Geyser Refresh for Q4 2023

Ampleforth Governance
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The current wave of geysers are set to expire on December 19th, 2023, let’s talk about the next rounds!

Ecosystem State

SPOT is closing in on it’s 1 year anniversary next month. It’s so far shown resilience through a fairly protracted down market period. The Spot Rotation Vault (aka stAMPL) was launched 3 months ago and in that short time has already amassed 6.5% of the AMPL network.

AMPL has seen some growth lately seemingly connected to awareness and trust around SPOT. This is suggested by the strong demand for AMPL staking in the vault and also increasing sophistication in activity in community channels. More people seem to show an understanding of the SPOT system, how it works, and the benefits it brings compared to alternative systems.

The FORTH/WETH PALM vault is making good use of the market volatility and is showing some life. It’s earned $19K in fees and now owns 65.5 ETH in external assets. The value is up 8% vs holding the assets outside the vault.

The DAO still owns $1M of AMPL/ETH liquidity on Uniswap v2. Average volume has been in the few $100k per day, which is a healthy source of income.

The SPOT/USDC Arrakis vault is earning 1.58% APR from organic fees, all while 77% of the assets are already inflation resistant, which would mean ~5% already vs the dollar.

A new version of the rotation vault is in development, with some features that could help make market making operations for SPOT more efficient, and earn more fees for vault depositors simultaneously.

But, there is still a lot of work needed to grow SPOT. For SPOT to succeed, I believe we still need more people to treat it as a real and lasting store of value. Higher supportable supply, higher holders of SPOT or SPOT liquidity, more efficient market arbitrage, and perhaps new things to do with SPOT, could help bring SPOT to the next level.

Proposed Configuration

I propose keeping largely the same configuration as last time with more weight to encouraging SPOT supply and liquidity.

The rotation vault has shown strong demand so far. We should closely watch the behavior of vault stakers during any possible market reversal.

The Forth DAO Treasury owns 3,665,664 FORTH directly and 134,595 FORTH in the Arrakis PALM Vault

Proposed Configuration:

Geyser Platform Pair Chain FORTH Amount
Beehive v5 Uniswap v2 ETH/AMPL Ethereum 25,000 FORTH
Fly Uniswap v3 SPOT/USDC Ethereum 25,000 FORTH
Total 50,000 FORTH
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I’m not 100% sure about the implications of reducing the ETH/AMPL liquidity rewards on the health of the DAO, especially regarding the necessary generation of Ethereum (that can be adjusted later in 2024 anyway). However, my perspective is that if the SPOT adoption and activity don’t increase, then accumulating Ethereum might not yield significant benefits. I agree with placing more emphasis on improving SPOT’s geyser allure (full disclosure: I do not provide liquidity in ETH/AMPL pool, so my reasons are not entirely selfless).

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How about a small amount for Poolside? Its SPOT/AMPL pool is designed for rebasing tokens but has low liquidity since it’s new.

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If I understand you correctly, this shouldn’t have any impact on the DAOs accumulation of ETH. Geysers incentivize outside LPs, so any extra fee accumulation from those positions goes to those outside LPs. The DAO only gets fees from it’s own LP positions & vaults. The DAO currently owns about 1/3rd of the uniswap liquidity.

However, you may be pointing out a different issue–If this change results in less liquidity for AMPL/ETH, how would that affect the health of the ecosystem? If this parallel proposal goes through, the DAO could deploy significantly more, nearly doubling its position in the maximal case. The DAO can also start reclaiming some of the ETH from the Arrakis vault, when it chooses to.

There is also a potential future where, if SPOT is incentivized and healthy, since it exists at the top of the stack, everything below it will work itself out in the markets. This remains to be seen though, but also I don’t think SPOT is there quite yet. Helping to grow SPOT could let us find out.

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  • Success of SPOT is essential for the success of AMPL
  • Demand for SPOT is also indirect demand for AMPL
  • Liquidity will lead to more awareness. Awareness brings liquidity
  • By increasing the geyser rewards for the SPOT/USDC pool, we might attract more liquidity

For these reasons, I believe maximising the incentive for the SPOT/USDC pool is the right thing, and bringing the rewards to the same level as the AMPL/ETH pool is a step in the right direction.
I’m a big supporter of this proposal.

However, I would like to emphasize that this will be only attracting liquidity from people who are already involved with the AMPL ecosystem and who are following along the discussions in this forum and the discord server. People outside of the circle probably won’t even notice the rewards, unless we communicate it to them.

If we really want to increase awareness and adoption, the social media game has to be ramped up big time. I hate to say this, but the person responsible for the twitter and instagram communication has been really really bad, just generating similar content over and over again.
But this is for another topic.

That being said, I assume that the 10k FORTH shift from the Beehive pool, instead of just adding 20k FORTH to the Fly pool is to save the remaining FORTH from the inflation for other things, such as grants?
(200k FORTH vs 280k FORTH per year)

I invite to keep a close eye on how this change in rewards for the Fly geyser will affect liquidity in the SPOT/USDC pool.
I too belive that this will help in attracting more liquidity.

Should this be a success, I would like to open up the conversation for much higher rewards to keep attracting more liquidity, financed by minting SPOT with the AMPL from the treasury, on top of the FORTH rewards.

Having SPOT as the reward for the SPOT/USDC pool would be the dream for LPs, because they would be earning “real yield”. And it makes it much better for long-term planning as there would be less influence from market fluctuations.

I’m convinced that the DAO should be keep betting big on SPOT until liquidity starts coming in on its own.

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Agree with a lot of this, especially that Spot and Spot liquidity is a key for ampl at the top and other growth and liquidity should filter down.

In support of this proposal 100%,while also agree that would love to discuss further on further incentives in Spot, funded by DAO owned/minted Spot.

Also agree, on social and promotion aspects you mention, if I may say, Togenkyo, would you like to find me on the Amplforth discord and friend me - danbainbridge - if you’d be interested to chat about community marketing, content and social promotion, I want to do more here and would love to have you and some other community involved.

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I see this as an interim solution so i’m okay with it but a couple points i want to bring up.

  1. Not having an LP on poolside i think is a big miss as they launch their rewards program, its a good way to drive our community to them and bring more liquidity that will help both sides.
  2. My assumption is we will see a fair amount of unstaking in the vault as AMPL’s price goes down and it would be good to create some stickiness of that capital in the vault, no only to the total amount in the vault but diversity of wallets participating is important as well.

Driving the SPOT/USDC LP with increased rewards makes sense to me i’m excited to see how this impacts the $SPOT markets going forward.

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Thanks everyone for the contributions and thoughts. A couple things I’ve registered:

  • General support for increasing backing on SPOT
  • Geyser rewards only help grow the ecosystem if those outside the ecosystem know about it
  • Let’s keep an eye on the liquidity pools to see how they may or may not react
  • Interest in a Poolside incentivized pool and/or stAMPL pool
  • Interest in SPOT rewards

From the outset, I think a good strategy for the DAO is to be very clear about “what, specifically, the ecosystem needs to move forward”, and then to use it’s resources in pursuit of those.

So when it comes to liquidity, there’s a question for the DAO-- What does it want to own and what does it want to rent? LP positions on Uniswap-style pools incur IL for the depositors. Traditionally projects have added rewards in order to counteract that risk, but I think the DAO is happy to take on that risk. So it makes sense for it to be a primary owner of that liquidity.

AMPL is a scarce resource, and I think the DAO has many uses for it going forward, especially in terms of bootstrapping SPOT and stAMPL. I have some thoughts there, but I’ll break that out into a separate plan/proposal. So I’m hesitant to be too quick to hand those out if it’s not immediately needed.

One big benefit of Poolside is that LPs do not incur (long term) IL, so it is already a much better deal for LPs, with less risk. Does the ecosystem need a stAMPL pool to grow? I think that’s a harder case to make at the moment. A little stickiness in vault deposits… is not a bad thing, all considered. And also–if you think there’s a market for people exiting their stAMPL positions quickly, and you already hold stAMPL, please go forth and create that pool! If it’s needed, it will get volume :+1:
(Probably worth a quick check with the Poolside team to make sure it’s supported first)

If there’s rough consensus that the initial plan is good enough to move forward, I’ll aim to post a snapshot vote tomorrow before the weekend.

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I’ve posted a signal vote here:
https://signal.ampleforth.org/#/proposal/0x393b4052218e53e59676ade480f0cb25ee93b8351b8414f10b2ea02cc02fb4f7

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An onchain proposal is posted:

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