*ACP1: Across ($ACX) Community Initial Liquidity Proposal
With the upcoming token launch, liquidity is an important consideration. I am proposing that Across use Balancer for their liquidity DEX and that Risk Labs provides some initial $ACX incentives from the Across treasury for LPs to help establish deep liquidity that will minimize long term cost.
Over the past few weeks $ACX liquidity has been a hot topic as we await the token launch. The community has held multiple AMAs on potential liquidity solutions, conversations in discord, questions, and ideas about the best options for liquidity. This proposal summarizes much of the discussion and aims to lay a foundation for $ACX liquidity alongside the upcoming token launch.
Given multiple options reviewed and considering cost efficiency, ease of maintaining deep liquidity, opportunities for additional yield for LPs, and strategic partnership in the ecosystem, I am recommending we align as a community alongside the Across/RL team to use Balancer for the main liquidity pool for ACX with a 50/50 ACX/wstETH pool at token launch. This will provide one pool to focus on establishing deep liquidity, minimize cost & effort to maintain said liquidity long term.
This provides a simple approach as a foundation and benefits include:
- Using a trusted platform in Balancer
- Keeping a simple 50/50 pool to minimize complexity or potential IL
- Using wstETH as the pair provides deep liquidity and also additional yield opportunities other than trading fees for LPs through the Balancer/Aura framework that allow for cost efficient provision of liquidity instead of having to constantly incentivize long term.
- In addition, aggregators can route swaps from eth to ACX even when the pool is wstETH/ACX. Balancer’s UI uses cowswap for trading and they are very well integrated so from a buyer/seller’s perspective it is no different than having ETH as the pair to ACX
It’s important to solidify this pool as the primary venue for trading ACX immediately so when the launch happens we don’t see fragmented liquidity across DEXs. I propose that the protocol treasury allocate some ACX towards direct incentives on the pool (LP’s would earn ACX).
For the first two weeks, I am proposing we allocate 60k ACX per week to encourage deep liquidity and establish this as the main pool for ACX trading. The Balancer team confirmed they can directly distribute these rewards to LPs through their gauge framework which means no additional effort for calculations or distribution. I would also recommend as part of this proposal that the Risk Labs team monitor the pool during these two weeks to watch depth of liquidity and LP participation and have the ability to adjust the reward rate to change behavior as they see fit.
If you would like to look at detailed calculations for what potential APR and estimated ACX counts, reference this spreadsheet from @hasherror here: ACX Swap Liquidity Scenarios
In addition, by using Balancer, we will work through their governance process to enable a gauge proposal to receive veBAL and Aura rewards emissions for LPs. Typically takes a couple weeks. We can monitor liquidity levels throughout the timeframe and adjust as needed, but the first two weeks of $ACX LM rewards are intended to start off strong and enable us to transition to a sustainable scale of APR through bribes that more closely align to the reward locking staking rewards.
There may be more nuance or additional details, but given the various moving pieces, I wanted to show key milestones and timeline relative to the Airdrop and token unlock announcement to set expectations on liquidity and LM incentives.
1.) Risk Labs to formally announce timing of token launch/unlock
2.) Some community members adds liquidity to Balancer pool to get it started as $ACX is available to claim
4.) Pending agreement/approval of this proposal Across treasury send needed ACX to Balancer for 2 weeks of LM rewards
5.) Liquidity incentives start
6.) Post gauge governance proposal on Balancer once pool is up to tap into LP incentives through Balancer/Aura. Pending approval, those will begin in 1-2 weeks
Please vote on this proposal as a way to enact this streamlined governance process with a 3 day forum poll. Majority vote should carry the proposal.
Voting “Yes” supports the proposal to have Across use Balancer for their liquidity DEX & that Risk Labs provides some initial $ACX incentives from the Across treasury for LPs to help establish liquidity
Voting “No” is not supporting this proposal and don’t agree with this as a solution.