Deposit 400 ETH into Swapr xDai [Proposal]

Feedback appreciated on 1. Total size of deposit 2. Breakdown of pairs

The proposal below would send 400 ETH from DXdao treasury to be deposited in Swapr on xDai by way of the dev multi-sig

Background

xDXdao currently holds $671k of liquidity in Swapr on xDai with an additional $450k set to be deposited in the coming days. This has helped to attract users and volume to Swapr xDai, creating a base of liquidity for common pairs, hopefully enabling liquidity in smaller tokens. On xDai, Swapr is competing against Honeyswap ($10m) and Baoswap ($26m), although Honeyswap sees more trade volume. With eco-routing, Swapr plugs into these now, making Swapr the best trader experience on xDai now, with revenue opportunities from trades through base liquidity supplied by DXdao.

Swapr Beta is just around the corner, which will feature a do-it-yourself farming experience. This will help Swapr capture the long-tail of new tokens, but base liquidity is needed to supplement and ensure a smooth experience.

Details

This proposal sends 400 ETH to the dev multi-sig address, previously identified as 0x5f239a6671bc6d2baef6d7cd892296e678810882 whose signatories have been verified as REP holders. The dev multi-sig will convert the ETH into the following tokens and then bridge over to xDai (on Omni bridge), and then deposit the tokens in xDXdao, where they will be deposited into Swapr by xDXdao via a proposal and the liquidity relayer.

The pair targets are:

  • WETH-WXDAI (20%)
  • WETH-WBTC (20%)
  • USDC-WXDAI (20%)
  • WETH-DPI (20%)
  • WETH-STAKE (20%)

The percentages are suggestive, actual amounts may vary slightly. It will ultimately be up to xDXdao to deposit the funds in swapr.

Risks and considerations

Transfer of these funds relies on the dev multi-sig. xDai also presents risks because security is dependent on its limited validator set. Additionally, cross-chain bridges are still new and not battle-tested.

This proposal will put the funds in xDXdao around ~$2.3m, depending on amount of worker proposals completed. This is about 4.5% of DXdao’s total assets. The transfer and liquidity deposit is worthwhile because of the opportunity to support Swapr while the market is moving to sidechains and Layer 2.

There is also upside in that the assets deposited will gain fees from trading, but there is also a risk of impermanent loss on each of the pools.

This is the first time DXdao would hold STAKE token, which is the underlying token for xDai, so it is a way of DXdao supporting the infrastructure.

5 Likes

For reference to current pool size on Honeyswap and Baoswap in comparison to Swapr:
Screen Shot 2021-04-06 at 1.42.15 PM

Is 400 ETH the right amount to deposit?
  • Too high
  • Too low
  • Just right

0 voters

Does any pair have too high of a %?
  • WETH-WXDAI (20%)
  • WETH-WBTC (20%)
  • USDC-WXDAI (20%)
  • WETH-DPI (20%)
  • WETH-STAKE (20%)
  • Just right

0 voters

Does any pair have too low of a %?
  • WETH-WXDAI (20%)
  • WETH-WBTC (20%)
  • USDC-WXDAI (20%)
  • WETH-DPI (20%)
  • WETH-STAKE (20%)
  • Just right

0 voters

1 Like

If we can, we should try to do less “splitting” between different pairs within each proposal. The number of transactions (and gas fees) add up quickly.
If it’s unavoidable, then it’s not a huge deal. But if we are going to follow this with another 400 ETH into the same pairs, then we should do it in more concentrated fashion, right?

1 Like

The biggest cost of the transaction is the proposal itself; it involves submitting, boosting, voting and redeeming. Those are fixed costs, as are the trade fees (or the gas costs on trades), so the best way to be efficient is to increase the size of the trades and proposal amounts. There are of course security concerns about moving a lot of funds, so I think 400 ETH is about the right amount.

It does involve a lot of transactions, but I think it’s important to have multiple pairs with good liquidity on Swapr, and there’s no way around purchasing those tokens one by one.

What might make sense is as we talk more about the arbitrum rollout is to come up with a plan about how we want to move liquidity there. We could do large amounts and not split them up because they were part of a 2-3 week process. How we move liquidity to arbitrum is definitely something to think about

2 Likes

This proposal has been submitted and boosted. Voting is open for next 7 days

2 Likes