RGP-4: RBN Token Activation Event

Authors

Apogee Technologies (the company behind the development of the Ribbon Protocol)

Summary

Proposal for “RBN Token Activation Event”, which includes two elements:

  • Turn on RBN token transferability
  • An initial liquidity incentive to bootstrap liquidity

RBN Transferability

Ribbon Vaults have been live since April 12, and has seen remarkable growth. The protocol has done over $1b notional in option volume, and is currently staying strong at >$100m of TVL — that is, $100m of risk being sold every week.

On May 25th 2021, RBN token, a governance token for the Ribbon Protocol was announced, which has since been used to vote on multiple governance proposals and incentivize liquidity in the Ribbon Vaults. Throughout all of this, the RBN token has still remained non-tradable. This has achieved great results so far — it has encouraged strong participation in governance and built a strong community of enthusiasts by excluding speculators. For example, the first liquidity mining program was a success with pretty low TVL churn, likely thanks to the fact that the non-transferability attracted enthusiasts over mercenary speculators.

With the last 4 months being a good enough test bed to bootstrap a strong community, it is timely to consider turning on transferability so that people can use RBN tokens across DeFi — whether it is for lending/staking/collateral, and so on.

Hence, RGP-4 is a proposal by Apogee Technologies to switch on transferability for RBN tokens.

Initial Liquidity

To bootstrap liquidity for the RBN tokens, RGP-4 is a proposal for the Ribbon DAO to allocate 10,000,000 RBN from Ribbon DAO treasury for distribution to providers of liquidity for RBN-ETH 1% fee tier pool on Uniswap V3, using the new Uniswap V3 Staker contract. In connection with RGP-4, the 10m RBN proposed to be distributed over 60 days (October 8th 2021 to December 7th 2021) to such liquidity providers, proportional to the amount of liquidity they provide.

RGP-4 proposal will be executed using SafeSnap, a tool built by Gnosis, to autonomously execute the RGP-4 proposal if the Snapshot vote passes.

Execution

If this vote passes, the execution and timelines will be as follows:

  • 12pm UTC Thursday (Oct 7th) : Snapshot vote closes and Transferability gets turned on
  • 12pm UTC Thursday (Oct 7th) to 12pm UTC Friday (Oct 8th): 24 hour cooldown period (Safesnap parameter)
  • 12pm UTC Friday (Oct 8th): RBN gets transferred into Uniswap Staker Contract, kicking off the incentive program

Vote

Snapshot vote will run from October 4th, 4pm UTC to October 7th 12pm UTC.

Please vote here:
https://snapshot.org/#/rbn.eth/proposal/QmNudMhJmKYdTFVpw58VAejiuDfVfwMyBifye3iPxmcJ3U

18 Likes

Hi Team.

Thanks for putting this together. I’m not convinced we need a liquidity mining event. I think there will be demand for the token and that there will be those who would like to hedge by liquidity providing without incentive.

Also, v3 presents issues when I expect the price to be very volatile, failing out of range is going to cause some issues for buyers and sellers. If distribution of tokens is required sushi might be a safer place.

I look forward to your response.

2 Likes

Thanks for the feedback! We feel like it is worth it for a single one-time event to kickstart the liquidity flywheel.

Agree with the v3 comment, but we think that v3 allows way more capital efficiency so you can have deeper liquidity for smaller amounts of capital. Users can still set their range to 0-to-infinity to ensure that they will be in range

3 Likes

I love this as a user. Using Uni V3 has many benefits. My only suggestion is to try and educate the ribbon user base about why Uni v3 and how to setup an infinite position during the first week or so as price discovery happens. It is quite daunting if you are not familiar already with LPing via Uni v3.

Anyways looking forward to the discussion on all of this.
Cheers.

5 Likes

It might be interesting for us to look at Visor.finance. For TracerDAO they will actively manage the LP on Uni v3 actively managing the range and reducing slippage.

See Snapshot

All for liquidity incentives of course. Why only uniswap and not sushi? Could also do a 2x farm on sushi. Any thoughts to using some other defi legos, such as ondo finance to lock liquidity in for 30 days, just as more options can possibly beget more liquidity? Too late for Tokemak I suppose and a hard uphill battle anyway with toke votes…

1 Like

Will any portion of the rewards be allocated towards users who missed the 1st liquidity mining program but have been staked since then? We could take into account the length of time and amount staked to reward real users not “mercenary capital”.

1 Like

First of all i d like to highlight your initial launch. I mean deploying the contract with the token, which is not transferable and has no value, is something to think about for some other protocols from now on.
Eventhough you had troubles with launching token using LBP thanks to Garry, you have showed an inteteresting way to start the project. Thanks for that!

Unfortunately must agree with some comments above. Why to use Uni v3 with impermament liquidity? I mean we know the % of circulating supply, therefore we could set up the range to aim on some certain mcap, eventhough it is way over/under valued?

1 Like

Why to use Uni v3 with impermament liquidity? I mean we know the % of circulating supply, therefore we could set up the range to aim on some certain mcap, eventhough it is way over/under valued?

You can use an unlimited range on a V3 position to mimic V2 behavior. For those looking for more efficiency, being in range on a 1 order of magnitude positions provides ~2.3x capital efficiency, and 2 orders of magnitude provides ~1.5x capital efficiency. Pretty big improvements for those willing to take additional LP risk.

Will any portion of the rewards be allocated towards users who missed the 1st liquidity mining program but have been staked since then? We could take into account the length of time and amount staked to reward real users not “mercenary capital”.

Remaining staked in the original LM staking contract is a bad metric for this. Users were informed that they should leave the contract and that it would be used for nothing else, and reneging on this is a bad precedent.

1 Like

Can you link me to where this was said? My apologies if I missed it in the Discord. It was my belief that it was the intent of the devs to distribute the token to sticky users and limit distribution to “mercenary capital”.

Is it possible to look into Ribbon buying it’s own liquidity through bonds instead of giving out RBN to liquidity locusts?

It was mentioned several times, including by me while I was still an Apogee Technologies employee. I can find the discord messages if necessary

Olympus pro has been suggested for shifting the liquidity to protocol owned.

i think it is necessary.

GM sers and maams,

Great proposal, the price discovery game will be fascinating to see play out!

Just want to make sure I’m on the same page on the term “liquidity” in the proposal. When you say RBN rewards accrue according to amount of liquidity provided, do you mean the dollar value of the liquidity, or do you mean the position Liquidity (which depends on the ranges selected in the position)?

2 Likes

I have the same questions. I assume also that rewards for a position will only accrue when the current tick is within the tick boundaries?

If it’s not already planned, it could be useful to adopt a similar formula to what Reflexer has used to incentivize the RAI/DAI pool. Otherwise I could imagine large positions capturing outsized rewards without taking on price risk.

Aeto in the discord channel says that RBN reward accrual will be based on the amount of Liquidity active in the range so we are well protected from that lazy whale scenario.

Hey everyone, I thought I’d give a quick primer on how staking works on the Uniswap V3 pool.

Uniswap V3 Staking Guide

Concentrated liquidity allows LPs to provide a higher amount of liquidity, with lesser capital. The main advantage of doing liquidity incentives on Uniswap V3 is that it allows buyers and sellers to trade without causing a huge price impact.

How Staking Works

Users are able to stake their RBN/ETH LP positions. This means that the UI allows you to stake multiple RBN/ETH positions. As a result, everyone will have a different APY return in RBN.

At the start of staking, the contract will record the timestamp and liquidity of the user’s selected price range. “Liquidity” here means the combination of both of the assets i.e. RBN and ETH.

When we unstake, the contract will look at the time spent within your price range. Using the duration, the contract calculates the reward amount.

Reward = (Time Spent In Range * Unclaimed Rewards) / Total Rewards

This calculation is heavily simplified from this blog post from Dan Robinson.

Things To Know

There are a few important things to remember about:

  • The narrower your range, the more rewards you stand to earn.
  • BUT this comes at the risk of the price moving out of range, which would leave you with either 100% RBN or 100% ETH.
  • Being out of range also makes you lose out on any RBN rewards, since your liquidity is not in use.

Due to these factors, users who are not familiar with LPing on Uniswap V3, but want to earn RBN rewards are encouraged to either a) LP from 0 to infinity b) choose a wide range.

Example of providing liquidity for the full range.

Below are some diagrams, to help better your understanding. The prices used are just examples.

User Interface

To make things simpler, a Ribbon community member worked on an LP Staking frontend so users can stake their LP positions easily.

4 Likes

Yea you can somewhat think about “liquidity” here as the dollar value you’re putting up. It’s a good way to think about it. However in this case since it’s a RBN/ETH pool, it’s number of RBN * number of ETH. That product of RBN * ETH varies across different ranges.

First instance I found, although I’m sure there are others. Dated Aug 7th.