Background:
As most of you may know, most of the liquidity of HAKA on Ethereum is currently on Uniswap V2 and for BSC its on Pancakeswap V2. However, both of them have released updated versions; the landscape of DEX has changed a lot these days. As a result, I believe it’s a good time to consider migrating liquidity to somewhere else.
Uniswap v3 introduced liquidity concentration, which means that you can set a certain price range where you provide liquidity. This is a way of decreasing your impermanent losses. This allows token trading pairs to take advantage of concentrated liquidity pools to increase capital efficiency. By migrating liquidity out of Uniswap v2 and Pancake swap v2 to Uniswap v3 and Pancakeswap v3 pools, users can benefit from less slippage on trades and LPs can benefit from more capital efficiency.
The trading range during initial liquidity addition means that LPs earn fees if the market price is within your selected range. One of the aspects of this new system is that liquidity providers will need to reset their price ranges in a volatile market to optimize returns. This can make providing liquidity more costly for providers with less capital due to gas costs associated with adjusting prices.
Description:
$HAKA liquidity was initially deployed on Uniswap and Panackeswap v2 liquidity pools. Although these were great options for users who did not want to use a CEX, it poses some issues with slippage and gas costs. The v2 liquidity pools are based off the years old constant product model, X * Y = K. This model is inefficient because it assumes the price of either asset are bound by 0 and infinity. Realistically speaking, there is no asset that could be priced to infinity, therefore it makes sense to have an upper bound limit on token prices.
Uniswap’s v3 AMM model introduces a complex AMM which enables liquidity provisioning within bands of liquidity aka the concentrated liquidity model. For example, users can deposit liquidity into the ETH/USDC pair only when ETH is between $1000 USDC and $2000 USDC. The ability to customize the liquidity ranges, makes the AMM much more efficient as the price of ETH is bound by the range instead of 0 and infinity.
This proposal will incentivize users to withdraw their liquidity from Uniswap v2 and Pancakeswap v2, and deposit into both v3 liquidity pools respectively.
Technical Specs:
Current Uni V2 https://etherscan.io/address/0xc5BbE611A5A0Ee224ABF7ad959C11aAd3b875957 has a total of 95k USD worth of liquidity 25 WTH and 6.2M HAKA.
Current Uniswap V2 LP holders https://etherscan.io/token/tokenholderchart/0xc5BbE611A5A0Ee224ABF7ad959C11aAd3b875957
Current Pancake v2 pair https://bscscan.com/address/0x3CdD9d3A67BFCE83B4a96703BA8cC70e8372F819 has a total of 57k USD worth of liquidity with 122 BNB and 3.5M HAKA.
Current Pancake V2 LP Holders https://bscscan.com/token/tokenholderchart/0x3CdD9d3A67BFCE83B4a96703BA8cC70e8372F819
During the migration event the weighted average spot will be calculated to add liquidity on the v3 pair. We will be using MEV blocker RPC to prevent sniping during migration sniped.
Providing liquidity on Uniswap v3 requires a more active presence compared to the earlier version of the platform hence Additional LP management tools will be considered such as:
- leveraged LP vaults
- auto compounders
- Arrakis v2 Protocol Automated Liquidity Management
Future Considerations:
The NFT community on BSC - especially traders, borrowing and lending users are quite scarce on BSC and we believe it would be better for the protocol to launch its new v3 version for perpetual trading on Arbitrum network as it provides a better access to degen traders and NFT community who might be interested in using our V2 lending product and V3 perpetual markets product.
Furthermore, all liquidity from BSC will be migrated to Arbitrum later in the coming month. Liquidity will be initialized on a popular DEX on Arbitrum network like Camelot and the incentive to migrate liquidity and bridge the tokens from BSC => Arbitrum will be promoted by and gas compensation plans.
We will also be initiating conversations with various decentralized bridge providers to allow token bridging from ETH <=>Arbitrum and BSC => Arbitrum.
Conclusion and next steps:
A minimum of 2 days will be given for the proposal to move to the snapshot stage. This will give active DAO participants ample time to discuss pro’s and con’s, and provide any feedback. After improvements and suggestions are finalized, a snapshot voting will begin which once passed will do the following:
- Migrate liquidity from Uniswap V2 to V3
- Migrate liquidity from Pancakeswap V2 to V3
- Draft reward allocation budget for a 90 day LP mining program on new V3 pools with target goal of reaching 1M USD liquidity on DEX pairs.