MVI
The MVI:ETH uniswap v2 pool continues to be the main source of liquidity from MVI.
~13th July the coop liquidity mining contract was topped up with a further 3,286 INDEX inline with IIP-52.
Since then we have seen the pool AUM increase in value with the gains in both MVI and ETH price with the pair returning to $5.3 m:
Looking at the supply of LP tokens we have seen an 18% increase since the 1st July :
Even so, there has been a significant growth in unincentivised units with < 30% in the Uni v2 pool.
V3 pool
There is a small v3 pool that has seen occasional use by LP’s and some trade volume (including my unsuccessful attempt). The most recent “large” LP has deployed ~$50 K over +/- 25% and captured $ 426 in the last 60 hours (~122% if annualised with no fees).
However the overall liquidity on v3 is still very lumpy.
There is also a pool on polygon, however, this currently has no liquidity.
Overall the v2 (inc historical) and v3 pools look like this:
| MVI:ETH | Unit | Uni v2 (01Jul21) | Uni v2 (27Jul21) | Uni v3 (27Jul21) | Ratio v3 /v2 |
|---|---|---|---|---|---|
| Pool AUM | Million $ | $3.09 | $5.37 | $0.07 | 1.3% |
| MVI in pool | MVI | 41,139 | 35,285 | 386 | – |
| ETH in pool | ETH | 727 | 1,209 | 18.3 | – |
| MVI in pool | $ M USD | $1.54 | $2.69 | $0.03 | – |
| ETH in pool | $ M USD | $1.54 | $2.65 | $0.04 | – |
| Sell ETH for 1% price impact | ETH | 5.15 | 8.65 | 0.8 | – |
| Buy ETH for 1% price impact | ETH | 5.12 | 8.58 | 0.69 | – |
| Sell ETH for 2% price impact | ETH | 12.58 | 21.1 | 1.9 | – |
| Buy ETH for 2% price impact | ETH | 12.35 | 20.72 | 1.8 | – |
| 4 day average volume | $ | $121,975 | $852,435 | $39,635 | 4.6% |
| 4 day average fee | $ | $366 | $2,557 | $119 | 4.6% |
| Annualised fee return (at current AUM) | % | 4.3% | 17.4% | 62% | – |
| INDEX rewards (on day) | % | 26% | 18% | 0.0% | – |
| Combined rewards | % | 30% | 36% | 62% | – |
So, with the recent improved market we are seeing more liquidity in terms of both LP tokens and $, and more trade volume. Even so, the INDEX rewards are contributing ~50% to the v2 LP income.
How much liquidity do we need?
Exchange issuance:
An recent exchange issuance abritrage of MVI used 1,700 k gas. So a gas price of 50 gwei will cost 0.086 ETH ($171 @ $2,000).
A uniswap trade is ~100k gas, so ~ $11 at 50 gwei / $2,000 ETH.
My understanding is that the available value in an arbitrage = 50% of the premium to NAV * the trade size required to being the price back to NAV. So for MVI on v2:
- 8.5 ETH at 1% premium to NAV ~ 0.043 ETH ~ $85 value
- 21 ETH at 2% premium to NAV ~ 0.21 ETH ~ $420 value
As the additional gas costs ~$160. Arbitrage looks to be start becoming cost effective at premiums of between 1 to 2% to NAV.
Competitors
| Main chain | AUM ($ M) | Liquidity ($ M) | Volume |
|---|---|---|---|
| MVI | $9.4 | $5.4 | $930,203 |
| PLAY | $2.0 | $2.1 | $186,104 |
| NFPT | $1.2 | $0.3 | $ 58,566 |
Looking at this information, I think some form of liquidity mining is required for MVI after the 13th August. With v3 and polygon pools available, there are many different approaches we could use.