Increase INDEX liquidity

I wouldn’t call them problems so much as constraints/watch-outs. From our experience thus far, there is an application process that then goes under a formal review by the exchange across multiple dimensions (e.g., legal/compliance/technical) to arrive at risk scores. The application receives that feedback to either clarify initial responses or incorporate the CEX feedback. A token like DPI that isn’t a pure governance token can also require a legal letter (which is why we’re focusing on that in Q4). All tokens benefit from having a formal market maker in place (which is why we focused on putting that in place in Q3). And depending on the exchange, there might be additional requirements for minimum liquidity, which is why this conversation is a good one to have (as a community and with Wintermute), to best tee ourselves up for a possible listing.

Does that help?

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Thank you for pushing this initiative. I like the concept of owning LP. Also, building a relationship with Ohmies would be great, however, I have a few concerns/questions.

  • buying Index LP might need significant funding from the treasury. Is TWG open to this idea? How much are they willing to spend on this?

  • I am curious what will the LP sellers do with the discounted INDEX that they acquired through bonds. Are they going to dump or hold it?
    If we based it on DPI/MVI farmers, the INDEX holders and sellers are almost 50-50
    See: Dune Analytics

  • There is an initiative that would encourage IC contributors to hold INDEX to get higher APY for their INDEX (Sorry I forgot which meeting was that, maybe Index 2.0 ).
    Is it possible to only offer bonds to whitelisted addresses, such as IC contributors and farmers that held INDEX? This would likely reduce the selling pressure if there is any.

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yes Metfanmike, thx for your answer

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Hey, Bruno here from Fei community!

I was reading this discussion and wondering if Liquidity-as-a-Service could have a fit here.

Fei and Index have a solid partnership. FEI DAO invested in INDEX, DPI and is also providing liquidity to DPI-FEI on Sushiswap. I would like to bring the discussion about a new kind of partnership, the Liquidity-as-a-Service (LaaS) offering.

Liquidity Mining attracts capital at a high cost, LaaS is a cheaper alternative.

With LaaS, projects can get immediate liquidity without issuing more tokens and upfront capital costs. Fei & Ondo help by doubling their liquidity.

DAO allocates tokens to an Ondo Vault; this amount is combined with Fei to LP on Uniswap or Sushiswap. Currently, the program lasts 30 days and at the end of the period, DAO would pay a 0.17% fee (2% annual fee divided by 12 months) on the total value of the governance token deposited in the vault. This 0.17% fee can be partially, if not fully covered. This will depend on the accrued trading fees of the vault and the impermanent loss that are kept by the project.

You can use this worksheet to make simulations.

It is a good way to increase liquidity with a much lower cost than liquidity mining and to gain awareness by participating in this innovative partnership.

Fei is finalizing the selection of launch partners for LaaS. Those selected to be part of the launch group can benefit from the low fees associated with the group.

More resources on the Liquidity-as-a-Service here: Medium Article.

I would love to hear Index community about this idea.

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OK, we now have a Bancor $INDEX:BNT pool live :slight_smile:

This has added ~5% to the available liquidity:

Bancor has pros and cons:

  • Single sided deposit
  • Divergence loss protection (after 100 days) - [and if INDEX pumps you may get some of the value back as $BNT…]
  • No need to reposition / claim fees.
  • Gas to deposit is more than Uniswap v2 (and possibly v3).
  • Pairs with $BNT and Not $ETH
  • Lower LP fee (0.2% so ETH → BNT → INDEX is only 0.25% LP fee [but more gas than sushi or Uni v2]), Stable coin to INDEX would be 0.4% fee to LP vs 0.6% for Uni v2 or Sushi.
  • Not as capital efficient as Uni v3, so more tokens for the same depth.
  • INDEX in the pool can’t be used in coop snapshots.

Note the Uni v3 pool is a 1% fee - good for LP’s but expensive for traders. Also, the Uni v3 pool is out of place at the moment due to the INDE price dropping vs ETH:

What can we do with the Bancor pool?

  1. Nothing / pursue other options for growing INDEX liquidity
  2. Encourage INDEX contributors / dolphins / whales to deposit
  3. Deposit Treasury INDEX into the pool to boost liquidity without selling / providing other tokens / risking divergence loss.

The pool is capped at ~$1,600,000 total value, but can be raised by Bancor governance proposal if it’s filled.

There is the option for $BNT incentives on the pool, but we would need a Bancor governance proposal and high engagement from INDEXcoop to stand any chance of passing.

I like Bancor, and I’m farming BNT. I also like the fact I don’t suffer divergence loss on tokens I LP. However, I’m aware that there are other options for increasing INDEX liquidity.

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@ncitron how difficult would this lift be?

I’d have to look into it, but I’ve been meaning to update the INDEXPOWAH contracts to support Uniswap V3 anyway. I imagine it won’t be particularly difficult to add Bancor as well.

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I would leave Bancor for the moment / until after v3 launches.

  1. Very little traction amongst LP’s
  2. Bancor v3 (due in a couple of months) will give LP tokens and any work done to integrate v2.1 will be wasted (v3 may be a simple 1:1 on the number of tokens deposited).
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@Metfanmike Any more updates on the Wintermute proposal. I do think that this is a sustainable way forward.

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Please make an announcement or let @jackiepoo and I know once you’re done updating the INDEXPOWAH so we can update the analytics side too. :owl:

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