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
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.
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.
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.