Protocol Owned Liquidity Injection: The proposal calls for a $500,000 investment from the DAO’s treasury into the SEAM/USDC LP on Aerodrome, granting us the dual benefit of trading fees and AERO emissions.
SEAM Bribes for Voting Incentive: To sustain community engagement, we propose a $140,000 fund for SEAM bribes over 20 weeks to incentivize voting, which in turn boosts AERO emissions and the protocol’s governance strength.
Fruitful Emissions Outcome: An anticipated collection of approximately 132,146 AERO, estimated at $199,540.46, sets the stage for a community-driven decision on the utilization of the accrued assets. Ultimately, the DAO will decide what we do with the earned AERO rewards/emissions: (1) sell AERO to buyback SEAM; (2) lock-up AERO and improve the DAO’s opportunities in earning more emissions.
Advantages for the DAO: This approach allows us to forgo a rigid lock-up period, instead facilitating active liquidity provision to stabilize SEAM’s value and increase potential revenue and governance sway.
Specification
Our proposal aims to utilize treasury assets in a manner that not only enhances liquidity but also aligns with our long-term objectives (and the ethos of Seamless Protocol). We are sidestepping an enforced lock-up in favor of a more fluid and dynamic approach that provides immediate benefits and opens up future governance decisions to the community.
To reiterate:
$500,000 worth of SEAM will be allotted towards LPing in the SEAM/USDC pool.
$250,000 worth of SEAM will be exchanged for USDC in 7d TWAP.
After successfully exchanging SEAM>USDC we will proceed to provide liquidity to the given pool. At the same rate, we will also allocate $140,000 worth of SEAM to further incentivize (bribe) the pool. We’ve broken this allocation into weekly intervals of $7,000/week. This campaign aims to run for 20 weeks.
At the mid-way point of the campaign (week: 10), an update proposal will be submitted for community deliberation to determine whether or not: (1) we should continue with this experimental effort or; (2) the community is in favor of how well the campaign is performing and believes we (the DAO) should allocate more funds to the existing LP position.
We are confident that this proposal serves the best interests of the DAO, providing stability for SEAM’s market, generating revenue through trading activity & emission accural, and possibly amplifying our governance influence overall.
We welcome the community’s feedback, discussion, and votes on this pivotal governance proposal.
Thank you @Guz_MassAdopt for this proposal. I believe that a closer collaboration between two leading dapps on Base Seamless and Aerodrome will be beneficial for both DAOs and the Base ecosystem in general. This proposal shall pay the way towards this collaboration.
Moreover, it is a very elegant way to start the process of the treasury diversification.
Hi @Guz_MassAdopt I am in favor of this proposal. The Protocol Owned Liquidity seems to create a flywheel with bribes and also earning some of those same rewards.
This also creates more reason for users to LP their SEAM on Aero and continue holding to reap the rewards on the Aero platform.
I do think that we can determine if over time we want to increase the position based on how it is performing. Additionally I feel a good call to LP into a USDC pool given Gauntlet’s push for native USDC adoption on Base which has manifested in Aerodrome receiving more rewards in the form of USDC to provide users. https://x.com/aerodromefi/status/1776232317230690685
From the aerodrome team - weekly retroactive calculations are done to match a proportion of the USDC rewards to the incentives of each pair that has USDC.
BTW I am for this proposal - one thing to really think about is the responsible liquidation fo DAO assets - there have been side discussions with Aera Finance on this front and I believe something could be in place by the time this proposal is executed (if it is passed).
Hi all, I’m part of the Aerodrome team. Excited for the Seamless <> Aerodrome collaboration!
This feels like a very well-designed program. The SEAM <> USDC pool will certainly qualify for the USDC program mentioned in the comments, and the AERO captured through the LP position will allow Seamless to lock AERO as veAERO to vote on the pool or redeploy the AERO as additional incentives (bribes) in following weeks. Both options would enhance the impact of the program.
@tao thanks for sharing this and welcome to the Seamless discourse forums! Agreed, this seems like a mutually beneficial opportunity for both projects and the Base ecosystem.
@Guz_MassAdopt since this discussion has been ongoing for 8 days, should we move it to a snapshot vote? (It has passed the required bar of 5 days discussion + 2 days cooldown). This could gauge community interest and commitment to the proposed amounts and approach. However, funding for SEAM and USDC will require an on-chain governance action later (but it would be implied this could be passed pending the snapshot vote outcome).
In the meantime, I suggest community contributors start coordinating on a parallel proposal to responsibly liquidate DAO SEAM for USDC needed to execute on the proposal ourlined above. Several options have been discussed on Discord and Telegram, there seem to be a couple of valid decentralized approaches that can fit into the framework of the DAO, more to come from @Ras on this front I believe separately.
Hi all! As a community member pointed out, there was one small step we missed in the codified governance process: reposting the proposal with edits incorporated
As such, doing this below cc @Guz_MassAdopt .
To summarize: there were no additional community comments to add into the original proposal, as such, the proposal goes to voting in it’s original form (see below).
The proposal is currently live for voting on snapshot labs.
Protocol Owned Liquidity Injection: The proposal calls for a $500,000 investment from the DAO’s treasury into the SEAM/USDC LP on Aerodrome, granting us the dual benefit of trading fees and AERO emissions.
SEAM Bribes for Voting Incentive: To sustain community engagement, we propose a $140,000 fund for SEAM bribes over 20 weeks to incentivize voting, which in turn boosts AERO emissions and the protocol’s governance strength.
Fruitful Emissions Outcome: An anticipated collection of approximately 132,146 AERO, estimated at $199,540.46, sets the stage for a community-driven decision on the utilization of the accrued assets. Ultimately, the DAO will decide what we do with the earned AERO rewards/emissions: (1) sell AERO to buyback SEAM; (2) lock-up AERO and improve the DAO’s opportunities in earning more emissions.
Advantages for the DAO: This approach allows us to forgo a rigid lock-up period, instead facilitating active liquidity provision to stabilize SEAM’s value and increase potential revenue and governance sway.
Specification
Our proposal aims to utilize treasury assets in a manner that not only enhances liquidity but also aligns with our long-term objectives (and the ethos of Seamless Protocol). We are sidestepping an enforced lock-up in favor of a more fluid and dynamic approach that provides immediate benefits and opens up future governance decisions to the community.
To reiterate:
$500,000 worth of SEAM will be allotted towards LPing in the SEAM/USDC pool.
$250,000 worth of SEAM will be exchanged for USDC in 7d TWAP.
After successfully exchanging SEAM>USDC we will proceed to provide liquidity to the given pool. At the same rate, we will also allocate $140,000 worth of SEAM to further incentivize (bribe) the pool. We’ve broken this allocation into weekly intervals of $7,000/week. This campaign aims to run for 20 weeks.
At the mid-way point of the campaign (week: 10), an update proposal will be submitted for community deliberation to determine whether or not: (1) we should continue with this experimental effort or; (2) the community is in favor of how well the campaign is performing and believes we (the DAO) should allocate more funds to the existing LP position.
We are confident that this proposal serves the best interests of the DAO, providing stability for SEAM’s market, generating revenue through trading activity & emission accural, and possibly amplifying our governance influence overall.
We welcome the community’s feedback, discussion, and votes on this pivotal governance proposal.
A quick update here - our community partners at @Aera cc @holt-aera have been hard at work putting together a new product feature that allows the DAO Treasury to directly integrate into the Aerodrome liquidity flywheel system.
This means, within the next week or two a fully functioning system will be integrated into the DAO’s Aera Vault which can:
Incentivize targeted liquidity pools
Provide Protocol-owned-liquidty to specific vAMM and CL-AMM pools
Collect rewards emissions from those pools
Lock-up AERA into veAERO to be used for voting
Vote to collect incentives/bribes and direct emissions to certain pools.
Per the longstanding GP-5 proposal above, the DAO will aim to provide protocol owned liquidity once these features are live. Additionally, based on the [GP-6] proposal, a treasury management multi-sig (called the AVMC) was setup to help make these decisions more quickly and execute on them, with a limit of ~$2m USD worth of SEAM being directed into strategies as seen fit by the council.
As such, here is the current proposal/timeline as seen by the AVMC:
Given the DAO Aera Vault has close to ~$625k in USDC available, the AVMC suggests increasing the POL strategy from $500k to a total of $1m USD (i.e. $500k worth of USDC and $500k worth of SEAM)
First deploy liquidity across a SEAM-USDC vAMM pool and CL-AMM pool - keeping an eye on which pool seems to be more efficient (likely the CL-AMM pool, but there are additional complexities that arise with the CL-AMM pool)
Meanwhile, accumulate some ETH into the DAO Aera Vault to allow for future optionality on spinning up SEAM-ETH pools (less impermanent loss). These pools are currently not possible given the DAO does not own ETH
Begin accumulating AERO and locking as veAERO to participate in the Aerodrome flywheel (described in bullets 1-5 above). Based on rough estimates, accumulating >200k in veAERO to be used as votes from the DAO should be enough to maintain >$1m liquidity pool in the future (so the DAO liquidity could be used elsewhere if decided)
Begin bribes from the AERA DAO vault to begin this flywheel effect, targeting between $5-10k USD worth of bribes per epoch (once again, keeping a close eye on efficiency and impact). Here is a model based on numbers @tao from the Aerodrome contributor team has shared with us, to help calculate some of these initial numbers
To offset the risk of initial bribes/incentives being accumulated by minuscule votes, the Aera DAO Vault will buy ~$5k AERO to lock as veAERO to utilize as initial voting to provide at least a base floor of votes and re-accumulate some of the incentives back to the DAO
We believe this plan of action will provide the Seamless community with:
Deep on-chain liquidity for the SEAM token, allowing more users to accumulate SEAM on-chain and join the growing Seamless Protocol community
Stable liquidity that is less sensitive to market conditions, given the DAO’s Aera Vault mandate to provide protocol-owned-liquidity
Offset short-term bribes/incentives of SEAM with longer-term accumulation and position building of AERO and veAERO, which can be used to vote on emissions to SEAM pools in the future (which can offset lower and lower bribes from the community), finally creating more sustainability in the SEAM DAO simply taking a larger role in veAERO voting vs the need to use short-term incentives
As a separate note, the eventual sunsetting of AVMC should still be a topic under discussion, and can be revisited and discussed in the [GP-6] thread (proposal linked above). In the interest of speed and timelines, it seems after the aerodrome feature integration into the vault, would be a good time for the DAO to revisit this discussion.
Nice idea and model, but one question:
Given potential risks such as shifts in AERO’s popularity or unforeseen vulnerabilities like hacker attacks, what metrics or KPIs will be used to evaluate the efficiency of the bribes, and whats plans are in place to quickly adjust the strategy if these risks materialize?
I fully support this. To @Smailov’s comment, I agree that sharing a contingency plan (overall back-out plan) would be great for both transparency and protocol integrity purposes. Another question is, “are we (Seamless DAO) limited in accrued emission selloff?” A good recent example is that of Origin Protocol’s Super OETH product that was selling a substantial amount of emissions - thus impacting AERO price (whether concurrently or lagging). In response, the Aerodrome submitted some guidelines on what/what-not to do if you’re farming emissions.
This should be thoroughly laid out for the community to ascertain and better for Aerodrome to ascertain our (Seamless DAO’s) intentions. Should this lay out change in the near future, it should be escalated for community vote (wheter streamlined or through the traditional governance flow).
Fully support this idea. DEX liquidity should be definitely improved. Today we witnessed a surge in volumes, but around 99% of them were traded on CEXes, that is not very within the on-chain philosophy. Additionally, this will contribute to the treasury diversification of the protocol.
@Smailov concern is valid. Aerodrome is a leading Base native DEX for the moment and we should act accordingly. However, as a DAO we should examine all possible scenarios and diversify as much as possible. In order to move liquidity in case of emergency we need to have it first. In this regard I agree with @richyRNG suggestion on accumulating enough ETH on the DAOs balance in order to have a space for maneuver. Additionally, since we have cbBTC now available on Base, I would also opt for accumulating it as well, as a part of the treasury diversification process. But that is definitely a subject for another proposal.
Given the size (TVL) of Aerodrome and multiple audits and longstanding operations (on both Optimism and Base), I would personally assign a low risk score to a black swan exploitation event, and certainly other projects would be far more exposed than us. However, happy to have more technical insight weigh-in here as needed. If the DAO cannot provide liquidity to Aerodrome (a top 5 dex in all of DeFi, not just Base), then the list of protocols the DAO can work with is far too short. Additionally, this is simply an expansion of agreed upon POL from above
In terms of plans, we will need to check with the Aera team, but the Aera team constantly monitors positions as a part of their rebalancing task (they are managing the position actively similar to how something like Arrakis helps with uni v3 management), they might be one of the first front lines of defense for a speedy withdrawal of assets
Efficiency of bribes is certainly a hot topic, a few thoughts here:
From the spreadsheet I shared, it is projected to be a net positive EV decision for the DAO, as long as the emission multiplier remains above >1, then the bribes/incentives put in get a positive return of AERO emissions. Historically, this multipler has sat around 1.2x but been as high as 2x. If the multiplier drops BELOW 1x, it is unprofitable to incentivize the pools and I believe the DAO should not incentivize in that case.
Aera will be pioneering an incentive optimization product with Seamless, that focuses on optimizing incentives given historical (and projected) future emission multipliers as well as efficiency of those bribes (I assume it would be measured as $ in incentives spent vs on-chain liquidity depth provided). We can discuss with Aera further, the exact scope of this and try to publish those reports as they are available, maybe on a quarterly basis or so
Apologies if this wasn’t clear from the post above, but the DAO will be strictly accumulating AERO at first, in the short-term. This ensures harmony with the Aerodrome team/ecosystem and is long-term aligned with the goal of the DAO (to maintain a stack that will allow for voting on pools / generating emissions and removing the need for the DAO to therefore bribe.
For example, the DAO needs to bribe/incentivize now to get X votes, but if the DAO has X votes itself, in the future it can vote for the pools itself and save the money on the bribes. This is a net positive and long term relationship with the Aerodrome protocol and so long as emission multiplier >1 (as outlined in response above) this is actually a positive EV/profitable activity for the DAO to partake in.
This thinking has been preshared to aerodrome contributors who are generally aligned and excited about the launch this week
I believe this proposal represents an excellent strategic move for Seamless Protocol and should be approved. The flywheel concept embedded in this strategy is particularly compelling, as it creates a self-reinforcing cycle of benefits for the community and the protocol. By investing in the SEAM/USDC pool and leveraging AERO emissions, the protocol can achieve multiple objectives simultaneously: enhancing liquidity, stabilizing the token price, and generating consistent rewards.
The allocation of $140,000 in SEAM as “bribes” to incentivize votes amplifies the flywheel effect, driving further emissions and creating an opportunity to accumulate AERO. This mechanism can directly benefit SEAM holders, not only by strengthening the protocol’s liquidity but also by potentially boosting the token’s price due to increased demand and utility.
The flexibility in managing the accumulated AERO rewards is also noteworthy. Whether they are used to repurchase SEAM or reinvested to boost governance influence, both paths can provide long-term value to the community.
It is my understanding that AERA will fully monitor each epochs bribes, their effectiveness, and at any moment are able to adjust strategy to meet goals set forth by the Seamless community. With this watchful approach I feel confident in starting with this strategy, taking any AERO emissions and locking to veAERO. Of course this can change if there are certain epochs where another outcome is optimal. Fully support I think this has big implications for SEAM with tremendous upside to drive onchain liquidity for the community here on Base.
