of what to expect.
The question is legality and if/how they’ve gotten around that. Legally, the foundation cannot provide liquidity directly as in the eyes of the average person, it comes across as selling the token - which we’re not allowed to do under the Cayman VASP legislation.
I think the most straightforward win here is supporting and maybe incentivising liquidity provision. Everything else is super interest and things we should do, but feels like bigger, complex lifts to achieve in time, money and effort.
The GitCoin approach sounded very interesting but I haven’t read this properly yet - I will try to today. I’m also happy to provide some liquidity myself, I just don’t know what I’m doing.
@pfedprog I have a call with the Foundation Supervisor this coming week (the person who keeps us inside the law), and I’ll ask their advice. They perform the same role for other Cayman-based DAOs so hopefully, they’ll have some idea.
I’m also due a catch-up with Scott at Gitcoin, so prioritise that; ask about the proposal you’ve shared and anything they have historically done to support liquidity.
I put out a Tweet asking for an idiot guide on providing liquidity on Uniswap here. I’m starting at zero re how to provide liquidity so any advice/resources on this would be super appreciated.
I can’t remember if we had the conversation with the foundation supervisor in the end and the catch-up with Scott did not happen. We’re in touch with the Gitcoin team now though to complete on P-4: Partnership & Mutual Grant with Gitcoin so I will ask them on our next call in Jan and report back.
I’ve removed myself from the Labs team from the start of next quarter specifically to free up to invest in these kind of questions I’m currently a blocker to the community on.
Good bump. I didn’t have the time to ask in that meeting, however I did bring this up with another contact who is a director of another well established Cayman Foundation for a DAO we know well.
Their professional MMs cost money to engage (monthly fee). We didn’t discuss specific costs however if we’re interested in exploring this further they’re happy to make introductions to good actors they’ve worked with. There are a lot of not so good actors who are very focused on number go up in the short-term.
This paid MM happens on CEXs, no MM on DEXs. This happens naturally as people arb the value here vs the value on CEXs.
Liquidity providers on DEXs are rewarded in their native token.
Their DEX pools are Uniswap V2 rather than V3 like ours. V2 is a simple mechanism where you provide liquidity in the entire range, whereas for V3, you need to actively manage the ranges liquidity is provided in which is generally done by sophisticated actors (professional MMs) as it requires expertise to do so effectively.