Hey All,
Brian from Visor Finance here. I’ve actually been in quite a few talks with the Index team regarding potential liquidity mining for the DPI-ETH pair here: Proposal: Use Visor Finance for Liquidity Mining on Uniswap v3. We’re also in talks with regards to $JPG as well.
However, for the Index token, I would suggest a few different alternatives. A concentrated liquidity DEX like Uni v3 makes obvious sense. The capital efficiency of Uni v3 can be anywhere from 3x - 10x greater than it is on Uni v2 or Sushi. So with just a fraction of the liquidity on Uni v3, you can have equivalent slippage on Uni v2.
My suggestion would be the following. If Index has a lot of $INDEX in their treasury, it may be beneficial for Index Coop to provide that liquidity themselves on Uni v3. The only issue is getting the other side ETH without having to dump a lot of INDEX tokens. If Index has both $INDEX & $ETH that they can provide, that would be the most ideal and the cheapest way to source liquidity. There’s currently only around $559K of liquidity on Uni v2 for INDEX-ETH. If Index Coop were even able to provide $300K ($150k of ETH & $150k of INDEX) of its own liquidity on Uni v3, that would be an improvement in terms of slippage.
If the Index treasury did not have the other side in ETH, but only had $INDEX tokens, then two possible alternatives exist. We can initialize the Uni v3 pool at a slight discount to the current price on Uni v2, and have a single-sided range order consisting of only INDEX above the initialized price. The lower price on Uni v3 would incentivize arbitrageurs to come in and buy the INDEX tokens with ETH, and we can get the other side of the pair that way, in a cost-minimized way that wouldn’t affect the price of INDEX too much.
The other alternative would be to use Olympus Pro to buy back Uni v2 or Sushi liquidity at a slight premium, but manage that liquidity on Uni v3. This incurs the costs of bonding, which is currently 3.3% in addition to the premium paid with your own governance tokens. However, this could potentially lessen the impact of dumping INDEX tokens (assuming that the person who sold the INDEX-ETH liquidity for INDEX at a discount doesn’t immediately dump). Also, you retain all the capital efficiency benefits and yield-generating capabilities of Uni v3.
Lastly, Index Coop could incentivize liquidity through a liquidity mining campaign. It need not be too robust, but just enough to gain the requisite liquidity. Again, on Uni v3, you don’t need as much liquidity as you would need on Uni v2 or Sushi, so even then the liquidity mining rewards would be less expensive in that you wouldn’t need as much liquidity.
Happy to talk more with the Index Team on a phone call to discuss these alternatives in more detail! But those are what I see as the best solutions to this issue. Visor provides a liquidity mining infrastructure on Uni v3 as well as treasury management solutions that help protocols to source liquidity themselves and manage that liquidity on Uni v3.