Hello Seamless Community!
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.