KIP-19: Sunset the Liquidity Pools product

Proposal

Sunset the KeeperDAO Liquidity Pools by ending ROOK emissions and providing a timeline for withdrawal of DAO Treasury deposits.

Background

The Liquidity Pools are a waste of our treasury, they dilute tokenholders while adding no revenue, and the upcoming trading protocol upgrade removes the need for flash loan pools as user funds are used for MEV capture. Given this, it no longer makes sense for us to dedicate resources to its maintenance as more is gained from sunsetting the product and reallocating the deposited funds to more directly align with KeeperDAO’s long-term vision.

As it stands, we have ~48 million dollars worth of assets deposited to the liquidity pools. A summary is given below.

Asset Amount Today’s Value
kETH 4,615.85 $12,532,032.75
kwETH 4,604.02 $12,499,914.30
kDAI 12,741,904.44 $12,741,904.44
kBTC 134.803 $5,648,245.70
kUSDC 4,369,935.23 $4,369,935.23
Total $47,792,032.42

According to the core team, the amount of liquidity required for flash loans is approximately $5M of each asset. As this is already covered by existing DAO Treasury deposits, we propose to cease ROOK emissions for liquidity providers, and allow excess DAO Treasury funds deposited in the pools to be withdrawn, while leaving at least the required amount of assets in each pool to provide effective flash loan liquidity. When the trading protocol upgrade is live, the entirety of deposited DAO Treasury funds can be withdrawn, and we may declare the liquidity pools obsolete.

Specification

  1. Mint an amount of ROOK to cover LP emissions for the period between the end of Act V and the block in which this KIP is ratified.
  2. Notify all LP users of a scheduled phase-out of the LP.
  3. Emit no further ROOK to LPs after the emissions minted in (1) are exhausted.
  4. Maintain, for 1 year, a UI that will allow users to withdraw their capital from the Liquidity Pools. After that, provide instructions for users to call the LP smart contracts directly.
  5. Make a best effort to maintain in the pools only sufficient liquidity to cover flash loan needs (estimated to be approximately $5M worth of assets in each pool at present) until the pools become obsolete.
7 Likes

in favor. the opportunity cost of the lps is quite large and the benefit is comparably small.

if keepers value the pool for flash loans they should make the case

Thank you for the KIP draft @yungpeso

We are talking about this internally as well. Let’s talk about this some more during Friday’s Town Hall. The team can present our views, what needs to be considered, and how we could potentially move forward with his, as well as hear the view of the DAO on this.

i am in support of this KIP. thanks for drafting peso

This could be formulated in a more precise manner. It’s a bit ambiguous.

In support of this. Should have been done long time ago.

In favor. better to support staking than LP. Thank you Peso

1 Like

In support of this. LPs are not a very compelling product and are the remaining source of ROOK emissions.

Comments on the spec:

  1. Stop Rook emissions to Hiding Vault users after all previously minted Rook has been emitted

I think this is a typo. You mean Liquidity Pool stakers right?

  1. Use the accrued Rook from the treasury funds to subsidized the xRook APY

This is too vague. What is the accrued Rook in this case?

Supported. Agree with the rationale on all levels.

The alternative uses of those emissions and liquidity could be leveraged to improve $ROOK tokenomics and incentives hodlers

1 Like

Here is an update on our findings:

1 Like