Supporting MORPHO token liquidity on DEXs

[Tane]

Thank you to everyone involved for this insightful discussion.
There are numerous promising strategy ideas here, and we truly appreciate the thoughtful contributions.

At the moment, we support @OneTrueKirk’s idea.

@OneTrueKirk

it seems appropriate to wait on public incentives until several weeks after the transferability event (proposal now live on Snapshot).

We believe we should

• finalize the POL strategy design and execute it first
• analyze the situation including the effect of the POL strategy after a few weeks of the token launch
• design a liquidity mining incentive based on the analysis above

This is because

1. deploying a liquidity mining program too early might not be very effective.
2. the POL strategy doesn’t require as much cost as a liquidity mining strategy, as some of its costs can be offset.
3. it would also allow us to design a clear liquidity mining program with the insights obtained.

The point 1 and 2 are described by @Gauntlet

@Gauntlet

However, our estimations show that the program does not account for the initial volatility following launch. Gauntlet recommends transitioning to an LM program after one month to allocate incentives efficiently.

@Gauntlet

Loss Versus Rebalancing (LVR) is the primary cost for the POL strategy. LVR depends on volatility; empirical models can estimate this cost (see here). These costs are offset by fee yield, which depends on volume.

For point 3, we don’t think we need additional explanation on this.

In this way, we should also be able to maximize the synergy between the two initiatives that share the same objective of deepening liquidity, allowing us to use resources effectively.