INTR to Omnipool
I have seen that recently various incentives have been made for iBTC pairs in different Dexs paid in INTR
So I would like to propose the following initiative:
Provide INTR as liquidity in the Omnipool (by design it allows LPing a single token) in order to access a large number of assets that will expand over time, which by providing liquidity, is as if we were opening a pair with each Omnipool asset, without the need to be incentivizing separate pools,
and in turn the Interlay community, will be able to manage the fees generated through governance, opening up different possibilities
It should also be noted that the HydraDX community owns and already provides 10 iBTC as liquidity, which currently makes Omnipool the best option in terms of slippage, you can review it for yourselves
Also INTR could be used as an incentive in the Omnipool (this can be separated in another discussion and is not the main point of the proposal) once Liquidity Mining is active and create a broader liquidity base (with the difference that the LM of the Omnipool rewards long-term LPs, since the more last the position in the Omnipool, more rewards will be generated, these positions can also be transferred)
For now I would like to propose and discuss the above ideas, so as a community we can decide what the terms would be.
This seems like a very good next step for expanding both Interlay Network and HydraDX’s omnipool. I would vote aye on this proposal
As an avid swimmer in the Omnipool, it would be great to have INTR tradeable there. Makes absolute sense with the ability to have INTR single-sided LP and automagically paired against all other assets in the Omnipool
Nay, we should start with INTR/DOT pool on Interlay DEX. Ofc i understand that more rewards is smth that always make sense for current Omnipool users, heh.
But is there any single reason why we really need INTR in Omnipool, especially earliar then having INTR/DOT on our own DEX? And would that bring at least one new iBTC user to Interlay? The fact that HydraDX community already have 10 iBTC without any rewards means that they can get 20 or 200 iBTC lately also without rewards. Just because iBTC is so strong asset.
However i have nothing against incentivizing Hydra community for putting more iBTC into the omnipool. More iBTC into pool - more INTR rewards. Some steps may be. 20, 50, 100 iBTC seems to be reasonable. If some reasonable mechanics like this would be proposed, i'll support for sure.
I think that Alexey is quite aware of what Hydra and Omnipool are. It would be illogical from the point of view of benefits for Interlay to refuse to add a INTR to Omnipool without providing a second pair to DOT or USDT. You don't just lose nothing, you also earn on commissions. Imba.
This is not a competition with its own INTR/DOT pair, INTR should be as liquid as possible
Be sure to place an INTER in Omnipool. I'll be waiting
It should also be taken into account that if Omnipool Users acquire iBTC and wish to use it in the Interlay Chain with its different features or withdraw them to BTC, they need INTR as gas, and being able to obtain these in the Omnipool greatly reduces that friction for the news users.
Seems like guys from Hydra coordinated to came to us and get some free money. Finally have nothing against in case some more targets for iBTC would be reached. Like, each 10 iBTC - some portion of INTR from us to support Omnipool. And no rewards for adding INTR token. Right now its not true time for INTR token marketing i suppose, at least until Interlay DEX wouldn't be launched.
I fully support both parachains, and I'm excited about the potential integrations. As an INTR holder, I will vote in favor of this proposal as it will increase liquidity for INTR and provide more use cases for both networks.
After reviewing the discussion, I am confused about the concept of "free money" for HDX holders. Please review the proposal description again and let's maintain a respectful discussion.
To clarify, the proposal does not provide INTR tokens for LP incentives as liquidity mining is not available on HydraDX atm. Rather, it aims to provide liquidity and earn rewards from generated fees. This will properly utilize INTR funds and generate yield at no cost.
I will vote in favor of adding INTR liquidity to the Hydra Omnipool. Hydra is great, because it allows you to buy and sell your tokens with great liquidity.
One more point is adding liquidity from treasury means taking some risks for sure.
Would you guys probably cover all possible risks. Including:
What would happen with our treasury tokens if MultiChain would be drained or USDT blacklist some of your USDT tokens in Omnipool?
What would happen if some low-liquidity token in omnipool got manipulated:
- smb bring 1M USDT into Omnipool and swap to HDX tokens.
- swap expensive HDX tokens INTR and withdraw
- swap rest of HDX back to USDT
- withdraw USDT
Do you have a clear simulation of this kind of behaviour?
Generally saying, we can look for your offer as investment idea for Interlay holders. However it still totally unclear if investing INTR from treasury make sense from strategic standpoint. We are not investment DAO i suppose, we are buliding iBTC, thats our purpose.
I'm generally very supportive of this idea since it makes sense to create POL in INTR instead of paying incentives for INTR pools, while simultaneously diversifying the treasury.
I just don't think that right now is a good time to do so. The community has to be aware that the execution of such a proposal would sell INTR tokens from the treasury in exchange for LRNA. It is just my personal view, but I do think that the INTR token is very undervalued compared to other projects on Polkadot and I would not want to sell a large chunk of the treasury holdings at such depressed prices.
Ever since OHM and ROME I've realized that Protocol Owned Liquidity is an awesome concept because the treasury receives rewards from swaps of their tokens instead of constantly paying out LM rewards and depleting the treasury. Then I learned about the HydraDX Omnipool design and was impressed with all of the security features to reduce IL like capping the amount of a token in the pool, having circuit breakers to stop trading in an asset if its volatility increases too much (I think circuit breakers activate within one block). Plus single-sided liquidity provision simplifies implementation for the Interlay team and provides more concentrated exposure to all of the other assets in the Omnipool instead of choosing which individual pairs are incentivized.
I've been a long-term Kintsugi/Interlay vault operator and understand why the Interlay team has felt a need to build their own DEX so that they can create loan products based on iBTC to grow the iBTC economy. However, I now feel that the Omnipool design is superior to all other xyk DEXs and superior to Uniswap v3 "concentrated liquidity". Therefore it seems the most efficient place to establish deep INTR trading liquidity. Therefore the combination of Omnipool and POL (or Treasury Owned Liquidity TOL as I like to call it) seems like a no-brainer and the question is only "wen?".
Regardless of the timing of the rollout of Interlay's own DEX, I whole-heartedly endorse depositing some amount of INTR into the Omnipool. Stellaswap is the deepest INTR liquidity pool currently and I notice that Stellaswap currently has $100k TVL in INTR-GLMR v2 pool as a comparative datapoint.
Therefore I propose two different possible amounts of INTR that could be deposited into the Omnipool:
- Deposit the same amount of INTR into the Omnipool for each LM incentive program paid out by the treasury. That's currently $8500 or 362k INTR in today's Stellaswap 2-month funding proposal. That amount of INTR would be a "small step" into the Omnipool and with each LM incentive paid out we'll incrementally deposit more INTR into the Omnipool.
- Go all the way right now and deposit $100k of INTR (3.4M INTR) to match the current INTR-GLMR v2 Stellaswap pool depth. I don't know the current size of Interlay treasury so this may not be feasible or palatable, but it would reduce team workload in that you'd need to transfer INTR only once.
note: I propose not providing ANY INTR as liquidity mining incentives to the Omnipool right now. ONLY deposit tokens that the Interlay treasury retains ownership of.
I am all for making INTR more accessible. The Interlay treasury would own the Liquidity & earn the fees. This is really a no lose situation.
Graphic representation of Hydrate your Treasury 👀
Yes like @wdCm...tn4a say in the last comment
I believe that we can add like liquidi an initial amount of 200k $, and later, after seeing how it has worked, decide if it is worth adding more or not.
200k $ is a enought amount for a reasonable slippage
For mlre context:
To put some perspective on this, on $1000 trade you currently get:
USDT/DOT ($465k liq): 0.26% slippage
USDT/iBTC ($298k liq): 0.38% slippage
USDT/ZTG ($172k liq): 0.62% slippage
As a contribution to the discussion around the protocol owned liquidity (POL) in the Omnipool, I prepared an analysis of the benefits and risks and tried to put it into perspective to the existing solutions. The questions I raised are not answered directly but are followed up with unbiased facts, so that the readers can draw their own conclusions.
Does this replace the need for incentives for INTR pools and how much does it save?
So far the DAO has spend ~700k INTR for liquidity mining for INTR across various chains and DEXs, while only one pool (INTR/GLMR on Stellaswap. Moonbeam) retained sufficient liquidity over time:
- Acala: 440,000 INTR
- Stellswap: 250,000 INTR
- Arthswap: 6,500 INTR
- Total: 690,650 INTR ~$15,700 (with INTR at $0.0227 as per 08/05/2023)
The recent proposal from Stellaswap asked for 64,000 INTR (=$1,500) for 8 weeks and assumed an APR for ~60% for the Pulsar pool (Uniswap V3 style). From the experience with the existing INTR pool on Stellaswap (Uniswap V2 style), it is known that Stellaswap has an interest to continue paying incentives for the INTR pool unilaterally at a lower APR, while the TVL stayed relatively constant.
Given that Pulsar pools allow for concetrated liquidity, it can be assumed that a pool on HydraDX would need around 10 times the TVL of a Pulsar pool to achieve the same liquidity. Assuming $100,000 TVL (about the historic average on Stellswap over the past months) on Pulsar, the DAO would need to deposit around $500,000 (10x the $50,000 INTR in the Stellswap pool) in INTR into HydraDX’s Omnipool, which would be around 20,000,000 INTR or 8% of the treasury.
Does that replace the need for a market maker on a CEX?
The current market maker is not able to provide sufficient order book depth for users to execute larger trades without meaningful price impact. While a large liquidity pool would improve the tokens liquidity, I does not fully replace liquid listings on CEX’s because these are still the easiest way for new users to buy INTR token and join the network. However, on-boarding new users usually only requires a small amount of token so that there is no hard requirement for deep liquidity on CEXs.
What are the risks for the DAO?
From price changes of the INTR token
Since HydraDX’s Omnipool is similar to a Uniswap V2, the IL behaves very similar. Assuming the DAO deposits 20mln INTR tokens in the pool at the current price of $0.0227, every 1% increase in the INTR price would result in an impermanent loss (IL) of around $5100.
Given the above cost analysis, a 3% increase in INTR price would already result in an IL that would have covered the cost for the all three previous incentive programs.
Should the price of the INTR token decrease, the DAO would not receive any LRNA token when redeeming the LP position and hence, would not diversify the treasury that way.
Currently, the majority of the TVL on HydraDX are tokens that are bridged via Wormhole (wBTC, wETH and DAI). These three tokens make up for almost $6m or 63% of the protocols TVL. Since INTR would be implicitly paired against all other tokens in the pool, the DAO is at risk of incurring losses in the event of another Wormhole exploit. This could lead to a loss of around 2/3 of the DAOs initial/current contribution.
What are the benefits for the DAO?
What the cost analysis left aside is that the DAO would generate a 0.3% trading fee from every trade that would be executed through the INTR pool (every buy or sell of INTR). The current daily volume of most tokens on HydraDX is between 1-10% of the TVL. Assuming similar values for INTR and the aformentioned $500,000 INTR deposit, this would generate around 1.1-11% APY for the DAOs LP position.
From price changes of the INTR token
Should the price of the INTR token increase (relative to the other tokens in the pool) after the deposit of the token, then the DAO would receive, upon withdrawal on the LP position, some LRNA token. LRNA token can be traded for any other token in the pool and the DAO would therefore diversify the treasury.
Price risk of other tokens
Because the LP position of the DAO is implicitly exposed to the price risk of other tokens in the Omnipool, a decrease in the other tokens prices relative to INTR would mean that the DAO would receive some LRNA tokens upon withdrawal, similar to the situation described above.
- On the one hand, INTR price is currently close to this all-time low. With small tokens usually appreciating in price more than established tokens during a bull run, this could lead to considerable IL for the DAO
- On the other hand, the constant and high issuance of INTR tokens relative to its current supply keeps diluting existing holders and consequently puts pressure on the price.
- Setting up a large INTR position on Omnipool would directly compete with an INTR pool on Interlays on DeFi hub, which is supposed to launch soon.
Thank you very much for the analysis, however regarding the IL, the HydraDX team is working on some IL comparisons and calculators, which will help to have a better view on this point, since now is hard to do
As for the point of bridges assets, it is something that is inevitable to avoid, since more liquidity is outside the ecosystem, however this percentage will go down more and more, as the POL strategy is executed, where several will be added. Millions of $, in various native assets, like DOT and vDOT, as well as more ecosystem projects joining (ASTAR soon) and of course the same community adding liquidity and the security measures will help in any case to limit of a possible damage
Personally, I see it as a good thing to add liquidity when the token price is low, since when it goes up, you end up with LRNA (which represents the liquidity of the Omnipool, so if liquidity goes up, the LRNA price too, which you can swap to other tokens through DCA and diversify the Treasury( POL) or do INTR buybacks) and in turn you end up with a higher TVL as liquidity available to the market, without making more effort and without deploying more capital, and thus the Interlay community can enjoy a market more liquid for INTR token, controlled by the same community through governance, not depending on market makers, not depending on CEXs, all trustless and through governance
and since you will not withdraw the liquidity, in a short term, it also gives you to accumulate fees,
Also if remain in the same range, still you end up with more fees - tokens
and with the addition of dynamic fees, the liquidity provided will become more profitable, obtaining more tokens
Do you guys have same stuff on Kusama? Basilisk if i am not wrong? Why not to start with this on Kusama with KINT and see whats going on following our best traditions.
Have thousands vKINT to vote on it on Kusama.
IIRC the Omnipool is on HydraDX only. Basilisk does not have an Omnipool.
I'm supportive of making such a proposal.
Good proposal. INTR needs better liquidity. Pretty sure INTR in the omnipool and the DeFi hub can co-exist.