RFC: Liquis Launch Partner Program

Ideas & suggestions
1

Summary

Liquis, a liquid wrapper for Bunni / Timeless Finance’s veLIT governance power, is conducting a launch partner program that allows participating DeFi projects to receive an allocation of its governance power (LIQ) in exchange for bootstrapping its platform.

This provides an opportunity for Reserve to stake out a position in Bunni’s engine for concentrated liquidity, which would be beneficial for its full range of issued assets.

Introduction

On Bunni

Bunni addressed the need for user-friendly abstraction of Uniswap v3 by introducing wrapped range positions. It allows anyone to deploy a target range with a corresponding ERC-20 receipt token on top of a Uniswap v3 pool, making it simple to provide, reuse, or incentivize liquidity.

Bunni also features a voting-escrow governance model in which emissions can be dynamically directed across approved token ranges. Users can receive $oLIT for providing liquidity to a Bunni range, which itself is redeemable for $LIT. Users who further pair this $LIT against $WETH on a canonical Balancer pool can then lock their position for veLIT governance power. A user’s veLIT balance determines both the amount of $oLIT emissions they are entitled to for providing liquidity in a recipient range, as well as their say in the distribution of future $oLIT emissions.

On Liquis

Liquis is a liquid wrapper solution for Bunni governance. It is based on a two-token model:

  • $liqLIT: The Liquis wrapper token for veLIT
  • $LIQ: The Liquis governance token

Liquis allows Bunni liquidity providers to benefit from a maximum-duration lock without having to commit to one themselves. As users exchange $LIT, $oLIT, or $BAL-20WETH-80LIT for $liqLIT, the protocol permanently accumulates veLIT governance power. This allows Liquis to pass on boosted $oLIT rewards to any liquidity provider who stakes their Bunni tokens with the protocol. These liquidity providers will also earn $LIQ in addition to their Bunni proceeds. $LIQ serves to determine how protocol veLIT is allocated across Bunni gauges.

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Liquis Launch Partner Program

Liquis has set aside 10% of its governance token supply to be allocated to other DeFi projects committed to helping bootstrap our liquid wrapper.

The Liquis Launch Partner Program is not a fundraising effort. Instead, it is meant to reward partner projects that commit to acting as early adopters of the protocol.

Liquis launch partners will receive 100,000 LIQ for every $10,000 they commit to the program. While this LIQ would be vested over the course of four years, launch partners will have access to its full voting power on day one. Their vesting will begin upon protocol launch and Liquis will retain the ability to clawback unvested LIQ in the event of an unsatisfied commitment.

Partner projects can satisfy their capital commitments to Liquis in one of three ways, or any combination thereof.

1. Minting liqLIT

liqLIT is our liquid wrapper for Bunni governance power, or veLIT. Users can mint it by depositing $LIT, $oLIT, or the BAL-20WETH-80LIT pool token into Liquis. Partners who go this route would be expected to make their committed deposit within one month of the protocol launching - so, by the end of September. Those that see through this commitment during the Pre-Launch period would also be eligible for the rewards allocated to that program.

Please note that existing veLIT positions cannot be converted to liqLIT.

2. Supporting vlLIQ

LIQ is the governance token of Liquis. Holders who lock LIQ in exchange for vlLIQ can vote on how the protocol’s veLIT is allocated across Bunni gauges. Liquis launch partners can commit to a specific budget to be spent on incentivizing vlLIQ holders to vote in favor of their target Bunni gauges.

This budget is to be spent within the first six months following protocol launch.

3. Contributing to ImmuneFi

ImmuneFi is the leading bug bounty platform for DeFi. Liquis launch partners who choose this option would be contributing funds to a multisig controlled by Liquis contributors for the sole purpose of making bug bounty payouts. Partners should anticipate that any non-USDC assets provided to meet such a commitment would eventually need to be liquidated in the event of a payout.

Benefits for Reserve

Bunni makes it straight forward for projects to access concentrated liquidity. While this can be tricky for volatile asset pairings, it’s proven very efficient for pegged asset pairings. Uniswap v3 can often support similar trade sizes compared to stableswap pools that have 3x or 4x the TVL.

As a Liquis launch partner, Reserve would be in a position to bootstrap highly efficient liquidity for both its fiat-pegged and ETH-pegged offerings. It would be able to direct Liquis veLIT to its specific pools while itself earning on its voted-locked LIQ.

More about Liquis

If you’d like to learn more about Liquis, check out the following links:

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Thanks for the post @0xLennie, I think there’s a lot of interesting ideas here. I like the approach Bunni has taken to create a user-friendly interface for LPs on Uniswap V3, and the two-token mechanism that Liquis introduces seems to align incentives well.

I have a couple of concerns with taking part in the launch partner program.

  1. While it could be advantageous to get into the Bunni/Liquis ecosystem early, at the moment it is purely for Uniswap liquidity given the concentrated liquidity focus. Given that Reserve has been prioritizing the Curve ecosystem for the initial liquidity and growth of RTokens, I think the $10k+ required for the launch program might be better utilized on Curve incentives or bribes. Taking part in the Liquis launch partner program would result in fragmenting liquidity, and while expanding liquidity to Uniswap could happen eventually, it is not the current priority.

  2. Bunni and Liquis are are very new protocols, and with ~$12M in TVL, they inevitably carry higher risk. Based on the website I see only a single audit has been done. Furthermore, one method of participating in the program is through funding bug bounties, so I’m not sure if the code base has been battle tested enough.

Overall I would want to see more evidence of security before pursuing something like this, particularly for an initiative that deviates from the current Curve-centric liquidity strategy.

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Hey Soham, thank you for your thoughtful insights and constructive feedback on the Bunni/Liquis ecosystem. We appreciate the time you’ve taken to analyze our approach, and we’re thrilled to see genuine interest in our mechanisms.

I want to clarify a few things to address your concerns:

  1. Audits: We’ve heard your concern about security, and I’m pleased to inform you that we’ve updated the Bunni website to reflect that we have not one but three separate audits for different components of the Bunni protocol at various stages of iteration. We believe in rigorous testing and have ensured that our codebase has been thoroughly examined by yaudit. I can only list two links due to security features here but will do so below.

  2. Bunni protocol: 08-2022-Bunni | yAudit Reports

  3. Bunni zap-in: 03-2023-Bunni-Zap | yAudit Reports

  4. Bug Bounty: In addition to our audits, we’ve instituted a bug bounty program. Anyone identifying vulnerabilities has a clear and incentivized pathway to report them.

  5. Diversification: In light of the recent events with Curve, we feel that diversification is prudent. Bunni stands as an efficient and yielding alternative. Our temporary dip in TVL was likely a reaction to misunderstandings around the situation, related to the viper contracts, but we’d like to emphasize that Bunni’s focus on efficiency and yield remains steadfast.

  6. User-Friendly Interface & Two-Token Mechanism: It’s great that you recognize our efforts in creating a user-friendly interface for Uniswap V3 LPs and our two-token mechanism. We’re working diligently to refine and expand our offerings, and we hope you’ll continue to monitor our progress.

Your feedback is invaluable to us, and we’re grateful you pointed out areas for clarification. We remain open to further discussion and invite any additional questions or concerns you might have. Thanks again for engaging with us. Together, we’ll keep building!

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Hey @Soham thanks for giving us a look. I see @Dakotah has provided some feedback regarding Bunni already, so I’ll focus on the Liquis angle.

Regarding Uniswap Liquidity
While Reserve has committed significant resources to the Curve ecosystem, we view the prospect of deeper Uniswap v3 liquidity to be a complementary strategy. A dedicated pool focused on at-peg liquidity for an asset like eUSD on Uniswap / Bunni can provide more efficient trading routes for smaller notional amounts, while Curve remains the go-to for larger transactions. It can also prove to be an interesting venue for eUSD / eth+ / hyusd to be paired against corresponding non-major assets should Reserve partner with more stablecoin / LST issuers across DeFi; there is no need to ask governance for a tight liquidity range for these secondary pools, in contrast to the A parameter on a stableswap pool. And lastly, at the time of writing, a dollar spent on Bunni bribes does go further than one spent on either Convex or Aura.

Any resources invested in Bunni / Liquis can be further complemented by other ongoing efforts in the Uniswap ecosystem. For example, Angle’s Merkl solution could allow Reserve to target subsidies specifically at just-in-time liquidity providers of the paired asset for a given pool.

We’ve seen time and time again that concentrated Uniswap TVL can punch above its weight in terms of volumes facilitated, and would argue that its shortcomings (e.g. if price goes out of range) are addressed by your existing Curve liquidity.

On Us Being New
We totally understand the concern, so will just leave some food for thought:

  • Liquis has been audited by Watchpug, and will be by Halborn at the time of its launch.

  • The Liquis codebase is comprised almost entirely of previous work done by Aura and Convex, with net new code serving to deal with the nuances of Bunni’s oLIT emission program

  • Our security philosophy is that bug bounties should be available regardless of the perceived maturity of a protocol, and the presence of one should not be construed as a negative

  • The option to participate as a Launch Partner via vlLIQ incentives would allow Reserve to take a wait-and-see approach to their commitment. If at any point in the six month window Reserve no longer feels the need to participate in Liquis, it can simply renege by not spending further incentives and leave with its already-vested LIQ. This, combined with any protocol fees it were to earn in that period, firmly derisks the opportunity.

  • If the success of Aura and Convex on the participation in their corresponding DEXes is any indication, the arrival of Liquis should help to kickstart Bunni over the coming months.

Hope this was helpful, and we look forward to speaking at the RToken Lab on Wednesday!

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