With our 4M$ BAL treasury swap executed several weeks ago, the buybacks streaming 2-3M$ per week through Balancer Liquidity Boostrapping pools, and the 100M$ FEI->LUSD auction also concluded using Balancer, now is the time to interface more with the Balancer protocol. Now is the time to deploy some PCV there. Let’s show the world that the Tribe has big BALs.
I have been working on code to be able to deploy PCV on Balancer, but we still have to decide as a community what to deploy and under which parameters. This thread intends to serve as a basis to discuss the initial PCV deployments on Balancer.
Create pools and deploy liquidity from the PCV and DAO treasury to Balancer.
The pools will be owned by the Fei DAO Timelock, so our DAO will be able to change pool parameters (e.g. fees, enable the pool to act as an oracle, or pause trading) on each of these pools.
Balancer is an innovative, generic, programmable AMM that allows inequal weights for tokens in a pool, among other things. Weights of 80/20 for instance can be chosen instead of 50/50, to reduce impermanent loss or increase exposure to one of the underlying assets. The 80/20 split is used by numerous pools on Balancer already. See the Balancer documentation of weighted pools.
Balancer supports stable pools (like Curve), and meta-stable pools (that concentrate liquidity like Curve, but works with different-price assets by concentrating liquidity around “oracle” prices).
Balancer, as a DAO, can also co-incentivize pools with BAL rewards. BAL-incentivized pools will attract more user funds than if we incentivize alone with TRIBE, like we are doing now with the TribalChief.
Balancer will be an integral part of Fei v2, it is a very flexible infrastructure for AMM and portfolio management, and is very synergistic with our goals here at Fei Protocol. Strengthening our relationship with the Balancer team/ecosystem is a valuable long-term play in my opinion.
BAL the token also has a lot of long-term potential, the DAO already recognized it by doing an OTC.
Deploy liquidity as following :
80% BAL / 20% WETH : deploy the 200,000 BAL previously obtained by OTC (~4M$), with matching WETH (~1M$).
- Our BAL are currently sitting idle on the FeiDAOTimelock
- We will earn ~20% APR in BAL rewards if we provide liquidity
- 80% TRIBE / 20% WETH : bootstrap the pool with 20M TRIBE (~20M$) from treasury + matching WETH (~5M$) from PCV
- Liquidity for TRIBE against ETH would de-corelate TRIBE from FEI a bit more.
- Exposure is 80% TRIBE, so it’s almost neutral for the treasury vs holding plain TRIBE.
- If the IDO funds are removed (FIP-46), additional liquidity will be useful.
- This pool could be co-incentivized with BAL and FEI.
- 50% WETH / 50% FEI : our protocol currently holds 300M$ of FEI-ETH liquidity on Uniswap v2. We would move 90% of this liquidity out of Uniswap, over to Balancer. Balancer currently incentivize the DAI/WETH pool with 15,000 BAL per week, and the DAI/WETH has around 110M$ liquidity. We have the opportunity to go big on Balancer and be the biggest stablecoin there. This will naturally attract more FEI pairs on Balancer, and if the Ballers incentivize our pool with rewards comparable to the DAI pool, we could capture a significant stream of outgoing BAL from their LM program (currently 145,000 BAL/week). In doing so, the protocol would build significant voting power in the Balancer DAO over time, and be able to use it to improve integrations of FEI and tokens from partner protocols.
That would already be a bold first move. But we can open more pools once the relation is established.