Provide Stable Liquidity: Ensure a deep liquidity pool for TCAP2.0/ETH, enabling smooth trades with minimal slippage. Maintain the Peg: If necessary, adjust liquidity to help nudge the token’s price toward its target peg (the total cryptocurrency market cap). Foster Healthy Growth: Support the continued expansion and stability of the TCAP2.0/ETH liquidity pool, contributing to overall protocol health.
Background
This proposal is presented by:
Connor (StakeHaus Labs): Node operations specialist and decentralized finance infrastructure provider. Daniel: The core developer of the TCAP2.0 protocol.
Together, they combine technical expertise and operational know-how to effectively manage the liquidity pool.
Funding Request
We request $100,000 in ETH from the DAO to effectively provide and manage liquidity. We will use half of the ETH to mint new TCAP tokens. The balance of the ETH and the newly minted TCAP will then be deposited into the TCAP/ETH liquidity pool.
Details about Fees
In order to cover operational costs, active liquidity monitoring, and any necessary adjustments to maintain the peg and support healthy market conditions:
A monthly recurring payment of 1,000 USDC and fees generated as compensation for ongoing management services.
Thank you for this proposal. The DAO would appreciate having someone with your expertise to assist in managing the TCAP liquidity, particularly with the automatic monitoring of the TCAP position and the automatic adjustment to prevent liquidation.
Could you provide more details on how you plan to achieve this?
Happy to expand further. We are planning to use 50% of ETH as collateral to mint new TCAP tokens worth ~60% of the value, this would make the position relatively safe from liquidation considering the liquidation threshold of 130%.
Next, we intend to take roughly 10% of liquidity and allocate it to a broad price range to ensure sufficient liquidity especially during volatile times. Combined with additional liquidity incentives by the DAO we expect that over time this allocation will no longer be necessary and it will allow us to repurpose this liquidity later on.
The remaining 90% of TCAP tokens will be used to create liquidity on a very narrow price range around the current price. This provides very deep liquidity mitigating volatility and giving users better prices. Rebalancing tactics allow us to constantly monitor and adjust the price ranges of the liquidity to ensure smooth trading.
This leaves around 20% of ETH currently unaccounted for. Considering that no users currently own TCAP we expect more buy pressure during the early phases of the launch. This buffer of ETH allows us to react fast to the needs of the users and allows us to mint more TCAP and supply them to the market.
Hi, Daniel here, the co-proposer. I wanted to ask the subdao expects impermanent loss to be handled. Obviously once rebalanced any impermanent loss becomes permanent so I was wondering what the tolerance of the subdao is in this regard.
Your proposal includes some thoughtful strategies - from active rebalancing to setting aside a portion of liquidity for those unpredictable market swings, and keeping a bit of ETH as a quick-response fund. These are exactly the kind of proactive steps we’re looking for.
We recognize that this is an inherent part of managing liquidity in DeFi.
Our goal is to keep that initial amount stable, or at best, see it appreciate. The TCAP LP position will also earn fees, so maybe that’s one way the amount could grow, using some of the earned fees from Uniswap to grow the position over time.
When it comes to our tolerance for loss, we’re aiming for growth, but we’re also pragmatic. We know the crypto market can be wild, so our expectation is that the management strategy will work to minimize any losses through careful oversight and strategic rebalancing, but some impermanent loss is okay.