Proposal #47: Launch of Perpetual Pools v2

Summary

The launch of Tracer Perpetual Pools V2.

Perpetual Pools V1 contracts have been enabling individuals to efficiently manage risk on Arbitrum for over 5 months now. In that time, tracer has hit some significant milestones such as:

  1. over $750 million in volume of leverage tokens traded; and
  2. upwards of $50 million USDC secured across the offered markets.

To continue this momentum, Perpetual Pools V2 aims to vastly improve the amount of flexibility users have to deploy financial products that combat emerging risks. This is especially prudent given the current international economic uncertainty. The Tracer DAO members (including existing Service Providers, Strategic Partners and Academic Advisors) have been working tirelessly to perfect the Perpetual Pools V2 financial contract and it is finally time to bring it to market.

New Features

To deliver on this promise of increased flexibility, Perpetual Pools V2 will include the following features:

  1. Long-term leverage with minimised volatility decay: From a mechanism level, the most prominent thing we will be introducing is SMA (Simple Moving Average) pricing - which will significantly reduce the effects of volatility decay. This will allow users to hold these fungible, leveraged tokens long-term without fear of liquidation. Additionally, a Minting Fee will be introduced 2 days after a Perpetual Pools market is deployed. This Minting Fee will be distributed to existing Pool participants and is intended to further reduce volatility decay.
  2. No more minimum commitments required to mint new Pool tokens: In v1, there is a minimum commit size of 1000 USDC into the pools to avoid DOS attacks. In V2, we propose batching commits to mint (burn) for a given rebalancing event. By doing this, the system can have no minimum commit size, while also being robust to DOS attacks.
  3. New permissionless market deployment: Tracer DAO believes in free markets and allowing market access to all users. The only barrier to accessing Tracer markets should be an internet connection. Tracer’s vision is to create novel derivative products and let anyone interact with them. In V2, anyone will be able to permissionlessly deploy a spot, or SMA-based market.
  4. Tracer Indices: In V2, there is going to be an influx of new markets. Not just any markets, but markets that track novel price feeds. This is where Tracer Indices comes in. Tracer Indices is creating novel price indices that can be plugged into markets, and allow users to gain leveraged exposure to any price feed. The first index that will be launched will be a value weighted index of ETH/BTC/LINK. Further down the track, we will also launch a novel cryptopunks index feed.
  5. Increase the Transaction Fee from 1% to 2% of TVL: The current transaction fee for Perpetual Pools is a 1% annual fee of TVL. Given the unique nature of the product in the market and as it gains broader adoption, increasing transaction fees to the DAO Treasury to 2% will increase the sustainability of the Tracer Protocol.

If this proposal succeeds, Tracer DAO will install Tracer Perpetual Pools V2 in the Tracer Factory.


Liquidity Mining

V2 will launch with an emissions campaign to attract liquidity in separate markets. The amount of emissions will be determined immediately prior to launch of V2 based on the price of TCR.

TCR rewards for the V2 campaign will come from the residual of the 100,000,000 TCR (10% of total TCR Supply) initially made available to incentivise V1 markets, pursuant to proposal #20. At the date of this proposal, there is approximately 60,000,000 (~60%) of that circulating TCR supply still available. Upon the launch of V2, the V1 staking contracts will no longer earn TCR incentives and the TCR rewards will be redirected to the new v2 markets.

For v2 Perpetual Pool markets, Tracer Pool stakers will be be able earn rewards by staking PP tokens on the Tracer Stake page or Tracer Pools stakers can stake their Pool tokens on Balancer and earn TCR LM incentives directly through Balancer by staking relevant Balancer LP tokens on Balancer. The TCR incentives on Balancer are meant to encourage secondary liquidity of Perp Pool tokens given the extended mint/burn period of 8 hours.

In summary, liquidity mining for V2 will have the following features:

  1. Incentives will be redirected from V1 markets to V2 launch markets
  2. All emissions will come from the V1 allocation of TCR for liquidity mining - of which approximately 60,000,000 TCR is available

Deliverables

If this proposal is successful:

  1. the Tracer Perpetual Pools V2 contract will be installed in the Tracer Factory, and;
  2. Liquidity Mining rewards will be redirected to incentivise new V2 markets as outlined above.

Variation and Termination

This Proposal may be terminated or varied by future Proposals approved by the DAO.


Interpretation

Unless expressly agreed otherwise in writing by an Authorised Representative of the DAO, all terms that are defined pursuant to the Participation Agreement will retain its meaning.

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

The following definitions shall apply in this Proposal:

Definitions

Commencement Date: the date this Proposal is passed on chain and is signed.

Tracer DAO: A decentralised autonomous organisation for Tracer, an open-sourced blockchain-based financial protocol.

TCR Token or TCR: A measure of voting power in the Tracer DAO that attaches to a specific Wallet Address, whereby the greater amount of TCR Tokens a person holds in that Wallet Address, the greater the person’s voting power.

Related party: Means, but is not limited to, the Service Provider’s parent company, subsidiary, affiliate, assignee, transferee or one of their representatives, principals, agents, directors, officers, employees, consultants, contractors, members, shareholders or guarantors.


Copyright Waiver

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

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V2 is needed and has been long awaited by our community. It’s a shame that this proposal was not shared prior to the contracts going live, however it is a consequence of an operational shift we had internally at the time.

Anyway, I support V2 and the cambrian explosion of markets we will see as permissionelss deployment is introduced.

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