Providing Liquidity with 4% fees (Ethix Empowerment Program (I))

Gobernanza
#1

Introduction

$Ethix has proven to be a tangible utility token, used within EthicHub protocol as collateral for EthicHub farmers.

So far, a total number of 50.000.000 $Ethix (EthicHub: Compensation Reserve) plus 1.200.000 $Ethix staked by the community (EthicHub: Collateral) are being used as crowdcollateral.

51.200.000 staked $Ethix is equal to $10.000.000. Nevertheless, the total liquidity for $Ethix is less than $500.000 (split down into Ethereum, Celo, and Gnosis).

Said that one of the higher priorities for EthicHub is to start deploying more liquidity for the $Ethix token.

In order to attract more liquidity, the daily volume of $Ethix on different pools should be increased.

At the present moment, the 4% fees generated from the total volume of transactions are being used to buyback Ethix from the market once a month and the resulting Ethix are used to further capitalize the compensation system.

This one time big buy operation is always being arbitrated by non aligned bots so the value that should be created for the Ethix and the compensation system is being drained by non aligned bots.

This arbitrage bots are draining value from the liquidity pools every day when users buy significant amounts. Instead we have to do the arbitrage ourselves so the value is kept within the ecosystem.

In order to start expanding $Ethix liquidity we propose to use the protocol fees (on stablecoin) to be dedicated to increase Volume and Liquidity and hire a Market Making company thedexer.xyz to manage the deployment of this fees in creating more liquidity in the most efficient way.

In addition to preventing arbitrage bots value extraction, this will help us to increase $Ethix’s daily volume which will increase the pool’s profitability attracting more liquidity providers.

This in the first step of the $Ethix Empowerment Program, which aims to ensure the proper distribution of Ethix to the community, at the same time consolidate $Ethix itself.

Links:

EthicHub reserve & compensation system

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#2

Hello Joan, I have attached my comments:

In general, the proposal seems interesting to me and I vote positively, although I would add some details.

a) I propose that the proposal be considered as an exception with a specific amount and once this amount is exceeded, return to the initial situation of dedicating the fees to buy ethixs or make a new proposal. I propose to use 40K usd of fees (1M USD in credits) and 40K of value in ethixs of incentives to carry out the project of increasing liquidity.

b) It should be studied which is the procedure and the appropriate LP to increase liquidity. Additionally, it would be necessary to study whether it is necessary to reallocate the existing liquidity in the different pools to have the same strategy.

c) It would be necessary to study how internally we can avoid the MEV and the extraction of value when an external investor buys a significant amount of Ethix.

Hola Joan, adjunto mis comentarios:

En general me parece interesante la propuesta y voto positivamente, aunque añadiría algunos detalles.

a) Propongo que la propuesta se considere como una excepción con una cantidad determinada y una vez superada esta cantidad, volver a la situación inicial de dedicar los honorarios a comprar ethixs o hacer una nueva propuesta. Propongo utilizar 40K usd de fee (1M USD en créditos) y 40K de valor en ethixs de incentivos para llevar a cabo el proyecto de aumento de liquidez.

b) Se debe estudiar cuál es el procedimiento y la LP adecuada para aumentar la liquidez. Adicionalmente, habría que estudiar si es necesario reasignar la liquidez existente en los diferentes pools para tener la misma estrategia.

c) HabrĂ­a que estudiar cĂłmo internamente podemos evitar el MEV y la extracciĂłn de valor cuando un inversor externo compra una cantidad significativa de Ethix.

#3

Hey Jordi, regarding your comments:

a) I think that’s a good idea… For sure this is an exception, and the limit could be 40k USD ($1M loans).

b) In order to increase liquidity we need to improve our pool’s APR, which means we need to increase the daily volume.

At the same time, it is necessary to reallocate our Liquidity. Our main goal is to migrate to Uniswap on Celo, which means moving from Ubeswap and Symmetric; focusing on Stable/Ethix pools. This si due to the 0% protocol fees, and also because Uniswap is a well-known DEX, by having a pool on Uniswap it will be much easier to show our liquidity to other platforms such as DexTools, CoinGecko and similar.

Our main pool on Ethereum will stay the same (WEth/Ethix).

Regarding Gnosis, we still waiting for a Grant, so we will see if we finally deploy there.

c) That’s something we are working on with Thedexer.

Hola Jordi, respecto a tus comentarios:

a) Creo que es una buena idea… Esto es una excepción, y el límite podría ser de 40k USD (préstamos de $1M).

b) Para aumentar la liquidez necesitamos mejorar la APR de nuestro pool, lo que significa que necesitamos aumentar el volumen diario.

Al mismo tiempo, es necesario reasignar nuestra Liquidez. Nuestro objetivo principal es migrar a Uniswap en Celo, lo que significa movernos de Ubeswap y Symmetric; centrándose en las piscinas Stable/Ethix. Esto se debe a las tarifas de protocolo del 0%, y también a que Uniswap es un DEX muy conocido, al tener un grupo en Uniswap será mucho más fácil mostrar nuestra liquidez a otras plataformas como DexTools, CoinGecko y similares.

Dejaremos nuestro pool principal en Ethereum tal y cómo está(WEth/Ethix).

En cuanto a Gnosis, todavĂ­a estamos esperando una subvenciĂłn, asĂ­ que veremos si finalmente desplegamos allĂ­.

c) Eso es algo en lo que estamos trabajando con Thedexer.

#4

As Ethereum gas fees are unaffordable to grow a token within the main Ethereum, and in Celo we already are the biggest and most traded token besides stablecoins, btc, eth, and Celo, our service provider recommends to deploy part of the liquidity to a chain with huge amount of users.
We think Base is the best alternative as it is becoming the chain with better bridges to fiat currencies, it already have a developed DeFi ecosystem and because farcarster is providing a real adoption.
We propose to move 500.000ethix to base in order to create liquidity and start moving the ethix in this chain with a promotion within farcaster.
Best regards,

#5

From my point of view, we should not focus in improving regular metrics used by traders, because traders are dollar minded. It would be more beneficial for the project to achieve that all single person that comes to a Crypto Café event, goes home having purchased at least $10 and staked them in an originator pool.

I talked yesterday with some fellows that have been more than three times at Crypto Café events and have 0 $Ethix nor staked $Ethix. Maybe a buy and stake corner with a support person to help in the process.

Coming back to liquidity would be more beneficial to:

  • Manage liquidity efficiently (not too much, not too little, just enough to meet defined objectives).
  • Create a treasury for the protocol, which would enhance the value of $Ethix, as the current value lies in the deposited liquidity and the collective capital of those who continue to support the project.

Having said that, I hope this new tactic helps the project :slight_smile:

Best,

Luis Alberto

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