[Proposal] Augur V2 Trading via Uniswap V3
Summary: This proposal would be to fund a small development team from the future DAO treasury to bring trading activity of Augur V2 outcome tokens to rails such as Uniswap V3 on primary Ethereum L1.
Details: Augur V2 is the current deployment of the Augur protocol which uses REPv2 to secure the primary human dependent oracle. This oracle is slow, comparatively, however can be used with a higher degree of confidence for resolving markets with large open interest due to its security model. While Turbo and Chainlink have proven to work and be more ideal for quick resolving and lower open interest markets, there is still something to be said in that a 48 hour to one week resolution period may still be sufficient for long-tail markets that are already open for quite some time, and ones where the open interest is large enough to where traders may still want it secured with the human Augur oracle and open to Augurs dispute resolution.
This proposal would be to fund a developer or two to create the required infrastructure needed to trade Augur V2 outcome tokens on modern-day trading rails such as Uniswap V3, where liquidity providers can take advantage of things such as the concentrated liquidity ranges. A similar example would be to create a system similar to what Catnip used to do, however replace trading in a Balancer Smart Pool with Uniswap V3 ranges. The Catnip model using Balancer required significant capital in order to balance and provide liquidity to the pool, making providing liquidity a very expensive and capital extensive task for the normal user. Using Uniswap V3 ranges, users can single side deposit and deposit on specific pre-defined ranges, allowing them to provide outcome token liquidity without needing large sums of initial capital.
The result of this development would be the trading of traditional Augur V2 outcome tokens in modern and more efficient manner, while having these outcome tokens secured by and resolve to the primary Augur V2 human oracle secured by REPv2 holders.
I believe the types of markets that would benefit from this structure and deployment would be longer-tailed and higher expected open interest markets. For example, a Superbowl market many months in advance, high-profile political markets, EOY-type markets, etc. We saw with the prior presidential election that there is some level of demand for these types of outcome tokens on Ethereum L1, with over $15M in open interest being escrowed in the V2 presidential market and significant secondary trading on both Uniswap V2 and Balancer (even with the less-than-ideal LPing and capital requirements).
Spec: Fairly confident this could be done by using a fork of Augur Foundry (developed by Catnip) to mint Augur V2 complete sets, then just providing these outcome tokens to a Uniswap V3 range instead of Balancer pools. It would be nice to have a custom AMM UI (similar to catnip.exchange) that would route and link to the primary outcome token markets trading on Uniswap V3, along with a CoinGecko type-list of the market cap, open interest, volume, etc of each trading outcome token.
Pros: Augur V2 outcome tokens being routed on modern and the primary Ethereum L1 trading venues, bringing open interest back for REPv2 holders to report on and resolve, provide a higher-security option for traders interested in some higher valued and longer lasting markets.
Cons: Trading on Ethereum L1 is expensive, but there is still some demand and tolerance for Uniswap level transaction fees. Creating initial ranged on V3 are quite expensive. Infrastructure for tracking the volume and activity of these tokens is non existent and messy at the moment.
TLDR: Find a developer or two who would be interested in integrating on the Catnip style model of trading Augur V2 tokens, create the supporting infrastructure required to efficiently track and monitor the activity, and to create a portal UI to allow users to trade these outcome tokens (like catnip.exchange). My initial thoughts would be that a $50k-$100k grant from the DAO should be sufficient to find some talent to attempt to take on this task.
I will add more thoughts as I continue to think about this and receive feedback, however would like to hear others thoughts on if this would be a valuable product for the Augur ecosystem and if it would be worth funding as an early Augur DAO product example.