I’ve been thinking a lot about how protocol owned liquidity can be useful for FORTH & AMPL. Over time, I am of the opinion the Forth DAO should own a reasonably sized AMPL-USD liquidity position (univ2/balancer).
This accomplishes 2 things,
Force correlation between FORTH and AMPL
Liquidity pool exists as a public good which and the twap from that pool could be used as a decentralized input the ampleforth price oracle. It could directly plug into the oracle as another provider. Or we could consider the compound model where the AMM price is used as a anchor price and prices reported by other centralized providers can only deviate as much as a pre-defined percentage of the anchor price.
What about DCA selling FORTH for AMPL and USDC via the Balancer V1 smart pool? We already have a USD(ish) pair and a geyser for that, so it benefits existing liquidity providers. Also the upcoming balancer V2 usd-ampl pair could be used in the future.
Not sure if I understand your point correctly.
Are you suggesting selling FORTH in the open market for USDC and providing that as liquidity to the BAL smart pool?
The benefit for the liquidity providers would be indirect through the trading fees, right?
I thought more in the direction of buying the BAL smart pool liquidity directly from the Geyser participants if they wish so.
This way, Geyser participants could decide between increasing their say in the protocol, i.e. acquiring FORTH, or continue participating normally in the Geyser and increasing their AMPL holdings.
FORTHs price would also not be impacted (too much) with this mechanism, as most frens selling their AMPL-USDC liquidity would most probably not dump the FORTH directly. Does this makes sense?
This is a very good point!
While I think we should not wait too long, as I imagine as soon as (w)AMPL is bridgeable to L2s (Arbitrum, Optimism, etc) the mainnet liquidity will start to dry up (especially if there will be a Geyser), it could definitely be worth waiting for the new pools as well!
I agree. The USD liquidity seems to be the most important one.
USD liquidity is important to enabling the “stable long term contracts”. While the contract denomination would be in AMPL, most people will probably trade the borrowed AMPL directly for USD to get out of AMPLs volatility.
However, AMPL-ETH liquidity could also be beneficial. Acquiring a reasonable-sized ETH stack, in the long run, would obviously help in paying the rebase/Orchestrator fees. This liquidity could still be used for the anchor oracle through ETH:USD oracles.
Diversifying the USD liquidity by using different stablecoins is definitely a worthy goal.
DAI also successfully managed to decrease its dependency on USDC lately.
While it’s still early for Mooncake, would it also make sense to discuss A-Tranches in the long run?