Over the past month, the HOPR Association has reached out to various projects who over liquidity management services. Two of them – Arrakis and Gamma – have already written proposals, which they’ll be sharing with you shortly.
Both projects are based in the US, so expect some slight delays in the discussion because of the timezone difference.
For now, I invite you to check out their websites and learn more about the projects:
More projects may be presenting proposals as the discussion proceeds.
50/50
Interesting. Using a liquidity management service is a good idea since it allows the HOPR team to focus on development.
Arrakis Finance describes itself as a community-owned protocol. Can you say more about this? I poked around your website and GitHub repository but couldn’t find anything about this.
Gamma has some interesting Uniswap v3-related GitHub repositories and some fairly detailed analytics. It looks like their interface supports a couple of additional networks.
Looking forward to the proposals from these services.
30%/70% divide
Can someone enlighten me…
I somehow get it, that hopr can focus more on their on protocol. On the other hand, what is there to manage? Add stuff to uniswap v3, end of story. Anyone can swap. And then, once in a while, there is a DAO experiment, and some tokes will get a new pair like ETH. Seems not to be a time consuming factor. Am I wrong?
Why does “active liquidity management” sound a lot like an product an investment bank would offer?
Let’s see what these groups can bring to the table. We should be worried about the “fine print” of such an agreement and I suggest the HOPR legal team play an active roll.
It seems to be a wise idea to use a professional liquidity service provider and I would recommend to go 30%for each provider. The remining 40% should be managed by the HOPR association for the near future. HOPR association should monitored the liquidity service providers performance for at least 4-5 years so that we would be able to gauge its performance in both bull and bear markets. Post this period, if HOPR association is pleased with its performance, they could extend the remaining 40% equally to these providers or use any new providers that are available.
Furthermore we would need to understand the strategies used by these providers in bear market to understand how they would do their best to protect the tokens price.
Furthermore what are the risk controls these provider have so that they do not take over control of the entire liquidity and leave HOPR association helpless, specially if these projects go bankrupt or get hacked etc.
Arrakis seems more established. Double TVL compared to Gamma. Gamma also seems like it was formally Visor which suffered from constant hacks.
I noticed that. Good flag.
I have quite a few question marks at the moment. How exactly is more effectiveness achieved?
Further, risk management is a very important topic. Gamma seems to be still quite young and has also much lower TVL. According to the previous speaker, there were even attacks on the protocol. I think we should refrain from using Gamma and focus more on the Arrakis.
I see it like this, regardless of the protocol, I see an additional risk here. With our small volume, is the risk even worth taking?
If someone could say something about the function of these protocols it would be great. I try to educate myself in the meantime.
Whatever we decide, it seems to me we should not put all our eggs in one basket. Particularly because these are untested waters. Giving a portion of liquidity to one or more of the proposals will allow us less risk. If we see consistency in a certain time frame we could do a future proposal to increase liquidity managed. At least this is my two cents.
Guys, I’ve already heard about Arrakis, which is by far the largest LP on Uniswap v3.
It seems to me that if you trust anyone, it’s only him)
In any outcome, the team provided us with these two candidates for a reason. I think there has already been their reliability check.
I liked the ideas of distributing the amount of funds between these companies.
I would distribute it like this:
Arrakis 70%
Gamma 30%
Arrakis proposal is very interesting and well detailed. However, I would to see as many proposals as possible. The main reason is that I do not have much knowledge on that subject so it would be interesting to compare all possible alternatives.
I was looking up both Arrakis and Gamma project and found some figures that might be interesting for other participants.
Arrakis: Arrakis Finance: TVL and Stats - DefiLlama
Gamma: Gamma: TVL and Stats - DefiLlama
the security and safety of these protocols must come first
Will there be any potential issues with both these management services based in the US? Is there a potential for future US regulatory issues around crypto affecting these management services?
Hey everyone!
Thank you all for your consideration here, and I would be happy to answer the questions that came up here. Please also take a look at the proposal from Gamma Strategies in the link above!
@lau
It’s more of a service provided by us to manage concentrated liquidity on an AMM. Essentially, we work with you on specified parameters such as (1) liquidity ranges and (2) rebalance triggers and then create the automation process to do exactly that.
In terms of strategies, it’s very similar to what I mentioned in response to @lau.thomas 's question. We would manage within a certain range and when certain price targets are hit, we would rebalance to the new range.
We would then periodically run an optimizer code to configure the best ranges to use based on historical data.
In terms of risk controls: Managing liquidity solely on behalf of the DAO is much safer than managing liquidity vaults open to the public. We can assure that only the DAO has the power to deposit within to its own position manager contract. The biggest risk here is that an external party would use a flash loan to inflate the price of one of the tokens and then subsequently deposit into the vault at an increased valuation. That would entitle such actor to receive greater than his proportionate share in the vault and withdrawing could lead to a potential exploit.
To control for that, restricting the depositing of the liquidity only to the DAO prevents that from happening. Gamma has no admin function to withdraw any of the liquidity and the DAO can deposit and withdraw from the vault permissionlessly.
The only admin function that Gamma would retain is the ability to rebalance the liquidity in the new range. But the vault would be completely noncustodial in that only the DAO would be able to deposit/withdraw to and from the vault.
We’ve also had a 4-week audit from ConsenSys Diligence and a 2-week audit from Arbitrary Execution to prevent such attacks from even occurring in our publicly managed pools.
I completely understand your concerns here, and we’ve really gone the extra mile in terms of securing audits. Our latest contracts have undergone an intensive 4-week audit by ConsenSys Diligence and a 2-week audit by Arbitrary Execution (links are in the proposal). Although irrelevant to our current proposal, we’ve also had Mudit Gupta look over our staking contract.
The technical changes included implementing dual-sided deposits, TWAP checks, and re-entrancy safeguards at every corner of contracts. Happy to go over those more in detail, and we’ve also released an article here detailing much of the changes (Gamma’s v2 Smart Contract Audit Completed by ConsenSys Diligence & Arbitrary Execution | by Gamma Strategies | Gamma Strategies | Medium). Ribbon Finance, FWB DAO, and Liquity have all used our new contracts for liquidity management.
Yeah definitely agree on this! For our Optimism proposal regarding incentivizing OP-WETH liquidity, we made a joint proposal with xToken which was very favorably received given that we’d be spreading out counterparty risk, while distributing those incentives all towards the same Uni v3 pool.
My only suggestion is if we do decide to split the liquidity amongst all providers, we ensure that both providers are providing liquidity to the same exact pool so as to lower price impact the most efficient way possible.
One thing to re-iterate here is that our position management contracts are completely permissionless and unable to be frozen by a government agency. Additionally, the liquidity within them is non-custodial in that we cannot withdraw that liquidity ever. Only the LP tokenholder, which is the DAO in this case has the power to do so.
Happy to delve deeper into any of these responses! Again, thank you all so much for your engagement!
I think it would be beneficiary to hold an AMA with Arrakis and Gamma to get a better understanding of how each one can contribute to HOPR. Taking pre-questions and live questions. I think the community would have a better opinion if that took place. Was Convex Finance considered?
Fantastic idea! Would love to take part in that