Proposal: AMPL/FORTH ElasticSwap incentivized pool

Ampleforth Governance
1

Title: AMPL/FORTH ElasticSwap incentivized pool

Authors: xiri

Date: 13.05.2022

tl;dr

Leverage a portion of the FORTH DAO treasury to seed an AMPL/FORTH pool on ElasticSwap. Coordinate with the ElasticSwap team to incentivize this pool via their TIC token.

BACKGROUND
ElasticSwap https://elasticswap.org/ is the first AMM specialized in rebasing tokens. Ampleforth is an early partner and currently, most of FORTH’s trading volume is on centralized exchanges and only paired against BTC, ETH, or stablecoins, not AMPL.

MOTIVATION & SPECIFICATION

Creating an AMPL/FORTH pool will bring in lots of new users to ElasticSwap, increasing awareness of the protocol. AMPL users wishing to participate in governance will have a direct way to exchange their AMPL tokens for governance tokens, decreasing slippage by having to go through multiple trading pairs. Moreover, the pool will provide revenue to the FORTH DAO.

The ElasticSwap team will also be onboard with incentivizing this pool via their TIC token and with their novel model of rewards distribution. ElasticSwap is already integrated on 1inch (in the Avalanche chain), which provides an opportunity to attract a new user base and increase overall volume on this chain.

Currently, the DAO has:

3,838,889.4182635 FORTH
9,330,286.9139406 AMPL

source: Timelock | Address 0x223592a191ecfc7fdc38a9256c3bd96e771539a9 | Etherscan

With 100 000 FORTH per chain (Avalanche and Ethereum) and the corresponding amount of AMPL to pair it with, this proposal will deploy about $1M of Capital at current prices, close to the amount being provided currently for the ETH/AMPL pool in Uniswap v2.

FINANCIAL IMPLICATIONS
Having a long-term outlook is crucial here. This proposal will bring in revenue to the DAO while supporting a partner project that is trying to raise awareness to the rebase tokens space. Moreover, this proposal can be expanded over to the different L2s if it proves beneficial to the DAO.

CONCLUSION

Having an incentivized AMPL/FORTH pool will make great use of the DAO funds, generate revenue and raise awareness of the elastic token space, while allowing people wanting to participate in governance to swap their AMPL directly for FORTH.

POLL

  • For - I support this proposal
  • Against - Not a good use of DAO funds

0 voters

AUTHOR BACKGROUND
xiri - An Engineer and Ampleforth supporter since its beginnings, surviving crypto crashes since 2013.

5 Likes
2

I support deeper FORTH liquidity on decentralized exchanges, but I have a few questions.

  1. Considering 200,000 / 3,800,000 FORTH is deployed to the AMPL/FORTH pool, is it possible for the DAO to be exposed to significant impermanent loss?
  2. Should FORTH be on Avalanche?

I don’t think FORTH is on Avalanche yet. Maybe more small-holders of FORTH will participate in votes if gas fees continue to be lower on Avalanche than on Ethereum.

If FORTH is on Avalanche, the calculation of https://signal.ampleforth.org/ vote power should also include Avalanche FORTH.

However, I don’t think the on-chain voting Tally | Ampleforth supports governing with 2 tokens.

3

Hey @xiri thanks for the proposal!

I’ll link this other topic, which is relevant:
https://forum.ampleforth.org/t/forth-dao-now-controls-the-ecosystem-fund/512

I think that if the DAO is already holding both FORTH and AMPL, I can see deploying it somewhere rather than leaving it sitting idle. Also, if the DAO wants to provide liquidity for FORTH, I agree that AMPL is the best pair token. It’s already owned, it’s a unit of account, and it provides more liquidity/volume for AMPL.

In terms of liquidity for FORTH… While I don’t think more liquidity for a governance token necessarily makes that a better governance token the way it does for a monetary asset like AMPL, I think there is still a balance and we may be a little low there on DEXs where other protocols & DAOs are likely to acquire them. I have heard from one DAO that reported liquidity issues trying to acquire a stake in FORTH fwiw.

While integration of governance on other chains is theoretically possible–AAVE has some integration with Arbitrum, I believe–it would require some development.

2 Likes
4

This will be relevant if the DAO wouldn’t want to hold any of the two assets, which is not the case here. Over the long term, FORTH should converge to a price that makes sense according to the total AMPL market cap (since buying FORTH gives you some kind of control over AMPL).

I don’t see a reason why not, even if there is no voting there, it could be a way to cheaply accumulate FORTH so you can bridge your tokens to vote in the future.

2 Likes
5

Thanks for the comments Brandon!

We could explore this in the future, but in my opinion it doesn’t need to be done as part of this proposal. Based on real trading data (for example, that FORTH/AMPL volume in Avalanche is orders or magnitude higher than on Ethereum) we can then make a decision to enable Governance on that chain as well.

3 Likes
6

Its proposals like this that I can abide. Not blatant robbery.