Idea: For Uniswap v3 Liquidity Mining, create a DPI/ETH pool that utilizes G-UNI

Hello everyone! My name is Dave Liebowitz and I lead growth at Gelato. I have been talking to members of the Index Coop team and wanted to get some feedback from the wider community. What I am proposing is implementing a liquidity mining program that utilizes a G-UNI pool of the DPI/ETH pair.

For those who are not familiar, G-UNI is an easy-to-use, unopinionated framework for Uniswap v3. The contracts have been audited and projects such as Instadapp and Float are already utilizing G-UNI for their own liquidity mining schemes. Index Coop can benefit from using G-UNI because:

  • Essentially, users can enjoy the same experience they are used to when providing liquidity to Uniswap v2 without the overhead effort that it takes to manage a Uniswap v3 position. The two core components that make up G-UNI are the fees are automatically reinvested and positions that the user interacts with are ERC-20 tokens rather than NFTs The fungibility of positions allows them to be utilized as a money lego in other protocols beyond just liquidity mining. For example, a G-UNI DPI/ETH pair can be used as collateral in a lending pool on Rari.
  • The community can decide how much or how little they want to manage the pool and can decide what ranges they want to incentivize liquidity, under what conditions rebalances occur, what party has control of the G-UNI pool, etc. For example, the community can decide to delegate the “Manager” functionality to a specific smart contract that enables “rebalances” (changing the range of the pool on Uniswap v3) to happen automatically based on any conditions managers deem appropriate. An example of an easy implementation would be to rebalance the position around the TWAP of a given pair.
  • In the future, the community can decide to migrate Uniswap v2 positions to the G-UNI Uniswap v3 pair of DPI/ETH. This would simplify the transition of migrating liquidity to v3 as well as bring more capital efficiency to the DPI/ETH pair.

The Gelato team will be there to help with the process each step of the way and assist with setting everything up. If the community has any questions or feedback, we would love to hear from you!

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Flagging @overanalyser into this thread. As he did some research on v3 recently. Having his thought on this matter would greatly increase more context. Cheers~

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Hi @DaveLiebowitz

Thank you for your message, automated management strategies for Uni v3 is something we are certainly considering. During our review in June we identified a number of liquidity management options but concluded that we would want to see more history of use.

To be honest, I would say that the coops goal is to try and completely stop liquidity mining DPI. We are about to do a short v3 staking contract, but to be honest, it’s more of a token gesture for LP’s. Likewise, we are planning a 30 campaign on polygon (Sushiswap pool) but again I’m expecting this to be a 1 off to kick start Liquidity on Polygon.

Basically, we hope that the DPI whales will be able to provide enough ETH:DPI liquidity that the fee income pays them and we don’t need to provide liquidity incentives for DPI. (ETH2-FLI and BTC2-FLI are already self sustaining)

However, we are looking at a number of options for MVI and future products. Here we are typically looking at achieving similar liquidity to a $5 M Uni v2 pool. We are currently considering a few options:

  1. Conventional uni v2 Liquidity mining - costs more, but kickstarts some AUM.
  2. Uni v3 using the staking contract - will be reviewed once we have seen the DPI:ETH v3 contract in action.
  3. Direct Uni v3 liquidity provision from INDEXcoop treasury.

I would say that automated v3 strategies could allow a v3 approach that is more attractive to smaller LPs as it removed the active management part for them (I assume that INDEXcoop would deploy a standard ERC20 LM contract for the G-UNI tokens).

I hope that this helps you understand my current thinking .

Thanks

OA

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Yes, I completely understand your thinking and thank you for communicating it all clearly. You are right, G-UNI would be most attractive for kickstarting liquidity in Uniswap v3 with smaller LPs.

As I mentioned in my first post, we have already worked with Float protocol and Instadapp to incentivize their liquidity mining programs. Our G-UNI pools are audited, battle-tested, and already handle millions of dollars worth of liquidity. There are a number of different directions we can take for MVI but using Instadapp as an example, they have decided at the moment to have the dev team in control of the manager role as a multi-sig and incentivize liquidity in two different ranges.

For MVI, we can work together creating the right strategy for that pool depending on the goals of Index Coop. Our development team will be here to help you every step of the way.

From here, we would need to figure out:

  • Who do you want in the manager role? These options include community multi-sig, a smart contract that automatically rebalances based on certain conditions, or to burn the manager role altogether.

  • What range would do you want the liquidity to be in? This range can be change by the discretion of the manager role but we would need to figure out the initial range. Normally we would recommend a range based on past performance, but since this is a new pool we can start out as a very wide or even infinite range and narrow it from there.

Hey! I wanted to revive this thread to inform you of our new passive rebalancing strategy. Here is the article.

Basically, there are two G-UNI pools that expand and contract based on price movement. For example, if MVI’s price increases, the MVI-focused G-UNI pool would expand to always insure there is liquidity. A liquidity mining program can be built around this two pool system to automatically adjust rewards to the pool that needs it most, so in the case of MVI price increases, the MVI pool rewards would increase. And as the price decreases, the MVI-focused pool would retract.

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Hey, I wanted to revive this thread again with a post we authored at Gelato about how protocols can be a “liquidity provider of last resort” for their tokens.

I like to call it the “brick by brick” strategy where protocols lay capital in different ranges over a given pair, always ensuring their is ample liquidity for traders. You can see it in the graphic below: