TLDR: Use the FORTH DAO treasury to seed an AMPL-SPOT pool on Button Swap with 25,000 SPOT and 25,000 AMPL.
Proposal Actions: Transfer 150,000 AMPL out of the treasury to the community Kennel Club multisig at: eth:0x57981B1EaFe4b18EC97f8B10859B40207b364662
In order to seed 25,000 AMPL and 25,000 SPOT, you need 25,000 AMPL + (4x) 25,000 AMPL for the SPOT mint. Whatever is left over from the 150,000 will be sent back to the DAO.
After receiving support on the forum post and receiving 100% ‘For’ votes on Signal, we now seek approval on Tally to deploy funds on Button Swap.
Note: Since the initial discussion and proposal, Button Swap has rebranded to Poolside.
Proposal
This proposal aligns our shared goals: to increase the utility and liquidity of SPOT, and to support the early growth of Button Swap, a new AMM for rebasing assets.
DAOs generally have two big problems:
- How to diversify its treasury without putting downward pressure on its own token.
- How to put its treasury assets to work and earn.
Providing liquidity on Swap solves the latter as FORTH DAO would earn fees from Swaps.
Ampleforth x Buttonwood
As detailed in the forum, Buttonwood has had close ties with the Ampleforth team for years.
LPs Earn More on Button Swap vs. Other AMMs
Through our involvement with AMPL and rebasing assets, we found and created a better solution for AMPL liquidity providers (LPs).
On other automated market makers (AMMs), rebasing alters the marginal price. This creates several problems:
- For positive rebases, existing AMMs think the asset is getting cheaper.
- For negative rebases, more expensive.
- As a result, traders arbitrage tokens from the pool that would otherwise be owned by LPs.
Button Swap’s Solution
Button Swap doesn’t solve every type of impermanent loss, but it does solve the one described above. The design is similar to Uniswap v2, but introduces a novel innovation, reservoirs:
- Button Swap’s model includes both a liquidity pool and a “reservoir” for each asset.
- Liquidity pools and reservoirs together form a “pair.”
- Liquidity pools are the active liquidity that gives users the swap ratio between two unique tokens.
- Reservoirs hold “excess” tokens, representing inactive liquidity (Note: at least one reservoir is always empty).
With Button Swap, new tokens flow to the reservoir, rather than liquidity pools. This allows the active pool to maintain the marginal price (1 AMPL = 1 SPOT)
Negative rebases follow the same logic. For a 10% negative rebase to AMPL, each pool would hold 90,000, and the reservoir for SPOT would hold 10,000 SPOT.
The net result of our design is more money for LPs. With Button Swap, additional token incentives become lucrative rewards, rather than compensating LPs for predictable losses.
Benefits of the Proposal
To establish a strong start and incentivize early liquidity providers, we kindly propose that FORTH DAO seed initial liquidity for a new asset pair on Button - Swap: AMPL-SPOT. We think a good starting point would be 25,000 AMPL and 25,000 SPOT.
- We believe Button Swap has the best design for a AMPL-SPOT pool.
- The AMPL-SPOT pair does not exist anywhere else.
- The FORTH DAO already owns both of these assets, and will earn fees from this initiative.
In addition to earning fees on treasury funds, seeding liquidity for the SPOT-AMPL pair is a strategic move that generates additional benefits, including:
- Enhanced Liquidity: A deep AMPL-SPOT pair will improve price stability and reduce slippage for traders.
- Mitigated Impermanent Loss: Button Swap’s unique mechanism to handle rebasing events will result in reduced losses for LPs. This feature should attract even more LPs to this pair, thereby further enhancing its depth and stability.
- Introduces New Market Opportunities: A successful AMPL-SPOT pair opens the door for additional rebasing pairs down the road. Pairs could be denominated in SPOT or AMPL. Button Swap can support two rebasing assets as well, so Lido stETH-AMPL would work nicely as well.
Other Notes
- Button Swap (now known as Poolside) was audited by StateMind.
