Deposit 300 ETH and 1,111 DXD into Swapr Relayer on Mainnet [Proposal]

Tldr, this draft proposal would deposit $1m of DXD & ETH from DXdao’s treasury into Swapr’s mainnet DXD/ETH pool. Each deposit requires two separate proposals and may be split up to minimize slippage. A test tx might also make sense.

Disclosure: Caney Fork is a DXD/ETH LP on Swapr mainnet & Gnosis Chain

Background

DXD liquidity has waned over the last six months. The latest DXD trade volume numbers put the average daily volume over the last 3 months at $45k. The low liquidity reinforces itself. No one trades DXD because no one is trading it. Worse, DXD liquidity is split across three chains. There’s only $93k DXD in Swapr on Gnosis Chain, $138k on Arbitrum and $68k on Ethereum.

This means at the moment, the maximum amount of DXD you could purchase with less than 1% slippage is ~$4,000. Additional liquidity from DXdao would allow more investors to purchase DXD and potentially contribute to the DXdao community. Given that DXD has been around for 2 years, it’s hard to attract new token holders, especially when liquidity is so low.

There’s also a possibility of DXdao earning fees. This proposal comes in line with another draft proposal to increase the DXD/ETH swap fee to 0.5%. Even with the 0.25% fee, DXD/ETH LP’s have been able to avoid impermanent loss over the last year.

Details

This proposal sends 300 ETH and 1,111 DXD to be deposited into the Swapr Relayer on Mainnet [note: looks like relayer wraps ETH automatically?]. A separate proposal will need to be created to deposit the liquidity. That will need to be done through the Multicall1 scheme. The deposits should be split up as to prevent manipulation.

Risks and Considerations

There is a risk to impermanent loss for DXdao by LPing on Swapr. DXdao will also be selling DXD for ETH should the price of DXD go up, and also buying DXD with ETH if the DXD price goes down. These may be affected by DXD buyback order submissions. There is also the risk that DXdao could “crowd out” other LP’s. Based on current size of DXD/ETH LP’s this does not seem to be a big concern.

6 Likes

Great proposal. Boosting mainnet liquidity more than tenfold could do wonders.

No issue with this proposal and happy to see some extra liquidity being provided even if below NAV which has been a sticking point in the past.

On this point above can we have confirmation that liquidity will be added at 70% of NAV. If with the new changes proposed to both circ supply and NAV calculations, DXD price is now at 60% of the new NAV, then adding $1m liquidity at 60% would in effect meaning selling DXD against any upward movement from 60% → 70%.

Adding at 70% on the other hand would be buying below 70% and selling above, which aligns well with the other buyback proposals being considered.

With liquidity as it is and with some the latest buyback proposals providing more certainty and clarity to holders above continued price support, it shouldn’t be too difficult to bring DXD price up to 70% in the coming weeks and then add liquidity there.

1 Like