Abstract
Ribbon to incentivize migration of primary liquid pool, RBN-USDC, to Balancer in a boosted pool (RBN/bb-a-USD) with a 50/50 weighting and activate a gauge to allow for voting. Additionally, Ribbon Finance to partner with Aura Finance to help bootstrap liquidity for a RBN/bb-a-USD gauge.
Background
Current RBN liquidity is composed of RBN and USDC within Uniswap V3. At time of writing the RBN/USDC TVL is ~$530k with $68k and $204 for volume and fees, respectively, within the last 24 hours of this proposal’s writing.
As stated within the recent liquidity mining proposal, Ribbon Lend Liquidity Mining, the current emissions of RBN are focused around the attraction of capital into Ribbon Lend and Option Vaults. The Ribbon Finance proposal has passed and has implemented the following changes to RBN emissions.
- Keep 250K RBN inflation per week for the next three months
- Redirect a % of RBN inflation towards Ribbon Lend 5 pools (Ribbon Lend Details 36)
- Add an additional 100K RBN inflation per week as auxiliary RBN to maintain a floor of 100K RBN inflation per week across all Ribbon Options vaults.
While current emissions are focused on maintaining AUM of the protocol, the liquidity for RBN has diminished overtime. Current liquidity seems to be primarily sourced from two primary, community owned wallets. If this depreciation in TVL, volume, and fees continues then it could impact the RBN token negatively such as increased volatility or risk that the primary liquidity providers leave for a more economically advantageous use of capital. RBN’s lack of liquidity is also an oft-cited reason for those not choosing to participate in Ribbon governance.
The fees and volume are partially driven by Balancer’s automated voting weight for Core Pools from Balancer Improvement Proposal 19. Core Pools are liquidity pairs that contain a yield-bearing pairing. In the case of RBN, the yield bearing portion of the proposed pair is bb-a-USDC. This would be beneficial for both third party liquidity providers and the RBN token. Third party liquidity providers would gain passive yield through the aAssets and increased fee revenue from the increase in volume. Furthermore, once the LP is approved for a gauge and receiving automatic voting weight, liquidity providers can earn additional yield through Aura Finance’s ability to boost BAL emissions and supplement with AURA emissions too.
Voting incentives for Aura holders has hovered around 2x in capital efficiency (Source on Llama airforce) over the last month. Meaning, if RBN or other rewards were provided to help bootstrap the liquidity it would be more capital efficient than typical liquidity mining.
Voting Incentives
So far we have been able to see protocols depositing around 5000$-6000$ per cycles in incentives see their liquidity grow to around 1m$ to 1.5m$ (DFX - Silo - FiatDAO - PrimeDAO). The proposed amount, 25,000 USD RBN bi-weekly, would represent 10% of the current liquidity mining program.
The combination of the benefits outlined above should increase the liquidity of the RBN token allowing for deeper liquidity, reduced volatility, and mitigation of mercenary capital risk on the farming front.
Balancer Boosted Pools
Boosted Pools bring the best of both worlds to Liquidity Providers and Swappers. Swappers get access to deep stablecoin liquidity with near-parity exchange rates while Liquidity Providers get their liquidity positions sent to external protocols, such as Aave.
These versions of Stable Pools don’t directly hold the stablecoins themselves, but rather hold the pool tokens of nested Linear Pools, which, for the Aave example, maintain proper balances of TOKEN and aTOKEN. The bb-a-USD pool holds a constant balance of undeposited stablecoins to facilitate lower-gas stablecoin swaps, which keeps volumes on the pool consistent, along with the yield-bearing nature of the Aave deposits.
Gauge Application
Logistically, applying for a gauge is relatively simple for legitimate and established projects such as Ribbon. It involves submitting an application to Balancer governance, outlining details about the project, the requested gauge that is seeking veBAL allocation for emissions, and relevant links and information about the token and gauge. As long as the proposal has this information and abides by BIP-19, they have historically been looked favorably upon by Balancer governance.
Proposal
Promote RBN-bb-a-USD on Balancer as primary liquidity of RBN, pursue and activate a gauge for proposed pool, and provide up to 25 000 RBN bi-weekly as voting incentives for the first two months. In conjunction with voting incentives Aura Delegate will match any incentives provided by Ribbon to help bootstrap liquidity.
Timing
Proposal will be live on forum for the next 7 days voting will then be open for 5 days. Each voter will be able to vote for one of the two options. The option with most votes will be the winning one.
Pool Specification: Deploy a 1% fee Balancer pool 50/50 RBN/bb-a-USD or stETH to be eligible for core pools incentives.
Voting Incentives
So far we’ve seen protocols depositing around 5000$-6000$ per cycles in incentives see their liquidity grow to around 1m$ to 1.5m$ (DFX - Silo - FiatDAO - PrimeDAO) which would represent 10% of the current liquidity mining program.