After bringing SHU to Base, Shutter DAO 0x36 should create a liquidity pool on a decentralized exchange (DEX) in order to facilitate the purchase and sale of SHU on Base.
Aerodrome is the most popular spot DEX on Base. The brand is widely trusted and the user experience is familiar to most traders. (https://defillama.com/chain/Base)
Most trading pairs on Base are X/WETH.
Implementation
Shutter DAO 0x36 transfers the SHU and USDC to its market maker (or a trusted member of Shutter DAO 0x36) on Ethereum mainnet.
Market maker applies for listing of SHU token on Aerodrome
Market maker bridges SHU and USDC to Base (ChainID: 8453(0x2105)).
Market maker swaps USDC for WETH.
Market maker deploys and funds a SHU/WETH pool on Aerodrome on Base.
Market maker transfers unused SHU and/or WETH to the Safe on Base controlled by Shutter DAO 0x36.
Market maker transfers Areodrome LP tokens to the Safe on Base controlled by Shutter DAO 0x36.
Funding the SHU/WETH Pool
Tokens to be transferred to the market maker on Ethereum mainnet:
8,000,000 SHU
100,000 USDC
The SHU to be transferred to the market maker on Ethereum mainnet is intentionally too high. The exact amount of SHU and WETH used to fund the Aerodrome pool on Base will depend on 1) the market price of WETH when swapping USDC to ETH, and 2) the market price for SHU on Ethereum mainnet. As stated above, the market maker will transfer unused SHU and/or WETH to the Safe on Base controlled by Shutter DAO 0x36.
Platform
Decent
(If passed and executed, this proposal will trigger on-chain transaction(s).)
Voting Options
Vote “FOR” to if you support deploying and funding a SHU/WETH pool on Uniswap v3 on Base
OR
Vote “AGAINST” if you do not support this proposal
OR
Vote “ABSTAIN” if you do not have an opinion but want to help the vote reach quorum
Sounds like a reasonable idea. Did you consider Aerodrome instead of Uniswap? If yes, why Uniswap over Aerodrome? Afaik Aerodrome has almost double the TVL.
Have one question as well since the Uniswap v3 is mentioned. Is intention of this proposal to deploy a standard full range liquidity pool or it should be deployed as a concentrated liquidity pool?
I will add the Aerodrome do have a volatile pool which work similar with Uniswap v2 pool but price tick works differently, so some monitoring/maintenance is beneficial.
Also for Aerodrome, token need to be list first. But it should not be too difficult to request list SHU.
If no market maker has been selected by the time this proposal can be executed, or if no other members have shown interest, we are prepared to proceed with the deployment.
Our requests are:
A gas fee grant of 0.5 ETH, with any unused ether to be returned to the DAO Safe, to cover various transactions.
A budget of 5 hours valued at 625 USD (125 USD per hour * 5 hours) payable in USDC or SHU, to cover various tasks including listing, deploying the pool, and communication.
We would like to add that since this is a one time work and LP token is of the ownership of DAO Safe, should the pool need any rebalance on Aerodrome, we will not be able to do that.
The loss and asset appreciation of deployment are not to the benefit or liability of JLH Venture.
That is more frequently happen when you have a new token with limit supply and lot of new buy pressure ( people want to ape into new memo token and on a chain which has a public mempool)
In this case, someone could front-run the pool creation, if the bridging is completely permissionless. But he or she has much less incentive to do so, given there is a liquid market on Ethereum mainnet.
Ultimately, if a frontrunner has much more SHU or USDC liquidity, they will still able to set a different price but not to immediate profit. Given the token bridge / trading is permissionless this is unavoidable and also a result from a fair market
But DAO could provide some additional SHU or WETH, so that we can arbitrage the price difference away should the market is not effective (no one is to arbitrage it for a profit or unwilling to take SHU risk)
How much trading volume have we seen on gnosis for SHU? I realise it is not as popular as base but it maybe an indication? Also, if we are looking for a new MM, maybe it would make sense to wait until one is selected and then seek their guidance on the best approach?
Overall will listing on more venues support the price without some sort of corresponding marketing campaign?
So this brings back the question of CEX vs. DEX: whether the DAO would like to put more liquidity on CEX or DEX. That is ultimately a decision beyond liquidity provision.
As far as the DEX trading venue is concerned, a trading venue on Base will likely have more trading volume. As the trading cost will be significantly lower than ETH mainnet and trading cost is always a significant factor of trading volume. Having a DEX pool on Base also enables some other integrations such as cheap airdrops, marketing luck draws, etc.
Given the very scale of the treasury, it is also important to not spread liquidity across three chains. This question should also be taken into consideration on the treasury allocation decision.
Our opinion is that should the volume pick up on Base, we are probably better off migrating some liquidity from ETH mainnet (and Gnosis) to Base, as long as that does not cause issues for voting.
Some marketing campaigns around Base token launch will definitely be beneficial.
BTW, JLH Ventures does plan to tender the MM replacement offer.
After some consideration, we decide increase the time estimation to 1500 USD budget as we would like to prepare potentially price distortion, pool imbalance due to the permissionless nature of bridging.