Following the interesting discussion and the various solutions proposed, I’d like to inform the DAO that Arrakis offers a solution to protocols and DAOs that automatically manages deep DEX liquidity and achieves minimum slippage given the provided capital. Arrakis is live on Mainnet and Base, manages about $115M TVL and is trusted by projects like MakerDAO, Lido, Maple.finance, Stargate, Etherfi and many more.
How can MORPHO’s Goals be achieved by using Arrakis?
- Active Market Making strategies achieve in pool wETH liquidity bootstrapping by leveraging organic trading volume. No liquidity mining incentives are needed and pools can be launched at skewed inventory (e.g. 90/10 for MORPHO/wETH) that are converted to optimal inventory ratios (50/50) without capital loss or negative sell pressure over time.
- Creating multiple factors higher capital efficiency, pools managed by Arrakis are frequently used as price reference for Oracles due to their deep liquidity and high price stability.
- In contrast to liquidity incentives, these vaults are more capital sustainable and provide deep liquidity with the DAO keeping custody and control over the funds. Contrary, liquidity from incentive programs is not sustainable and moves when incentives are terminated.
- Being backed by Uniswap itself, Arrakis built out the future of their protocol on top of UniswapV4 and enables users to seamlessly migrate liquidity after the launch of V4.
- Addressing @TokenBrice point, automated rebalancing of the V3 pool provides all benefits of a V2 type pool (x*y=k) without the cost of high capital inefficiency as it requires a fraction of TVL by achieving the same price impact.
- Arrakis offers a dedicated quant team to support DAOs on setting the optimal pool strategies and provides highly customizable infrastructure and AMM liquidity management strategies.
In line with the suggested steps above MORPHO could use this solution to launch DEX liquidity in coordination with the CEX listing and bootstrap the 50/50 inventory within a few weeks starting from 90/10 MORPHO/wETH while having low slippage at all times.
This approach has worked for various other blue chip tokens before and offers a much cheaper alternative over liquidity mining, while still benefiting from the high Uniswap trading volumes from day one (References can be found here)