DEUS <> SOLID Bootstrapping programm Part 2
USD $3m liquidity bootstrapping program to kickstart the Solidly & Deus ecosystem
We have created a think-tank to go through the best options on how we can get the ball rolling with the Solidly / Deus duo and we believe we arrived at an elegant solution which benefits all participants of both ecosystems to the maximum.
As you saw earlier today, we announced a $1m bribe for our USDC/DEI pool, we would like to offer you our perspective on how we believe we can kickstart the Solidly/Deus ecosystem.
The main goal of Solidly is to increase fees for the governors of the protocol (veNFT voters), which in turn incentivize liquidity for certain pools that generate those fees. On the other hand, the main goal of Deus is to increase DEI usage across its infrastructure to enable deep liquidity for its borrowing platform as wells as the v3 enabled forex, stocks, commodities and synthetics platforms.
The TL:DR we do a 3M trading incentive on the DEI / USDC pool + synthetics that should lead to volume of 30B+ in the next month.
So what exactly did we come up with?
First we gonna incentivize volume on our DEI / USDC pool directly.
Second we gonna implement together with the $SYNC team and incentives to buy $DEI and trade synthetics via $SYNC on $DEUS
Third we gonna add Forex pairs to solidly.
This will create another incentivize to bring volume to Solidly by arbitrage the forex pairs via Deus <> Solidly <> synthetics <> fixed forex
<> and more with the incentivized trading.
#1 DEX in volume is the goal, and I guess with Andres Fee structure this can be achieved easily.
Our goals can be reached by incentivizing fees earned by veNFT voters. We will dedicate $3m to the creation of $30b volume over the next 30 days to the USDC/DEI pool. ($1b volume or $100k fees per day). In turn SOLID emissions to USDC/DEI are increased, which will increase liquidity of USDC/DEI due to the high APR and will result in more DEI minted/DEUS burned.
We’re implementing this plan for today’s vote, so we ask the whole Solidly community to vote for the USDC/DEI pool at snapshot. This is a real opportunity to kickstart the Solidly ecosystem and we sincerely ask you to act in good faith in tonight’s vote.
In any case, as we’ve announced, we’re also offer a quick & dirty $1m offchain DEUS bribe for those who will have voted for USDC/DEI this week and didn’t change their votes by Thursday 00:05 UTC. The bribe is calculated as $1m for 100% of theoretical veNFT voting, so we will pay $1.66c per veNFT vote. A $1m bribe represents more than 100% of the output of all SOLID during the week, so self-voting isn’t incentivized even if someone doesn’t plan to act honestly.
We’re estimating that the preliminary return for veNFT voters on our pool will be between 50–70% APR during the whole month.
The reason we’re doing this is to attract liquidity to Solidly and specifically to our stablecoin DEI. We saw strong synergies of the two projects and how they can symbiotically help each other grow big.
Within that first month we plan to bootstrap forex pairs on Solidly, porting FixedForex assets and establish Forex arbitrage opportunities between dSynth and Iron Bank/FixedForex, audit an existing L2 bribing solution and potentially high-leverage forex-trading.
We’d also like to provide a speculative breakdown of how things could play out, so take it with a grain of salt:
current SOLID price: $1.12
estimated emission next epoch: 750k SOLID
estimated emission $ next epoch: $840k
potential self-voting $ per vote: $1.4c
bribing $1m for 100% of votes: $1.66c
wash-trading cost per day: $100k
Let’s assume we capture 75% of the votes with a historical voting participation of 85%
that’s 38.25m votes, at current price that represents $42.84m.
With our liquidity bootstrapping program, each day veNFT voters on our pool get $100k in trading fees, meaning veNFTs will have an APR of 85.2%.
flywheel effect initiated…
- SOLID get locked into veNFT
- Supply vanishes from market
- Price rises due to 85.2% APR and vanishing supply
- APR on USDC/DEI increases
In the first week 562500 SOLID would get distributed via USDC/DEI gauge, representing an APR of 58.5%.
If SOLID doubles due to above mentioned flywheel effect, APR of USDC/DEI doubles too, to 117%.
An APR of 117% on a stablecoin pair would normalize down to ~45% at worst (arbitrage with beets & lqdr), meaning that the supply would have to 2.6x, so from the current $56m liquidity to $145m liquidity, meaning 44.8m DEI would have to get minted, meaning $8.96m DEUS would have to get burned. This in turn incentivizes DeusDao to post more bribes and more incentives, creating a positive feedback loop.
The above numbers are possible, but they’re dependent on the voting outcome for USDC/DEI pool. In other words, they’re dependent on all of you out there.
Our goal isn’t to increase engagement short-term, our goal is to increase liquidity and exposure, so that our and our partner’s continuous stream of new products have a prepared nest, to enable the best liquidity, highest volume and best user experience out there.
Become part of the story and point all your voting power to USDC/DEI now.
Together we can create something amazing.
Please spread this word far and wide, and let’s get ready for the next chapter of Solidly.