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@0xgeert
Last active March 1, 2022 11:08
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Evmos Initial Liquidity
My initial question around bootstrapping liquidity using funds from the liquidity pool: https://discord.com/channels/809048090249134080/809049009670455338/944685256680804382
I've never written such a proposal but I might be willing to take it on with some help. My general thoughts:
# Advantages for providing initial liquidity
* Aid in price discovery by setting a price floor
* dampen excessive vol
* have 1 or more pools right of the bat with enough liquidity, which will attract liquidity from rektdroppers. Liquidity begets liquidity is a saying for a reason
* at the same time this prevents pools popping up all over the place. This is hazardous for price development, because it fragements liquidity, and thus increases slippages.
* Moreover, an abundance of pools creates confusion by potential buyers. 'Where to go'? Having a couple of 'evmos-backed' pools gives peace of mind
# Implementation
* Provide at least 2 pools on Evmos itself (what't DEX that's launching on Evmos launch day again?) + at least 2 pools on Osmosis.
* The Evmos pools are great for people bringing in liquidity from Ethereum. Same easy tooling, direct access to $Evmos. Logical pools would be: Evmos/USDC (or UST) and Evmos/Atom
* The Osmosis pools help to tie in Evmos with the rest of the Atom ecosystem. Same pools: Evmos/USDC (or UST) and Evmos/Atom.
* These 4 pools although attracting will each attract a different set of people and thus liquidity.
* Arbitrageurs will make sure Evmos will be priced evenly across all pools eventually. Not having too much pools here is a good thing, arbitrageurs (which you want for fair pricing) are less interested when liquidity is far more fragemented
* Pools should be put in place right after the rekt drop. Speed is likely pretty important here. We don't want to be too late and have to 'deal' with an already fragemented collection of pools.
Given the fact that rektdrop happens on mainnet and above pools are to be deployed on Evmos + Osmosis there's a time window of say 15 minutes befor rektdroppers bring $evmos over to Evmos to get this right
* Oh, let rektdroppers provide liquidity on the Ethereum side btw. Uniswap, etc. whatever they choose.
# Funds needed
* Given the likeliness of a big run based on the hype, and not wanting a quick pump & dump on launch day (although to some extent this will likely always happen), you'd want quite okay liquidity to start with.
* Others might be better versed to give some numbers (feel fry to chime in) but I'm thinking of total initial liquidity per pool of around 200K$. This will still cause lots of volatility the first days, but it's without a doubt better than having sharks setup pools to trick new naive buyers all over the place
* Total funds needed from the Community pool based on the above: 4 x 200K = $800K
# Initial price
* the 'other side' of pool liquidity, be it $ATOM, $UST, etc. can likely be had by giving out a loan in $evmos to parties like Osmosis. Note that this process might include a goverance vote at Osmosis which given small time-window as not ideal
* about initial price which would likely need to be set by this proposal as well: middleground, between far too low for the x100 boys to kick in and wreck a more-or-less smooth experience for the rest, and too high to stiffle buy-pressure from the get-go. My initial thoughts: $0.25 / $Evmos.
These are some preliminary thoughts. Please chime in if you would back this, or how we could approve on the above.
Thanks
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