Geyser Strategy for next Round

Ampleforth Governance
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Hello Forthers, Amplers, and Spotters–

The current round of Geysers are set to expire in 32 days, on ~Jan 21st. Now that SPOT is released into the wild, I think it’s a good time to revisit some high level strategy questions on how we should approach or optimize the geyser configurations.

As a refresher, there are currently four programs running:

Geyser Platform Pair Chain
Splendid Aave aAMPL Ethereum
Trinity v3 Balancer v2 WAMPL/WETH/WBTC Ethereum
Beehive v4 Uniswap v2 ETH/AMPL Ethereum
Crystal Pangolin WAVAX/AMPL Avalanche

Before proposing specific numbers for the next round, I wanted to run some thoughts for feedback first. I think right now, a primary goal of our ecosystem is the answer to the question “How can we most efficiently support the success of SPOT?” To that end, I propose halting the Splendid, Trinity, and Crystal, extending Beehive, and adding one new geyser for SPOT.

This would leave us with two, deeper geysers.

Splendid

Given the unfortunate news of Aave turning down many of their markets on V2, the Splendid geyser no longer has the utility it used to.

Crystal

If there’s one learning from the last year, it’s that multichain bridges are a continuing liability. I don’t think the space has played out in such a way that cross-chain systems are driving the market. Also, the technical landscape has changed such that other technologies like Ethereum Layer 2 are become much more promising. But they’re still very early in development and it’s hard to say which L2s will be important (Optimistic Rollups, ZK, etc).

So I think it’s premature to invest too much now, until it’s clear which platforms get traction. In the interest of avoiding the fracturing of liquidity, I propose halting the Crystal geyser on Avalanche and instead doubling down on liquidity on ETH L1.

Trinity

The ETH/BTC/AMPL pool on Balancer was originally conceived to be an interesting basket of collateral / Store of Value index. At the time (and still today) AMPL has the same Store of Value qualities that Bitcoin does–non-dillutive, “hard” money. However, now that Spot is live, there’s an even better Store of Value available. I don’t think Trinity has the same draw that it might have when it was established, especially with the difficulties borrowing platforms have had using LP tokens as collateral.

Beehive

I think we should resist liquidity fracturing and instead encourage very deep liquidity into a small number of pools instead. AMPL/ETH on Uniswap V2 seems like the best candidate right now. Let’s keep this one, and move any AMPL that would have been in other geysers here.

SPOT

Given how important I see liquidity being for the success of SPOT, I think we should experiment with a SPOT/USDC geyser. We’ll need to balance the extra demand with the healthy growth / supply caps of the system. So this first version we should view as a small pilot that has the option of growing in the future.

This would be built on top of a managed Arrakis vault that that can be tokenized and used in the geyser system.

Long Term

Long term, I think we should strive to move towards a system of DAO-owned, permanent liquidity. The DAO already owns a sizeable portion of the AMPL liquidity on Uniswap, for example. SPOT liquidity has a bright future for providing the “real yield” that most DeFiers are looking for right now, so it could organically grow very large.

What do people think of this overall approach?

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I agree - the protocol should tighten liquidity into concentrated locations. Beehive & SPOT Geyser seem to make the most sense.

I wonder also if reward tokens can be provided in SPOT & AMPL?

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Long time no post from me – I agree with focusing AMPL-oriented geyser(s) on mainnet for the reasons outlined in the Crystal geyser rationale, especially given the complexity of bridging AMPL through Meter Passport. In terms of reaching a wider audience, though, I wonder if there might be value in incentivizing SPOT-USDC pairs on more than one chain. Unlike cross-chain AMPL, SPOT is a simple, natively bridgeable ERC-20 token that avoids most bridge headaches except for the liquidity fractioning issue.

For example, suppose there were Arrakis-vault managed concentrated SPOT-USDC on Uniswap V3 mainnet and Optimism, and SPOT-USDC pairs on Balancer V2 Polgyon and Arbitrum? That would be two geysers on mainnet and one each on Polygon, Optimism, and Arbitrum. If not for this round of geysers, perhaps once enough SPOT has been minted to justify it.

Balancer has been good to Ampleforth; I’m not part of their DAO, but I do feel it would be a bit of a shame to move away from them completely (unlike, for example, the experience with Sushiswap).

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Very great idea to consolidate the geysers into the most important ones on Ethereum! I was never a big fan of having geysers on other DEXs than Uniswap. It just spreads liquidity while not generating any utility. (I liked the AAVE one though, as it generated adoption)

As for SPOT-USDC, my stance is to really bet big on it. Have a juicy geyser to bring in lots of liquidity. It will incentivise minting too and because of the 20:80 ratio for SPOT, every $ spent on that geyser might have 5 times the impact than spending it on a AMPL pool.

Having deep liquidity for SPOT will also incentivise other projects and exchanges in adopting it. The success of SPOT will directly correlate into the success of AMPL.

I don’t think that incentivizing SPOT-USDC pairs on other chains would necessarily lead to reaching a wider audience. Instead, I think it will more lead to people spreading out their liquidtiy into many DEXs to chase the yield, than having it all in one place where we would have actual deep liquidity

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In the off chance that Aave V2 markets are restored, we should discuss what utility AMPL had there. Did shorting make AMPL hover closer around the price target? How much shorting was there, were most people borrowing just for the positive rebases? Were people really using AMPL as a stable unit of account in a borrowing/lending contract?

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I wonder if there might be value in incentivizing SPOT -USDC pairs on more than one chain.

Yeah I agree this could be good when the time is right. It feels a bit early at the moment for SPOT.

Kind of an aside, but related–One nice quality that Spot has, compared to systems that require liquidations, is that’s there no limit to how much spot can be bridged to other locations. There could be a future where the high L1 security secures the Spot protocol, but most Spot actually lives on L2s. With (for example) DAI, there always has to be enough DAI on the L1 to be able to pay down the undercollateralized CDPs there, which could get precarious if L2s become the primary interface layer. This is an interesting advantage that will only become more important in the future.

Balancer has been good to Ampleforth; I’m not part of their DAO, but I do feel it would be a bit of a shame to move away from them completely

I’m also a fan of the Balancer platform and community. I’m optimistic that there are still opportunities for future collaboration, though.

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I concur.

Let’s concentrate on Ethereum main-net for now to deepen liquidity. The USDC/SPOT geyser could be a catalyst for all market participants. Especially, if/when Rollovers and Minting are automated with vaults.

@Brandon makes an important point about how SPOT can be bridged to other chains without dependencies on L1. if I understand correctly it is because SPOT doesn’t need an Oracle, and this is something that will likely become apparent with time as the broader market comes to understand what SPOT exactly is.

I was never a fan of Avalanche, Fantom, Solana, or any of the chains that prioritized scalability over decentralization. I think we should rollup to Optimism, Arbitrum, Polygon, ZK, and/or the other L2 solutions which are Ethereum aligned, after the geyser is up and running on L1.

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AMPL = SPOT.

Well more accurately, the “isotope” of AMPL with the 20 subscript = SPOT

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Here we go, but I will represent the disgruntled “investor” party and try to talk sense into it afterward. So here we go, hodl onto your tuques!

Urgh, the Splendid geyser was my best-performing geyser even after the AAVE platform froze AMPL. I recently opened an ARC to see what the AAVE community will say about unfreezing the asset, but it doesn’t look like there is much traction (plus it does sound like V2 pool assets don’t get too much love). As much as I hate to say it, I agree that Spelndid doesn’t make sense until AMPL is frozen on AAVE. We can revisit the reward topic for Splendid geyser later.

Urgh, Crystal geyser was my second-best-performing geyser, and I was going to bridge to Avalanche to get them sweet returns after Splendid was getting axed. Still, 2022 was the year of the bridge hacks, and it will likely continue into 2023 and beyond. Also, shady things are going on within AVA Labs, plus the rebases sometimes lag, so overall, it all feels way too clunky for my liking. It doesn’t feel polished, so I agree that the rewards can be piped down. I wouldn’t halt it immediately, but only extend them to 10-30 days with lower rewards and then not renew until further notice. This short renewal will give some time for people to collect some fees back in case they just started a cycle on the Crystal geyser.

I don’t have much stake in the Trinity geyser, so I haven’t given this much thought, but it feels like if we have this one, then the Behive geyser doesn’t make much sense and the other way around. It feels wrong to axe both of them, but I am not sure why; perhaps because maxis will complain or people are just not used to the idea of SPOT yet… keeping one of them makes sense, but I don’t know which one. ETH/BTC/AMPL was always messy, but BTC maxis might still want it. ETH/AMPL is more accessible, but why not BTC/AMPL? Intuitively, since I would not get rid of the Trinity geyser just yet. Perhaps some phase-away program also would make sense? For some reason, I couldn’t care less about ETH/AMPL. I can be convinced, on the other hand.

In the long term, I like to make money and get “free” things because I am gambling with my money and taking risks. That said, DAO-owned, permanent liquidity makes sense since life isn’t always about me but the bright future for my kids. Fire it away!

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PS: I would love to see more geyser rewards with USDC. :pray:

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I am in 100% favor of this proposal.

Ampl has tried fragmented liquidity across other chains/platforms other than uniswap before, and it didn’t really grow the ecosystem as hoped. I don’t see as much value in continuing the incentives for those geysers.

Activity and TVL has shrunk on other chains as well during the bear market.

I think Spot has the best shot yet to grow Ampl and provide a real world utility. I even think that all geyser rewards should eventually be directed towards Spot at some point.

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Agree with the consensus view of consolidation.

Additionally we could consider using SPOT as the reward token (and not AMPL). The DAO thus retains upside from the growth of AMPL which can be used in the future for more liquidity (or rewards).

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Yeah, I like the idea of using SPOT to payout rewards. Would this also be better for the DAO overall?

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@aalavandhan1894

Additionally we could consider using SPOT as the reward token (and not AMPL). The DAO thus retains upside from the growth of AMPL which can be used in the future for more liquidity (or rewards).

@RomanPope

Yeah, I like the idea of using SPOT to payout rewards. Would this also be better for the DAO overall?

I think the argument for SPOT rewards is really compelling. On top of the DAO maintaining more of the AMPL upside for future DAO-owned liquidity, participants often value X% return of a stable asset greater than X% return on a floating price asset. So we could be able to achieve higher efficiency of rewards to liquidity.

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@Brandon, I imagine the SPOT geyser rewards won’t be ready for the next cycle. So this time around we can only expect the consolidated geyser pools?

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Using SPOT shouldn’t be a problem since the Geysers are able to work with any kind of reward token. Beehive users would need to restake into the new program, though.

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I like the idea of pure Spot rewards for the geyser at some point. It definitely feels very close to real yield.

However, with the protocol going through an expansion phase as we speak, I think a volatile reward is more enticing to liquidity providers since the Ampl Geyser rewards will increase with each rebase.

I think there may be potential backlash during a expansion phase from lp’ers who are used to Ampl rewards as well.

At best, I think Spot rewards should be eased into, if possible maybe a % of Ampl rewards and a smaller % of Spot rewards and gathering feedback from lp’ers from there. I think pure spot rewards so soon is too drastic of a change this early.

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