[Signal] Deploy $2 M USDC to the USDaf ecosystem (LP + optional 50/50 to CDP)

Ampleforth Governance
9

I like the proposal to make use of the USDC sitting idle in the treasury. Thanks @RomanPope for the second post detailing the upsides of putting the USDC in Asymmetry. It made the benefits more clear to me.

Better use for SPOT

I’m a bit hesitant to use all of the USDC for the Asymmetry pool for 8-10% yield and later maybe 15%. I beleive it would be better to use it on something AMPL-native like SPOT-USDC liquidity which has similar APY, if not higher, and would driectly benefit the AMPL ecosystem by enabling bigger SPOT mint- and redeem arbitrage to happen, boosting the fees generated for stAMPL vault.

Support stAMPL vault

In the past, the settings for stAMPL vault were broken, because holders were affected by negative rebases stronger than by positive rebases, due to the DR falling too quickly. With the new, more aggressive debasement settings of up to 50% per year, this dynamic will be alleviated to some extent, and having more fees generated through bigger mints and redeems would help stAMPL even further.

The most amount of mint-/redeem arbitrage can happen if SPOT’s liquidity equals AMPL’s liquidity.

In my opinion, the stAMPL vault is the most important part to focus on right now. It plays a central role in the whole AMPL and SPOT ecosystem. If it’s fixed and it works, there is really nothing stopping AMPL & SPOT growth anymore.

In the Short-Term:

In the short-term however, minting SPOT to pair with all of the USDC would consume a too big portion of the AMPL in the treasury, so it might be better to wait for AMPL supply expansion before minting the SPOT part.

For these reasons, I would support using the USDC for the Asymmetry ecosystem only for a limited time with the intention to eventually switch it for SPOT liquidity when AMPL’s supply has grown enough to comfortably mint SPOT.

Using the USDC to farm yield and the ASF airdrop has benefits in the short-term, giving us a say in the Asymmetry DAO.
But for bootstrapping ampUSD-USDaf liquidity, I believe its better to directly purchase the USDaf than minting it, and using the rest for SPOT liquidity in the long run.

So in short:

I support using the USDC for Asymmetry only for a limited time until AMPL supply has expanded enough (>5x) to mint SPOT.

Using the USDC to provide liquidity for SPOT would be better in the long run because:

  1. It provides similar, if not higher APY on the capital
  2. A deeper liquidity in SPOT-USDC will lead to more fees for the stAMPL vault and support long-term holders

When ampUSD launches, it would be better to buy USDaf directly than minting and having USDC collateral locked. Use the rest then to support SPOT liquidity.

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