SHN Liquidity Pools & Treasury Utilisation

Motivation:

This proposal aims to allow users buying and selling SHN on Ethereum main net as well as Polygon network, while further increasing capital efficiency of ShineDAO treasury.

Background:

We have bridged SHN to polygon and became a multi chain species as described in The Great Migration discussion. We are already rewarding contributors with SHN on Polygon to avoid main net gas prices and we have registered Polygon in our Snapshot governance. The next logical step seems to be deploying pool on Polygon. This will allow users to buy and sell SHN without insane gas prices.

Currently there is about $457,000 liquidity in our SHN / ETH pool on Uniswap v2. Based on current trading volume, it seems like we could use some of the recourses in the existing liquidity pool to create another pool on Polygon network as well as stake our ETH to earn yield.

Details:

Rebalancing 2/3 of liquidity form SHN / ETH pool on Uniswap V2:

  1. Bridging 1/3 of liquidity form Ethereum main net SHN / ETH pool on Uniswap V2 to Polygon SHN / MATIC pool on Quickswap:
  • 16.72 ETH and 5,6M SHN (about $152,300) Ethereum main net liquidity stays in SHN / ETH on Uniswap V2
  • 16.72 ETH gets swaped for MATIC + 5,6M SHN (about $152,300) Polygon network liquidity is deployed to SHN / MATIC pool on Quickswap
  1. Moving 1/3 of of liquidity form SHN / ETH pool on Uniswap V2 into our treasury (5.601.275 SHN & about 16.72ETH)
  • SHN brought back to the treasury stays reserved for liquidity
  • Additional 16.72ETH is ready to generate yield in our treasury

Staking ETH From Treasury:

  • Currently we have 32 ETH in our treasury and additional 16.72 ETH would be added according to this proposal, resulting in about 48.72 ETH in our treasury.
  • Staking 50% (about 24.33 ETH) in Tokemak Genesis Pools at about 10% APR
  • Staking 50% (about 24.33 ETH) in Curve steth pool (without staking in the Curve gauge), and then stake stethCRV tokens in Convex at 6.55% APR
2 Likes

We could even use WETH on Quickswap and maybe we don’t even need to convert ETH to Matic.

Secondly, is the Convex idea 6.55% APR taking into the account the fees from the curve pool as well?

Thirdly, we should even create a SHN DOD pool on Quickswap.

1 Like

I think we shouldn’t have the same pair as on Uniswap. Having 2 different pairs will make SHN price in one pool relative to the other always different, resulting in arbitrage opportunities and increased trading volume.

If we are as community bullish about MATIC, we could get some exposure to that. If not I’d go with USDC.

  • SHN / MATIC
  • SHN / USDC
  • SHN / WETH

0 voters

Yes

Also great idea. We had some conversations about that with @NMA and @cinquemb already. Will try to get proposal done this week.

1 Like

Converting almost $80k to Matic at this stage of the cycle is a risky move which I am not sure it completely justifies the amount of trading volume that we are going to get by doing so.

Perhaps, we could convert just half of that (40k) to MATIC and half of that to USDC. This way there is going to be constant arbitrage between two quickswap pools and a uniswap pool.

The only downside is that slippage might be too big for large purchases. But again, for large purchases maybe even Uniswap pool could be used if gas prices are not an issue.

Agreed, and two follow-up points.

  1. We should definitely do a risk assessment on Liquidity Pool:
  • including assessing how the Liquidity Pool will be active for
  • our general forecast on the price appreciation (or depreciation) for both MATIC and SHN
  • then we can assess whether there were any risks in relation to impermanent loss
  1. Further to that, I agree that deploying a Liquidity Pool with Polygon can be a strategic win. It would help to entrench the partnership that we already have with them on a business level and then also the fact that we are using Polygon as our infrastructure level too.
2 Likes

very good idea I agree with having a pool on Matic but, I also agree that the amount is maybe too high for our current needs, we could always increase this after a while if we see there is a big demand for SHN on Matic

you get the highest curve staking gauge rewards when staking at convex and you could even do more with you rewards within the convex platform

1 Like

If we split the liquidity the slippage is going to be 3% for 5k USDC buy.
For smaller buy (100 USDC) its going 0.06% .

We used bankless dao uniswap pool to get some estimates - Uniswap Interface

True. I personally believe having some exposure to MATIC is okay, but probably the best would be to create both USD and MATIC pools.

Also great point, just submitted a request there. Will also reach out to Anuja who I’ve been in contact about DeFi Options to discuss this possibility.

2 Likes