Proposal #20: Tracer Perpetual Pools and Liquidity Mining

Summary

Tracer Perpetual Pools have almost arrived.

Over the past month, in preparation for the finalisation of Perpetual Pools, Tracer DAO members (including Service Providers, Strategic Partners and Academic Advisors) have been working together to form a tentative tokenomics model as displayed in the graphs here. It is important to note that future retroactive airdrops will be considered throughout this period.

If this proposal succeeds, Tracer DAO will:

  1. Install Tracer Perpetual Pools in the Tracer Factory; and
  2. Enable 100,000,000 TCR (10% of total supply) to be distributed for liquidity mining of the Perpetual Pools contracts, in accordance with the projected market distribution for Tracer DAO.

The Mycelium team will have initial oversight of the Perpetual Pools financial contract to implement upgrades and provide stability on an as per needed basis.

Perpetual Pools

Perpetual Pools is a new financial primitive that enables anybody to take a short or long position on any underlying asset. These positions are non-liquidatable, fully collateralised, fully-fungible and can exist perpetually without upkeep. By taking a position, users mint fungible ERC20 tokens representing ownership of the pool of assets. These fungible positions allow users to interact with the DeFi economy seamlessly and sustain their leveraged exposure.

Read the Tracer: Perpetual Pools Litepaper here.

Market Distribution

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Alongside other described benefits, liquidity mining serves two purposes:

  1. To incentivise liquidity providers for the Perpetual Pools financial contract with TCR. This will allow users to govern the way that they trade using the Tracer protocol; and
  2. Further decentralise Tracer DAO via the TCR governance token.

Liquidity Mining Schedule

A brief version of the liquidity mining schedule can be found below. If this proposal passes, a more detailed version of the schedule will be published. The graph below depicts an example schedule projection for the initial 6 months after the launch of Tracer DAO’s Perpetual Pools contract.

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From the day of launch, liquidity providers will receive TCR, where 57% (out of the allocated 5% over the first 6 months) will be distributed in the first 4 weeks of launch. The alignment between TCR token holders and Tracer DAO stakeholder primacy is crucial for successful decentralised governance and it will ultimately deliver a stronger Tracer DAO.

The total 100,000,000 TCR (10% of total TCR supply) will be distributed over a period of 5 years with 2.85% to be distributed within the first 4 weeks of the liquidity mining scheme. The markets that are proposed to be available at launch to participate in the liquidity mining scheme are:

  • BTC/USDC (1x leverage)
  • BTC/USDC (3x leverage)
  • ETH/USDC (1x leverage)
  • ETH/USDC (3x leverage)

Liquidity mining will also be available for markets deployed in the future.

There are two proposed methods of liquidity mining:

  1. Primary Market Liquidity (purchasing a pool token); and
  2. Secondary Market Liquidity (placing a pool token into an AMM liquidity pool).

From genesis, 40% of the TCR distribution (of the total 100,000,000 TCR) will be allocated to Primary Market Liquidity and 60% will be allocated to the Secondary Market Liquidity. Liquidity mining will begin after the Gnosis Auction event has concluded on 15 September.


Consideration

For liquidity mining to begin alongside the release of Tracer Perpetual Pools, the following amount will be distributed amongst users of the Perpetual Pools financial contract over the specified 5 year schedule:

  1. 100,000,000 TCR (10% of TCR network equity).

Deliverables

If this proposal passes, the Tracer Perpetual Pools contract will be installed in the Tracer Factory and Tracer DAO’s liquidity mining event will begin at the same time. This will distribute the TCR token amongst early users of the Tracer protocol to help with the governance of the DAO.


Variation and Termination

The liquidity mining schedule may be updated or terminated depending on future market conditions. A future proposal may be passed by the DAO to action an update/termination if the liquidity mining event no longer serves its purpose as detailed in this proposal.


Interpretation

Unless otherwise defined in this offer, all terms beginning with a capital letter which are defined in the Participation Agreement have the same meaning unless the context otherwise requires.

If this offer is accepted as a Proposal under the Participation Agreement, others may more formally document aspects of that Proposal.


Copyright Waiver

Copyright and related rights to this Proposal are waived pursuant to CC0.

Consensus check
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1 Like

Is there going to be a lockup period for the TCR obtained through liquidity mining? Should we discuss whether we should have one?

1 Like

@Beepidibop We initially considered lock-up periods for LM. However, from the advice that was given in addition to the high level scenario testing, no lock-up period was found to be the better option for Perpetual Pools.

1 Like

EDIT: Reviewed the proposal in more detail and reformulated the questions:
The issuance in the first period looks very steep, with a very low issuance in the second half of the first 6 months.
Does it not make sense to be a bit more conservative with initial issuance to better understand the market needs for incentives? For example, a more linear schedule and make it more steep early if the market requires it?
I also think using 5% for the first 6 months vs the other 5% in the other 54 months is a bit problematic. What if the liquidity incentive needs are significantly larger in month 6-54? I get that initial liquidity mining might need to be a bit more aggressive, but instead of it being 10x higher than the remaining time, it would in my opinion be more reasonable to make it ~ 5x higher (eg 2.5-3%).

3 Likes

Hi @Robdog,

Yes, this was the intention. It makes sense to front-load these incentives. To most effectively bootstrap a community (and thriving liquidity with the primary and secondary markets), it is important to have an attractive launch. Further, it is important to considerably incentivise early users over later ones.

We believe this mechanism will stand up on its own two feet given natural demand, as such, I don’t really see the point in lagging liquidity mining incentives for the back 54 months. It seems redundant to me - it is likely that the natural liquidity will already be there.

1 Like

Hi @lachlan.mycelium ,
Thanks a lot for the clarification. Given this intent then how about?

Month 1: 2% of issuance - linear in the month
Month 2: 1% of issuance - linear in the month
Month 3: try no issuance - course correct as necessary

Imo this would accomplish the following:

  1. Reward early users and attractive launch
  2. Assess the impact of reduced incentives on liquidity in distinct levels (easier to evaluate impact)
  3. Give ample flexibility to add further incentives in Month 3 and beyond.

I am glad to hear that we are confident the liquidity will be sustainable with natural demand, that is important. Imo this early period serves as a combination of successful launch and maximum learning about liquidity. With more data-points, it will be a lot easier to take informed decisions for the future and a shorter term commitment gives us more flexibility to leverage our learnings, because once the programme is announced the community might be unhappy if incentives are withdrawn.