RFC - RSR Liquidity on Base

RSR Liquidity on Base

Summery: RFC for the idea of adding RSR Tokens onto the Base Blockchain

Abstract: 1st Request for public comments on the ideas, ways, and means in which to introduce RSR Tokens onto the Base Blockchain. This RFC is created to answear 2 questions.

#1. Is this something the community and team agree with spending bandwidth and RSR on?
#2. In what ways should RSR be added to BASE, via LP pool or Bridge Discount??

Problem statement A critical component of the Reserve Ecosystem is the Backing of RTokens with RSR. Currently there are only about 0.24% of total circulating supply staked on Base vs 8.79% on ETH. Mainnet. Dune Info

In discord, I have seen a number of users express frustration with lack of available liquidity available on the BASE Blockchain. This lack of liquidity could effect RSR price and ecosystem growth.

Rational With the successful implentation of Dencun upgrade we have seen a massive drop in gas fees for the Base Blockchain. This new paradigm shift represents increadiable opportunity for the Reserve Protocol. There are 3 basic ways in which to provide liquidity. (BUT This RFC is requesting ALL Ideas)

  1. Provide Liquidity on BASE via LP Pool(s)
  2. In conjunction with a leading DEX, provide RSR Tokens as Incentive for LP Pool Creation
  3. Provide a GAS Discount on the Official Bridge from ETH to BASE

Risk As with any change, there is always the risk of smart contract. Especially if the community decides on going with the LP Pool, careful consideration must be made as to WHICH DEX in order to trust. Secondly, another risk comes from arbitrage and price discovery for the RSR Token between the BASE and ETH MAIN Blockchains. No matter which methood is used, and I believe this must be accounted for in any final calculations.

Questions:

  • YES, RSR Protocol should add RSR Tokens to Base BlockChain.
  • NO, RSR Protocol should NOT be involved right now
0 voters
4 Likes

This is awesome

  1. Liquidity Requirements and Market Activity:
  • I’m interested in understanding the initial liquidity required to effectively bootstrap the introduction of RSR tokens on the Base blockchain, particularly in relation to Aerodrome volatile LP Pools. Could you provide an estimate of the liquidity needed and your expectations for user activity within these RSR Pools?
  1. Evaluation of Gas Discount Necessity:
  • Given the current Ethereum gas fees, which are approximately $13 as per the Ethereum Gas Tracker, do you feel a discount is necessary? This fee level seems relatively moderate, especially when compared to costs associated with swapping, borrowing, and NFT purchases. Considering the activity level and the aim to achieve fees under $0.01 on Base, could you elaborate on the strategic importance of implementing a gas discount?

Considerations
When deciding on a token to LP $RSR with, I’d like to note that eUSD and bsdETH have leverage pools on ExtraFi. Neither are currently being utilized.

Something to consider is if we launch eUSD / RSR volatile pool on aerodrome. it would grow the utility of that eUSD (or bsdETH) vault as well as offer a quick avenue to grow the liquidity as long as their is activity.

2 Likes

This is a very common question in Discord, especially lately. I 100% think RSR liquidity needs to be increased on Base. However, the devil is always in the details. We first need to determine where this RSR comes from. Will this be coming from the slow wallet? I’m not sure I support that. I’d like to hear other people’s opinions.

The most obvious liquidity pair would be the higher transacted tokens on that chain. The top coin at the moment appears to be USDC according to CMC so I think that would be a good inroad. There should be discussion around using RToken pairs as well and the pros and cons of doing that. My initial thought would be to pair with USDC to get things going with a mid-term goal of pairing with Base RTokens.

EDIT: Perhaps some grant funds could be re-directed???

1 Like

I imagine confusion capital could seed the liquidity with the grant program.

I would have to do the math, but if they provide $1,000,000 liquidity for an LP Pool, earning fees as well as $AERO Rewards (I’m not sure where that would come from yet).

They could use it to generate revenue for the grant program, accumulate more $AERO to incentivize the pool further and grow the liquidity from there.

Looking at LP pools on Base, $1 Million TVL for an LP seems like a very reasonable place to start.

@0xSleepy

Makes sense to me. Hopefully, we get some thoughts from a decision-maker.

1 Like

100% needs base. ive spent probably about a third on gas fees compared to what i have in rsr currently.

Let’s make this happen!

Some thoughts:

  • Anyone can actually deploy liquidity pools! Great thing about defi is its permissionless and great thing about Base is its cheap (basically free!) to do so.
  • To do it on Aerodrome, you just go to “add liquidity” in top navigation. If you paste in the Base token address of any tokens, it will bring up this message saying “You’re about to create a new liquidity pool…”
    • Base Token Addresses of any token can be usually be found on Coingecko or Coinmarketcap.

  • Then deposit equal value amounts of the token into the pool.
    • Note: If you don’t deposit equal value amounts, you may lose some funds to arbitrage bots.
  • On what to pair a governance token with and where to do it:
    • Aerodrome is the largest DEX by far on Base these days. Probably best place for primary liquidity of any token.
    • Generally, ETH or ETH based tokens are a good pair, especially if ETH/GOVTOKEN has a tightly bounded range pool on uniswap. This generally allows the arb bots to keep two pools arbed tightly together price wise and generally minimize slippage for traders. Also, most people want to LP GOVTOKENs against ETH, not USDC, so pairing with ETH or something that tracks ETH is more likely to get more LPs.
    • bsdETH trades against ETH already, so any ETH trades on Aero would swap through ETH/bsdETH → bsdETH/GOVTOKEN no problem.
    • Expect that GOVTOKEN/bsdETH would be the most effective pair here.
    • Aerodrome has a 1% fee on pools of this type already. As we’ve seen on Uniswap on mainnet, that would result in fairly high APY for LPers that would probably be tantalizing enough for some people to LP and take on risk of impermanent loss.
  • If you have any questions on the process of how to move forward, the Aerodrome team is generally quite responsive!
  • Disclaimer: This is by no means financial advice or advice of any type, just trying to illustrate the magic of an open financial system :slight_smile:
1 Like

Thomas,

I believe I have done it.

2 Likes

I started a discussion on the Aerodrome side - I noted that I was only a Dao Community Member on a ‘gathering information’ mission.

I have asked if there is more to it, but I think for Aerodrome weekly incentives are simply voted for:
So from a wide angle our process would look something like.

  1. Reserve.org buys AERO
  2. Stakes AERO for veAERO Voting power
  3. Votes weekly for AERO incentives to feedback into the RSR/ETH Pools.

However, I see that brings us to A LOT more questions, and the need for the creation of a system to manage this. It’s also a major investment into another protocol and I would like to hear other’s thoughts on this.

So, let’s not get too far, this post was supposed to simply ask IF there is consensus among the community that there is an unfilled need for RSR liquidity on base.

BUT it has evolved very quickly to we are already working on solutions…Happy to be here :slight_smile: