B.Protocol <> Visor Finance: Liquidity Mining on Uniswap v3

Hi All,

I know that the last proposal for Liquidity Mining didn’t meet the quorum, but it seemed like most of the discussion was in favor of some sort of liquidity mining program. So I would like to propose a narrower subset of liquidity mining which may gather more support.

Visor Finance just launched its liquidity mining infrastructure on Uniswap v3. The product is called Visor Phantom, which is a solution for liquidity mining on top of Uniswap v3. Visor Phantom: Active Liquidity Management For DeFi Projects | by Visor Finance | Visor Finance | Aug, 2021 | Medium.

The current solutions on top of Uniswap v3 such as Uni v3 Staker Contract and Andre Cronje’s Uniswap v3 liquidity mining contract are not very flexible or favorable to smaller liquidity providers. Their main drawbacks are that the liquidity provider will not be rewarded if the price goes out of range. Additionally, it will be harder on smaller scale liquidity providers to achieve profitability because of the gas costs for adding liquidity to Uniswap v3, changing price ranges, staking into the contract, and re-investing earned fees.

Visor’s solution involves users minting an Visor NFT, in which they deposit the base assets (i.e. $BPRO and $ETH). Those assets are then actively managed on Uni v3 according to a strategy that is decided upon by the BPRO community. In the prior proposal, the strategy was to concentrate liquidity at a price of BPRO between $2-5. We can do a similar strategy but one that is more flexible just in case the price goes out of range. The BPRO team will also have access to a group Telegram bot, which has the following controls, so that if the price of BPRO were to go out of range, the range can be adjusted so that LPs can continue to earn fees:

Additionally, the telegram bot will allow the BPRO team / community to re-invest fees on behalf of the LPs.

Lastly, the liquidity providers can gaslessly subscribe to B. Protocol’s liquidity mining program.

Benefits:

  • LPs no longer need to manage range to earn fees

  • Gas cost savings: LPs only pay gas to mint a Visor Vault and deposit/withdraw base assets. Because re-balancing positions and re-investing fees are done on behalf of all LPs, the gas fees are significantly reduced.

  • Potential to increase BPRO tokenholders: Visor now has over 1300 liquidity providers, many of whom would look to participate in BPRO’s liquidity mining program by purchasing BPRO and depositing into their vaults.

  • Co-management of strategies with Gamma Strategies, Visor’s research organization: Gamma is dedicated to researching optimal Uni v3 management strategies would offer guidance and advice to the BPRO community; however, the BPRO community would have the ultimate discretion and signoff on the strategy to be implemented.

  • Potential for more profitability: LPs can earn Uniswap fees from a concentrated liquidity position and earn liquidity mining rewards from B. Protocol. Also, the auto-reinvestment of fees and the aforementioned gas cost savings can increase profitability as well.

Risks:

  • Impermanent loss - Providing liquidity to the BPRO-ETH pool can expose LPs to price divergence which can lead to impermanent loss. For example, if the price of BPRO rises rapidly in relation to ETH, providing to the BPRO-ETH pool could be less profitable than simply holding BPRO. Additionally, if the price of ETH drops against BPRO, an LP could lose more money than simply holding BPRO.

  • Smart contract risk - Visor Vaults have been audited by Certik and are currently undergoing rigorous audits by Runtime & ConsenSyS Diligence, but there is always ever present smart contract risk. Out of an abundance of caution, LPs will also have the option to purchase insurance from Nexus Mutual.

Specifics: (EDITED to include specific numbers)

  • 100,000 BPRO as liquidity mining incentives for 591300 blocks (~ 3 months) to be emitted through Visor Phantom
  • Additionally, Visor Finance will match up to $10,000 in initial bootstrap liquidity provided by B. Protocol to the Uniswap v3 pool. (i.e. B. Protocol can provide BPRO and Visor will match an equivalent amount in ETH to bootstrap the initial pool). See here for a recently passed proposal by mStable as an example.

Happy to take thoughts and answer questions from the community!

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