[Phase 1] HIP 59: Provide Liquidity for UBI on Uniswap

HIP: 59
title: Provide Liquidity to UBI
authors: Green, santi.eth
status: Phase 1
created: 2022-08-17
conflicts with: None
languages: EN

Simple Summary

In order to guarantee more stability to the price of UBI and prevent swings that might bring volatility to the price, the DAO will use its UBI and WETH funds to become a liquidity provider on Uniswap v3, the main decentralized exchange being used to trade UBI.

Abstract

In order to bring stability to UBI, the DAO can provide liquidity on Uniswap with its funds helping bring more stability to the price of UBI.

The DAO currently has control of 3.8M UBI and 46 ETH (in the form of Wrapped ETH or WETH). By taking into consideration an average price of 0.00000657 ETH per UBI (around $0.012 per UBI with the price of ETH at $1850 at the time of writing this proposal), we recommend creating a liquidity pool that pairs 2M UBI and 13.14 ETH on Uniswap.

This will keep some funds left for the DAO and provide a liquidity around the same levels prior to the removal of funds held by the Kleros Coop.

Motivation

A sharp reduction in the liquidity available to trade UBI for other assets on Uniswap has seen recently due to Kleros Coop removing its liquidity provision on Uniswap. This has led the unlisting of UBI in exchanges that are frequently used by Proof of Humanity users such as Ripio due to the low liquidity volume that makes the token prone to manipulation.

Specification

A trusted Gnosis multisig wallet with two members of the community willing to execute these changes can be set and used specifically for the purpose of this proposal.

We recommend having a member from Kleros and another member from the DAO not affiliated with Kleros to act as co-signers and execute the required actions. This should be a 2 of 2 multisig where both members must sign the transactions for these to be approved.

This will allow the action to be performed with speed during a zoom call and take any necessary actions in case a mistake is made.

We recommend having this wallet already specified on Phase 2

Implementation

  1. Setup Gnosis Multisig with 2 of 2 signatures
  2. Send the funds from the DAO Treasury 0x327a29fce0a6490e4236240be176daa282eccfdf to the approved Gnosis Multisig
  3. Contribute liquidity to the UBI/WETH pair on Uniswap v3
  4. Send back the LP tokens from the liquidity pool back to the DAO Treasury.
4 Likes

Something to discuss is: how much liquidity to put, if this was desirable?
How about putting the entire 3.8M UBI? At current prices, it would amount to ~25 ETH liquidity total. Likely, the UBI/ETH rate will change at the time this liquidity increase was to be put in place.

I’m not entirely convinced this HIP is the right call, but it would amount to putting the treasury funds to use on the, currently, biggest use case of PoH.

If this is chosen to go forward, given the volatility of UBI and in the interest of PoH treasury, it should be put in the highest fee pool, that is, Uniswap v3 1%.

3 Likes

I believe that providing liquidity would help to make the coin more stable. besize, it sends a message that its serious.

Also excited to see our funds in use.

We’ve discussed it in the DAOs spanish telegram group, and the idea to use half of the treausry for liquidity and put the other half in the vaults sounds about right.

WAGMI

2 Likes

I agree with this Hip, we should provide liquidity in Uniswap v3 so that UBI can get more stability, but I think a modificiation should be made in this HIP, I think it is possible to diversify the funds we have available to the DAO, not only promoting liquidity, but also giving it a use that will add value to UBI, I believe that if part of the UBI and WETH are destined to the vaults where the interests are burnt, all the Humans verified in the registry will be favoured, it is possible to establish a certain period of time if necessary and then the DAO will determine again if the funds remain in the vaults or return to the DAO.
I believe that the funds should not only be used to provide liquidity but also to provide use cases that allow the maximum amount of UBI to be burned.

The UBI as well as the Argentinean pesos are useless if we leave them under the mattress, we need to add value and fight the inflation that is generated with each new verified human.

I believe that 60% should be allocated to vaults and 40% should be used to add liquidity.

2 Likes

I strongly oppose this HIP. I believe the price stability of the $UBI token is not something that concerns the POH DAO particularly, and that this is a “short term” measure.

This proposal effectively buys tokens that have little to no utility, with strong inflation. It will artificially maintain the price, instead of letting it decrease organically - which could make the vault buy up a bigger part of the supply.

If the idea is to incentivize people to register on POH, it would make much more sense to incentivize people building utility to $UBI. That is, if we want to have a long term vision.

We could do that through retroactive grants, with both weth and $UBI grants. The $UBI grant could be used to incentivize users to use the dapps.

For example, for 13 eth (and its equivalent in $UBI), we could give 2 eth to 6 projects + the equivalent in $UBI.


Me opongo firmemente a este HIP. Creo que la estabilidad del precio del token $UBI no es algo que preocupe especialmente al DAO de POH, y que esta es una medida cortoplacista.

Esta propuesta efectivamente compra tokens que tienen poca o ninguna utilidad, con una fuerte inflación. Mantendrá artificialmente el precio, en lugar de dejar que disminuya orgánicamente - lo que podría hacer que la bóveda compre una mayor parte de la oferta.

Si la idea es incentivar a la gente para que se registre en POH, tendría mucho más sentido incentivar a la gente que construye utilidad a $UBI. Es decir, si queremos tener una visión a largo plazo.

Podríamos hacerlo a través de subvenciones retroactivas, con subvenciones tanto de weth como de $UBI. La subvención de $UBI podría utilizarse para incentivar a los usuarios a utilizar las dapps.

Por ejemplo, por 13 eth (y su equivalente en $UBI), podrĂ­amos dar 2 eth a 6 proyectos + el equivalente en $UBI.

2 Likes

I think that the idea of putting the funds in the UBI Vaults is a great idea and actually this has been already voted in the past with plenty of support on HIP 29 so we could either:

  • Execute that proposal using the available funds
  • Take the opportunity to combine it with this one

I got persuaded by @green when we talked about this that strengthening the liquidity of UBI in the pools would be a good thing to prevent violent swings in the price, thus why we have this proposal drafted.

Taking into consideration that UBI has remain stagnant at what seems its historical lowest price range around $0.01, I think this is actually a good time to build liquidity around it on the pools. I definitely would favor if this proposal moves forward to also use funds on the Vaults (50/50?) and take into consideration what has been voted with HIP 29.

“Letting the price decrease organically” as if it was something good is nonsense… Making a large nominal burn of UBI tokens is irrelevant if the price still remains at $0.01.

We could though, just execute HIP 29 and take it from there. Would you favor that @0xjean.eth ?

I like this idea of course. But a few ETH per project might not do much… at best you can fund a small demo that does something with the ETH itself.

I’m in favor of supporting dapps being built around poh, as a Buidler I can relate on how this Will help the teams or person doing it

1 Like

Actually thinking out loud here: We could execute HIP 29 and make a Liquidity Pool using UBIETH & UBI.

Did the mev issue with the vaults get resolved?

Yes, thanks for asking @shotaro.eth! I was able to execute a successful harvest using Flasbots MEV protection, you can check the last harvest here around a month ago: https://etherscan.io/tx/0x6af455f64c302c974f88858fc65979feb307acf45d5de3a7e11bde2b28eda5d8

2 Likes

Considering this HIP might be mutually beneficial between the UBI DAO and the POH DAO, would the UBI DAO be willing to provide half of the LP? Say any combination of,

  • 2M UBI
  • 1M UBI and 6.57 ETH
  • 13.14 ETH

@green , any status update on the cheaper $ubi (v1.2, no streams) implementation? This proposed liquidity is larger than the current liquidity of UBI-ETH. Why not start tabula rasa, with a cheaper implementation for transfers? surely this would also provide more value for POH users. Since this would provide more UBI-ETH liquidity than currently exists, good opportunity to deploy a cheaper version with a 1-1 bridge of the old more expensive fee UBI.

1 Like

We would first need to execute HIP 22 which requires the transfer of 2M UBI to the UBI DAO: Snapshot

Regarding an upgrade to UBI, the v2 developed by @juanu is testing its bridges to L2. I’m unaware of @green doing any actual work on UBI but whatever version upgrades the proxy should be voted by the UBI DAO first. On L2 I don’t think cheap transactions are a relevant issue and we have much to gain with delegated streaming.

That said, I’d have no issue making this a cooperation with PoH DAO and UBI DAO.

1 Like

Totally agree with the idea.
I think/ask: Multisig Gnosis should be controlled by the MB? with 3 of 5 signatures…