Deploy & Fund A SHU/WETH Pool on Aerodrome on Base

Proposal

Deploy and fund a SHU/WETH pool on Aerodrome on Base

Background

This proposal builds on the following proposal: Hire A Dev House to Bring SHU to Base and Deploy a Safe on Base

Rationale

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

2 Likes

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.

1 Like

you’re right. we should consider aerodrome because of the tvl and the popularity of it → better for the upcoming cycle

if the community is in favor i’m down for changing the dex to aerodrome

1 Like

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?

1 Like

there is no active MM at the moment so in my opinion we should go with the full range

2 Likes

but taking the consideration community requests and feedback

according to my knowledge aerodrome on base offer only the deployment of a concentrated liquidity pool

summarising: if on uniswap then full range, if aerodrome then concentrated but ideally there should be MM monitoring the pool

1 Like

That’s good additional update

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.

1 Like

i changed the proposal to aerodrome accordingly to community feedback

2 Likes

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.

3 Likes

Great! Thanks. I think this is the better option.

1 Like

Please make sure you are not front run by any bots in setting the pool up, many projects faced issues with that

3 Likes

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)

1 Like

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?

1 Like

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.

2 Likes

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.

1 Like

this makes sense, if active MM it would imo be good to concentrate liquidity in pool levels

1 Like

Additionally, we provide our address here as requested:

0x9C8FBC31e8B45017Bd87d272ceFb8Dc3f9e960c4

1 Like

@Ricosworksa Please add your suggestions for a DEX pool on Base here. Thanks!

1 Like

Hi @0xjakub and @czepluch -

I am not opposed to Aerodrome. But there is one reason why a Uniswap v3 pool would be beneficial:

yodl SHU payment links

yodl is willing to support SHU token - which would allow anyone to set up a payment link/page where the sender can pay with any token on any chain and the receiver receives SHU. However, yodl needs a Uniswap v3 or Curve pool to support the swaps.

SHU payment links are interesting because they extend SHU utility beyond a mere governance token and create buying pressure.

SHU payment links are particularly useful for projects which are building on the Shutter API. As one example: a sealed bid auction on Paddle Battle could collect bid fees via an SHU payment link.

1 Like

For integration, uniswap probably has a wider support

1 Like