PROPOSED: IIP-109: Deploy Protocol-Owned INDEX/ETH Liquidity into Managed Visor Vault on Uniswap v3

@mel.eth @sixtykeys I would like to temporarily pause the snapshot vote while we work with Visor on security and parameter considerations.

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Great call @jdcook - look forward to learning what your analysis reveals here re counter party/protocol risk and potential strategy

gm @jdcook

The snapshot vote has been canceled. Please call for a vote again when ready.

Should the text of this proposal change, please be aware that a 48 discussion period will need to ensue in the PROPOSED state prior to the Snapshot vote commencing.

cc: @sixtykeys

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Hey @mel.eth - calling for the snapshot vote to resume! No changes to the text of the proposal.

Thanks for the help!

cc: @sixtykeys

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gm @jdcook

This Snapshot vote will be scheduled for Monday 6 December 2021 at 6pm UTC. Details will be added here once queued.

cc: @sixtykeys

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gm @jdcook -

This proposal is queued on Snapshot for voting and will be live for 72-hours starting at 6pm UTC today: 6 December 2021

Please click Hootie to vote: :owl:

cc: @sixtykeys

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This proposal has PASSED with 100% of the 269.53K INDEX voting in support. Please keep this space updated in terms of planning and execution.

Go get 'em @jdcook; congrats on a successful proposal!

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Visor has now suffered its 3rd security incident in 6 months.

In June, funds were stolen due to an unencrypted private key being left in a Github commit.
In November, there was the flash loan attack against the platform
We have now seen a 3rd where an unaudited smart contract controlling vVISR had a security flaw.

In light of these security incidents I am personally deeply uncomfortable with deploying significant funds into this platform when other providers offer similar services without the history of security incidents.

Would love to open discussion on proposing a new IIP to cancel the deployment of this liquidity into Visor, and instead direct it towards another Uni-V3 management platform such as universe or gelato.

17 Likes

The Visor strategy to increase pair liquidity should be dropped after the new hack they suffered.
There are several different solutions which worked out smoothly in the past few months without incurring in losses/hacks and we should consider them.
I’m personally in favor of ONDO, albeit not being POL, the Coop could deposit ETH (from ETHFLI) or INDEX too in their vaults, earning apr the same way it would with POL and fees accrued.
This would also help with the INDEX token appeal, giving holders the possibility to earn APR on their tokens once deposited in the ONDO vaults, instead of holding them unproductively.

PRO:
-INDEX/ETH liquidity increase.
-INDEX holders could stake their tokens and earn interests instead of passively holding them, attracting investors otherwise not interested and oriented to interest-accruing tokens.
-the Coop would earn interests too depositing both INDEX and ETH (from ETHFLI) from the treasury.

We are reviewing our options within the liquidity pod and will be reaching a decision shortly about whether or not we will be proceeding with a private hypervisor managed by Gamma or another alternative.

Happy to have an open discussion. From my perspective, saying other providers offer similar services is mis-leading. The management is what is most important. With Gelato, we are left on our own to manage the position. They are not similar services at this point in time.

By keeping the hypervisor private we eliminate flash loan / price manipulation risks. And we get more efficient liquidity for holders, as well as better IL and fee management. So we are assessing the risk of a private hypervisor.

We have also been in talks with Gamma (prev. Visor) about their roadmap going forward. I understand the perception and that is being taken into account, but we are trying to dive a bit deeper into exactly where risk may be and how it could affect us.

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What about ONDO? Extending the possibility to earn interests to holders and at the same time increasing ETH/INDEX liquidity, no need to actively manage the position by the Coop, given it would only deposit both ETH and INDEX, or just INDEX.
Or using LaaS with INDEX/FEI still with Ondo, the Coop would only deposit INDEX and the same amount of FEI would be matched by ONDO.
Giving holders the possibility to earn apr on INDEX would be great for INDEX tokenomics and appeal

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Hey @jdcook , any updates on the execution status of this IIP?

Hi Set Labs,

May Index Coop community have the funds mentioned above sent to the Operations Account?
This is a request for $700K worth of INDEX.

It appears the INDEX:ETH Liquidity is going ahead via a private Visor pool. These funds are needed ASAP. Just highlighting another community fund transfer request that has gone unattended for about a month.

Can any of the following people @dylan, @puniaviision and @gregdocter, please perform the transfer ASAP.

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Hey all, sorry for the delay. This will be transferred to the Operations account at latest by Friday.

I’ll see if we can speed up that timeline as I am currently OOO.

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Hi @jdcook,

Can we please confirm that Index Coop is using the same contract that experienced the flash loan exploit in November, with the mitigating factor that the pool is private not public and only whitelisted addresses can interact with the contract ?

Can you please confirm the Operations Account will be the only whitelisted contract address that will have access to the INDEX : ETH Visor pool ?
And no other address can be added at a later date.

As the Index Coop’s Operations Account will be the single address on the whitelist, is this the only mitigating factor that protects the funds within the pool ?

Given the pool is private and is going to be optimised for yield / trading conditions, is it fair to assume this pool becomes a sub optimal for every other liquidity provider. The Hypervisor strategy will realised most of the benefits of being an LP. If this is true, we increase liquidity and make the pool less attractive for other to deposit liquidity into. With that said, how does the Liquidity Pod plan to remove liquidity from the pool ? ie: what is the exit strategy here. Is there a risk that this is a sunk cost to Index Coop ?

1 Like

It is using the same contract but with different safe-guards implemented (if it were public, it would be double-deposit enforced) - this alone would mitigate the same exploit that happened in Nov.

This will be a private vault - the Operations Account will be the only address that can add or withdraw funds from the vault.

I don’t believe your assessment here is correct. If I were to have presented a plan that did not manage our capital well, you would push back saying that we are at risk of losing too much capital due to IL. Also, we are not here to optimize for passive LPs - and we need to remove this thinking from the Coop. We need to be optimizing for LPs that are competing for the fees.

I expect our deposit in this vault to spark the opposite kind of spiral. At this point in time there is only ~$170k in the Uni v3 pool - by depositing, we will drive volume back to this pool, which will encourage LPs to bring capital to the pool as well. Bringing capital to this concentrated pool is imperative because of the ~4x+ capital efficiency gains it will bring compared to Sushi and Uni v2 being the main pools.

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Thank you for the response and clarifying the white listed, private nature of the pool as the safe guard protecting community funds.

It’ll be interesting to see if LP realise the affect the Visor pools has on there APY by providing liquidity.

Would it be possible to outline an exit strategy, perhaps some criteria or pools size we are hoping to achieve. I guess we are reliant on these LPs to actively manage there position ?

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Exit strategy is a good question - I haven’t developed a set strategy for how/when to exit - I think the liquidity pod can take up that question, but I do think it will likely look like a gradual exit over time as we get more reliable, concentrated liquidity from other LPs (fingers crossed). I see this as base/minimum liquidity for INDEX. We are pretty far away from the conversation of when we have enough to remove this liquidity given this liquidity will become the majority of liquidity available.

All ETH2x-FLI have been transferred to the Operations account.

700k USD worth of INDEX has also been transferred to the Operations account.

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Thanks for driving this forward, the irony of our own token having poor liquidity is too much to bear.

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