Summary TreasureDAO is looking to switch requirements for minting Balancer Crystals from MAGIC/ETH Sushiswap LP to GMX GLP (a basket of ETH, BTC, USDC, USDT, LINK, UNI assets) so that TreasureDAO can receive ETH income streams to use in ecosystem funding and prize pools.
Context Balancer Crystals are game items that help TreasureDAO accumulate and own productive assets, including its own liquidity. This strategy has been successful to date, helping TreasureDAO treasury accumulate approximately +$6.6mil MAGIC/ETH liquidity and +70% of the SLP MAGIC/ETH pool.
However as we secure partnerships with professional market-making firms such as Flowdesk (see TIP-17) and additional exchange listings, the need for protocol-owned liquidity decreases. We now have the option to accumulate other types of protocol-owned assets that produce real yields, and diversified revenue streams that can be more easily deployed for ecosystem funding, sustainable game rewards, and tournament prize pools.
What is GMX GLP? GMX is one of the largest decentralised perpetuals trading platforms in web3 and the largest on Arbitrum. GMX GLP is GMX’s vault token used to fund their user’s trading positions.
- You can contribute any of ETH, BTC, USDC, USDT, LINK, UNI to create GLP
- GLP receives ETH income streams as a separate stream, meaning it is easier for us to divert and use the income streams to drive ecosystem growth
Rationale While our holdings of SLP (MAGIC/ETH) do accrue trading fees, these fees are compounded within the SLP token and difficult to separate and re-allocate for ecosystem funding purposes.
GMX GLP receives ETH income streams in a separate stream, enabling us to readily allocate towards:
- funding TreasureDAO cartridges and community grants (without having recipients sell MAGIC emissions and introduce additional selling pressure on MAGIC)
- funding prize pools for ongoing tournaments and Harvester competitions, and moves us away from unsustainable P2E models.
Pros
- Income streams denominated in ETH will help diversify the DAO’s treasury funds
- ETH as prize pools is more attractive to external users who may be curious about the TreasureDAO ecosystem
- GLP ETH income comes in a separate stream, which is straightforward for the DAO to reallocate in support of various ecosystem growth initiatives
Risk Factors to Consider There is price risk on GLP, which stem from
- Traders outperforming and earning abnormal returns consistently over a long period of time
- Traders outperforming with short selling strategies, depleting the GLP vault of USDC and stablecoins
- Oracle manipulation attacks stemming from GMX’s zero slippage approach to trades.
- The GMX team is currently working on new features that directly address this issue including:
- Synthetics and upgrades to how the protocol utilises oracles
- Adding caps to open interest to reduce profitability of oracle manipulation attacks
- Separating out lower liquidity GLP assets such as AVAX from higher liquidity pairs such as ETH/BTC/USDC.
However since the GLP is not to be redeemed and we are primarily interested in the ETH income streams, the principal risk may be less of an issue (to the extent that the income streams remain unaffected and GMX continues to operate).
Proposal: What will happen to Balance Crystals
- Balancer Crystals will remain the same, the only thing that changes is that GMX GLP (which can be minted using ETH, BTC, USDC, USDT, etc) is used to mint BCs instead of MAGIC/ETH SLP.
- We will look to match costs, so that if it currently costs $20 worth of SLP to mint a Balancer Crystal, approximately $20 worth of GLP will be required to mint a BC
- We will stick to a single Balancer Crystal for now, instead of creating new variants of Balancer Crystals to drive more game utility to a single BC item.
**This proposal will approve the team to switch Balancer Crystals from using MAGIC/ETH SLP to GMX GLP. ** The team will look to add this to the roadmap and implement it when time permits.