TLDR of Proposal: Use Popsicle Finance Sorbetto Fragola in order to get optimized UniV3 liquidity on ROOK/ETH pair.
Popsicle Finance is a part of the Frog Nation products and we are currently the largest LP optimizer with over $35m value managed. The specific product that we are proposing for KeeperDao to use in this case is Sorbetto Fragola, which is a UniV3 LP Optimizer. UniV3 is an AMM where you can choose what price/tick range you would like to LP at. Sorbetto Fragola is based on a stochastic volume model, it sets and re-ranges the pool in order to make sure the market is constantly as liquid as possible. Additionally, it makes sure that LPers are receiving the majority of the trading fees and reduces IL as volatility increases. Read more info on Sorbetto Fragola here.
Popsicle Finance has been fully audited by Quanstamp and Certora and currently takes a 20% performance fee on the trading fees produced by the Uni V3 Pool.
Bancor: $8.7m (ROOK/BNT) (24hr Volume= $471k - 5% of liquidity)
Sushiswap: $3.9m (ROOK/ETH) (24hr Volume= 40k - 1% of liquidity)
UniV2: $4.3m (ROOK/ETH) (24hr Volume= 575k - 13% of liquidity)
UniV3: $157k (ROOK/ETH) (24hr Volume=44k - 28% of liquidity)
ROOK has a decent amount of liquidity available, however the problem is that this liquidity is fragmented. If 25%, or even 15%, of this total liquidity was being used to LP on UniV3 via Popsicle Finance it would be more liquid and have less slippage occur than the current available DEXs.When comparing current liquidity, we can see that the UniV2 and UniV3 pools are actually the most utilized, as users most likely use these DEXs rather than an aggregator. This analysis shows that a need for UniV3 liquidity exists.
In terms of the pool pair, ETH makes the most sense rather than a stable pool. This is for two main reasons:
- Most other altcoins also have ETH pairs, meaning if someone wants to swap an altcoin to ROOK, the trade routing through ETH will be more direct and have less slippage.
- As an LP, with a ETH/ROOK ratio you will reduce IL as cryptos are still correlated. If ETH goes up, ROOK will also likely increase in value.
- If this proposal is passed, Popsicle will launch the ROOK/ETH pool.
- Depending on the liquidity within the existing UniV3 Pool at the time of the pool opening, Popsicle Finance will calculate and report the optimal amount to be deposited.
To explain this further, in order for Popsicle to re-range, it requires liquidity within the pool, otherwise, if Popsicle removes and reenters the fund’s, slippage messes with re-ranging.
- As activity and liquidity increases, we will on a bi-weekly basis report whether to increase deposits into Sorbetto Fragola until the full proposed $2m is deployed.
- KeeperDAO will be able to withdraw the funds whenever they like. For security reasons, we will open up a pool that is limited to the KeeperDAO address.
We propose that KeeperDAO provides liquidity to Popsicle Finance in order to make ROOK/ETH a much more liquid pair on UniV3. The amount to be committed is a total of $2m (50% Rook, 50% ETH), deployed in a dynamic way. Popsicle Finance will update KeeperDAO when to add additional liquidity. We expect the $2m to be fully deployed within 3-6 months.
We look forward to discussing this further and hopefully working together!