[HOPR] Proposal - Accept both external offers on a 3 month trial

HOPR DAO v0.5
1

In my opinion both external proposals have merit and seem to represent fair compensation for the services provided. They each appear to be leaning towards different of our current pools, Arrakis towards HOPR/DAI and Gamma towards HOPR/ETH.

Their current TVL’s are quite far apart with Arrakis much higher, as well as having many more partnerships/projects under management than Gamma.

Our last DAO established the following ratios:

HOPR-DAI pair on Uni v3 6.8m TVL
HOPR-ETH pair on Uni v3 200k TVL

I propose that we:

Give management of 50% of the HOPR-DAI pair (6.8m)to Arrakis and retain the other 50% as per the status quo.

Give management of 50% of the HOPR/ETH pair (200k)to Gamma and retain the other 50% as per the status quo.

With a performance review after 3 months to compare each strategy with the respective 50% of liquidity managed internally as per the status quo.

If either or both providers have significantly out-performed our internally managed liquidity, we could hand over the remaining 50%, if under-performed against our internal, then we could bring the arrangement to an end.

The aim of the trial period is to establish the performance against what we are doing now. The only way in which they are competing against each other is in how much they can outperform the status quo as a percentage.

This way we will find out if their fees are worth the cost without placing all of our liquidity at additional smart contract risk (during the trial period at least).

This is of course giving much more liquidity to Arrakis, but this reflects the current experience/trust they have established with their clients as shown by their TVL when compared to Gamma.

If Gamma outperforms Arrakis as a percentage over our internal management as described above we can rebalance as appropriate.

It’s disappointing that since our last DAO, Gnosis is still not on uniswap If I understand correctly, that earmarked liquidity is currently sitting redundant with no current timeline for use. If so, we should consider shifting it to either uniswap-on-ETH or swapr DEX-on-Gnosis.

28 Likes
2

very good idea

3

Indeed good idea. Looking forward to providers’ comments.

4

I really like the idea of splitting 50/50 but I feel like both providers should have the same start (i.e. both manage a HOPR-DAI pair and a HOPR-ETH pair) so we can compare more fairly after the experiment.

What I disagree strongly with in this proposal, if I understood correctly, is to give them the whole liquidity we currently have.

I would suggest giving each provider 500k or maybe 250k to start with (split according to the TVL in the pools)

Committing all our liquidity to a single provider could end with a disaster (Hypervisor the previous GAMMA was exploited and I am not sure who lost money in the end, to be fair, IIRC Hypervisor/Gamma paid out of their chest for the losses)

In short: give them a trial amount with the same setup and then compare after e.g. 3 months

1 Like
5

I strongly support this general idea. Both proposals are very different, as are the service fees. It would be useful to have an objective measure of performance.

However, since Gamma is proposing one ETH/HOPR pool, I wonder 1.) if they would be willing to go this route given it’s counter to their reasoning, and 2.) how their proposal would be adjusted to accommodate this.

Ideally, we’d be able to do an apples-to-apples comparison. Would having two separate providers managing significant liquidity on Uniswap impact performance?

6

I like your thinking here. It seems like both proposals would need to be adjusted significantly to go this route.

7

I think it will get a lot more support if some corrections are made.

8

I realised from multiple comments that my description wasn’t clear enough, so I have edited to fix this.

I’m not proposing the 50/50 split is with each provider, but rather a 50/50 split with the status quo and then measure performance after 6 months. A comparison can still be made between external managers from how well performed against our internal management as a percentage.

I am suggesting much more liquidity is trusted with Arrakis in line with their much higher TVL.

In this proposal, only half of the liquidity is being managed externally so not all at risk.

A 50/50 split between Arrakis/Gamma is a different proposal all together, so perhaps write it up for submission?

1 Like
9

@jbradach

My original proposal had some language that was less than clear, I hope my edits have clarified this, the proposal is for Gamma to manage the ETH/HOPR pool as per their submission.

@filmoloji89

Corrections in clarity have been made. further suggestions are welcome

10

How about changing those numbers. I like the proposal, but I would change it to 40% initially and after the 6 month trial, another vote will take place to check if the will get another 20-35%.

I personally would never trust all of my funds to a single entity. Would you? Should h0pR DAO?

The rest is a proposal I would support.

11

I like the idea and I would like to hear from the both parties how they feel about it, although Arrakis’s annual fee of 1% of AUM feels to me really high…

In terms of “out-performing”, if we are talking about the better trade fee earning, I am rather skeptical because what I understand from their explanations is that the benefit of Automated Liquidity Management is basically to be able to provide better liquidity with less capital. Better liquidity gives less price impact for large trades, but doesn’t sound like the trade fee earning get doubled or something (while Arrakis charge 50% of it).

In any way, I’m an amateur in field and very curious how these Automated Liquidity Management works out. So, 6 months of trial seems to be a good idea.

12

I love the idea of trialing both asset managers but believe solely handling DAI as a pair would be a handicap, which may be the intent for loftier Arrakis in this community sourced proposal.

On the other hand 6 months is an exceptionally long trial period. If there was a way to even the field further, have the trial period coincide with a mid overlap of Hopr’s NFT staking seasons instead for 75 days for the benchmark.

Due to the handicap, I would not support this proposal because the inherent terms are not equal.

13

30/70 for Arrakis

14

As am I @satopin, I only have the most basic understanding of this issue.

In terms of out-performing, I’m not necessarily talking about trade fee earning, but in achieving the aims of managing liquidity, which must be a measurable data point.

The providers would be much better at explaining what winning looks like than myself.

In terms of the 1% being high, Arrakis would have to show that their work would earn/preserve more of the managed assets than that to prove their value during the trial period.

@lau.thomas In terms of trust, we aren’t really trusting them with funds so much as they have the power to withdraw, only to manage to LP ranges etc. So if they prove their worth in the trial, I would consider allowing 100% management.

1 Like
15

I would be open to adjusting the trial to 3 months if that was popular in the community.

16

Thanks for bringing this proposal! Competition in liquidity providing and diversification of DAO funds seems a good idea to me.

If Gamma outperforms Arrakis as a percentage over our internal management as described above we can rebalance as appropriate.

Makes sense. I will support this proposal.
Numbers 50/50 are OK.

17

Fantastic idea!

18

Thanks @MonkeyTennis for your reply.

Indeed there are many aspects when it comes to out-performing, and I’m curious what aspect HOPR DAO has the interest.

@thewanderingeditor Is there any online source or something where we can check the metrics/stats of the current HOPR DAO liquidity? I would like to know how the current HOPR DAO liquidity on Uniswap is performing. Also it is useful when it comes to comparing with Arrakis/Gamma managed part of the liquidity later.
Uniswap Info page shows the info of the pool itself but not the liquidity that HOPR DAO provides. It is also hard to see how much trade fee earning it generates in a certain period of time.

19

I do not agree. Now we can make a good choice. We can see how they work from the protocols they have worked with in the past, and they will not act together in any way. Waste of time.

20

Awesome idea!