EOI: TCR Secondary Market Liquidity Incentives

Summary

Assuming the Visor Finance proposal passes (it is looking like it will), this will go quite a way to generating liquidity for TCR on the secondary market. However, I am proposing that we may need to further supplement TCR secondary market liquidity. This could be in the forms of rewards to individuals users who LP a TCR asset pair on a secondary market (e.g. Uniswap V3, Sushiswap).

Rationale

There has been (and rightly so) a lot of discussion regarding TCR liquidity on the secondary market. Admittedly, there is a severe lack of TCR on secondary markets on mainnet (and to a more extreme extent, on Arbitrum). There have been many examples of this sentiment in the community (here, and here) and further, many proposed solutions to how to solve this lacklustre liquidity.

The proposal by Visor Finance is a welcome step. Contingent on it being passed, this will help aid the problem of lacking TCR liquidity. However, I am weary that may not be enough. As such, I am considering the idea of supplementing the Visor Finance initiative with rewarding users for LPing their TCR. I think this ties in with what has been discussed in this post here, and here.

I think it may be worth giving some TCR rewards and/or a percentage of protocol fees (as suggested here) to those who provide TCR liquidity.

Poll

If the TCR liquidity is still lacking (if) after the Visor Finance proposal is executed, should we look into rewarding users who provide TCR liquidity on the secondary market?

Consensus check
  • Support EOI → create formal proposal
  • Reject EOI

0 voters

3 Likes

I think liquidity will follow once more people use Tracer. IMO TCR can be better utilized to promote Tracer product usage instead of incentivizing TCR LPs.

1 Like

what sort of product usage would you like to see incentivised? like a retro airdrop?

1 Like

Since some TCR are already allocated to the upcoming BPT for the perp pairs. I was thinking of promoting future Tracer products and incentivizing 3rd party integrations.

2 Likes

Visor has a market making strategy.
I think it would be more efficient to create a public Hypervisor on Visor to engage the community.

I think this is a chicken and egg situation.

I sit in this uncomfortable space of having said in the discourse “hey its a governance token - chill and hold the damn token and stop trying to speculate” and on the other hand the realisation that we have “invited” people to participate in an experiment, with no expectation of making a profit, and a bunch of other explicit conditions contained in the participation agreement.

To participate in an experiment, doesn’t mean that sometimes, some people, foe some reason, won’t want to stop participating. Sometimes stop the ride I want to get off happens - and I think it would be good to let people do that with ease. I think DAO governance works best when there is a shared purpose, and if people with a cross-purpose have no way to leave the DAO, it can have negative consequences. Mobility of governance puts the right governance supply against the right governance demand. The disruption possible otherwise is limitless.

On the otherside, for people to be able to source extra governance on the secondary market, while with its own problems, outside of a bad actor issue, is bringing committed governance, staked governance, to the DAO. They have staked an asset of value to be able to participate more in the experiment. Just like @Bob_Boyle_1662 contributing the artwork, the visual assets, etc prior to incentivisation, [and ALL the other people in the same category - thankyou and we know who you are :slight_smile: ] - this shows an Active Commitment. What is the engine room of any organisation of humans, and particularly “volunteer orgs”? The actions of committed people.

@Beepidibop I agree with your first statement, however, I think there is another way to view TCR liquidity
and how it plays to increase product usage.

Utilizing TCR to provide liquidity may mean that some will be bought by some speculators, but even then I think they play a valuable role, in signalling to the larger community the value proposition of the Tracer DAO.

The big win is the people you can attract who are committed to Tracer experiment (and who missed the gnosis, who haven’t a skill in need right now). More people to do things, means more product (Perpetual Pools, Perpetual Swaps, Peer-Peer, Options and other factory products). And in turn this means more attraction and attention for Tracer and TCR, which in turns means more people.

More people, more product. More product, more people.
More chickens, more eggs. More eggs, more chickens!!

[disclaimer: opinions made by me in this post which are at direct odds to opinions made by me in other posts are potentionally unintentional and likely occurred accidentally due to my cat walking over my keyboard while I was thinking about pizza]

3 Likes

Some quick (but hopefully relevant) thoughts:

  1. I don’t think the case for additional liquidity is in doubt, but rather what the ‘price’ for that liquidity should be. You might analogise the relationship between Tracer Community and liquidity providers as that between a business looking to borrow a business loan from a lender: ultimately it’ll come down to whether the business can borrow at a good enough rate without killing the business model. Perhaps some analysis on the impact on Tracer’s growth at different reward rates (either on TCR or protocol fees) might assist?

  2. I suspect there will always be trade-off between liquidity and active management: maximising liquidity by providing more TCR will probably also increase the likelihood of TCR being held by users primarily interested in trading for profit. There nothing wrong with that (particularly if the need for liquidity is the overriding concern), but perhaps the better approach may be to allocate to actors who can provide liquidity and higher levels of engagement? I would put the EOI re Tokemak in this bucket (I almost think about it as a cross-shareholding): these are the preferable opportunities we should be looking for to increase liquidity.

My 2TRC!

2 Likes

Instead of providing incentives to mercenary liquidity we should try to find healthier long term solutions. One of them is Olympus Pro bonds, as far as I know the team has already shown some interest in this idea. Another good solutions would be a Tokemak reactor, lets see if we can end on the top 5.