Mutual token swap between Osmosis and MantaDAO

Proposal Discussion
1

TLDR

  • This is a joint proposal prepared by representatives of the Osmosis Community (RoboMcGobo, Johnny Wyles) and MantaDAO (Pragmatic Monkey, Vladimir GG, PostTenebras)
  • We are proposing a $50k OSMO<>MNTA token swap between our two Communities.
  • MantaDAO will match the received OSMO with another $50k of MNTA in a BOW LP (the AMM built on top of FIN, Kujira’s orderbook DEX).
  • Osmosis Community Pool will match the received MNTA with another $50k of OSMO in a +/- 5x position in the Supercharged pool on Osmosis, with the option to re-evaluate this when vaults are available.
  • This will result in $200k of OSMO/MNTA liquidity that will make the two tokens tradable with limited price impact against a wide variety of assets on both Osmosis and Kujira thanks to Osmosis and MantaSwap’s multihop routers.
  • Half of the LP ($100k on Osmosis) will be owned by Osmosis Community Pool; the other half ($100k on BOW) will be owned by MantaDAO.
  • This will sustainably deepen liquidity for OSMO on Kujira in the form of Protocol-Owned Liquidity without the need for any incentives.
  • This will enable the Osmosis Community to diversify its treasury and generate a source of income in the form of trading profits from market-making activities.
  • This will open up additional arbitrage routes between Osmosis and FIN, resulting in a net increase in trading volumes on both sides.
  • This will build a bridge between the Osmosis and Kujira communities, promoting net positive-sum cooperation across the Cosmos.

Introduction

MantaDAO is a decentralized autonomous organization based on the Kujira blockchain and governed by the MNTA token. The DAO and its token are backed by Protocol-Owned Liquidity (POL) and revenue-generating products, one of which is MantaSwap, a multihop router built on top of FIN, Kujira’s CLOB DEX.

MantaDAO’s mission is to support the entire Kujira ecosystem towards delivering a best-in-class experience to both traders and protocols looking to list their token on FIN, while being profitable for MNTA stakers.

To achieve that, MantaDAO operates two complementary activities: (i) a Development arm building applications and tooling to improve users’ experiences and opportunities across the Kujira ecosystem, and (ii) a Market Making arm focusing on deepening liquidity on FIN’s orderbook via long-term protocol-owned liquidity and sustainable market making programs (i.e. not requiring token incentives).

MantaSwap is the first product developed by MantaDAO and at the time of writing, it is responsible for approximately 15% of all volume on FIN, which generates about ~5.6% APR for MNTA stakers.

Over the last three months, the DAO has accumulated ~$730k (as of 15-Sep-23) of POL spread across 6 MNTA LPs (KUJI, wBTC, wstETH, stATOM, STARS and SHD) and ~$50k in stablecoins ready to be deployed in some new assets. MantaDAO is in discussions with several other protocols and communities to deepen their token liquidity via treasury swaps and sustainable market making programs such as the one discussed in this proposal.

The utility of the MNTA token is primarily to protect the MantaDAO treasury from governance attacks. MantaDAO stores POL in the form of LP tokens inside the DAO treasury. POL is constantly being increased and extended to new assets in order to boost the trading volumes and fees from MantaSwap router, which works on top of FIN and BOW. Each staked MNTA token represents a share in MantaDAO and enables stakers to receive regular distributions from operational income (MantaSwap revenue at present, more revenue generating products will be developed in the future). Since Kujira on-chain governance proposal 450 passed, MantaDAO is able to independently create new pools and trading pairs in BOW and FIN, and, most importantly, flexibly configure existing ones. Thus, MantaDAO truly owns its liquidity at the code level.

A long-form introduction on MantaDAO can be found here and our first monthly report outlining the state of MantaDAO’s finances is available here.

Proposal

Token Swap

MantaDAO is offering a token swap deal where Osmosis would receive $50,000 of MNTA in exchange for $50,000 of OSMO from the Osmosis Community Pool (exchange ratio will be based on 10-day TWAP at the time this proposal is executed).

MantaDAO will pair the received $50,000 OSMO with an additional $50,000 of MNTA from its treasury to be provided as liquidity on BOW (the AMM built on top of FIN, Kujira’s orderbook DEX) into the OSMO/MNTA pool.

Likewise, Osmosis Community will pair the received $50,000 MNTA with an additional $50,000 OSMO from the Community Pool that will be provided as liquidity in a +/- 5x position in the Supercharged pool on Osmosis with the option to re-evaluate this when vaults are available.

If accepted, this proposal will greatly increase OSMO liquidity on Kujira, and facilitate several liquidity routes through the OSMO/MNTA pair. In particular, this would enable users to trade OSMO across most of the pairs available on FIN, including axlUSDC, USK, ATOM, KUJI, wBTC and wETH at very low slippage via MantaSwap’s multihop router. This is made possible by routing trades via the >$200k MNTA/KUJI LP mostly owned by MantaDAO that acts as an intermediary step to the deepest KUJI pools on FIN (e.g. to trade OSMO for axlUSDC, the route would be OSMO<>MNTA<>KUJI<>axlUSDC).

This will result in a total of $200k in liquidity for the OSMO/MNTA pair (half on Osmosis, half on BOW) and $100k in revenue-generating POL for both the Osmosis Community Pool (on Osmosis) and MantaDAO (on BOW).

Benefits to Osmosis

The proposed token swap will provide several benefits to Osmosis:

  • Sustainably deepen liquidity for OSMO in the form of POL, without the need for any incentives.
  • OSMO and MNTA are locked in liquidity pools, thereby reducing risk of either protocol causing unnecessary sell pressure.
  • Facilitate intelligently routed swaps for OSMO on FIN and allow Kujira traders to trade against axlUSDC, USK, wBTC, wETH, ATOM, KUJI and more at very low slippage.
  • Diversify Osmosis Community Pool treasury and create a new source of income in the form of trading profits from market making activities.
  • Open up additional arbitrage routes between the two DEXs, resulting in a net increase in trading volumes on both sides.
  • Build a bridge between the Osmosis and Kujira communities, promoting net positive-sum cooperation across the Cosmos.

MantaDAO is seeking to collaborate with the Osmosis Community to continue its strategy of expanding POL and forming market making partnerships across Cosmos.

MantaDAO has a first fully built product (MantaSwap) already generating ~$13k of annualized revenue and growing fast (+44.3% in August). The MNTA token is already backed by ~$780k of POL (corresponding to ~29% of the MNTA circulating market cap), with clear plans to further expand. For a detailed overview of MantaDAO finances, please check the latest monthly transparency report.

Risks

  • Divergence Risk: Assets may experience significant divergent price movements during high volatility periods, resulting in impermanent loss (IL).

Proposed Execution Process

Note that while the language of the proposal mentions a $50k swap, each party utilizes a total of $100k of its assets in this collaboration to provide a total of $200k in liquidity for OSMO/MNTA.

After addressing any questions or concerns from the Osmosis community on the governance forum, should the proposal pass, the token swap deal and LP provisioning process will be as follows:

  1. The Kujira team will act as the intermediary for Kujira on-chain operations. MantaDAO community launches and votes on the proposal to send $100k worth of MNTA from the governance-controlled MantaDAO treasury wallet to Kujira team operational address: kujira1zspr6va4ev78lpsh48s57nv6szxj4cdywt2kkg.
  • $50k of this amount will be used for direct exchange with the Osmosis community. The remaining $50k MNTA will be used for LP matching with $50k OSMO received from the Osmosis Community Pool.
  1. A 2/3 multisig address controlled by members from the Osmosis community will be created for Osmosis on-chain operations. The multisig members are:
  1. If the on-chain proposal passes, the multisig members on Osmosis perform the IBC transfer of $50k OSMO to Kujira team operational address: kujira1zspr6va4ev78lpsh48s57nv6szxj4cdywt2kkg.
  2. In parallel with 3, Kujira team sends $50k MNTA via IBC to the multisig address on Osmosis: osmo1rfcf70z0052zsjp9kz9zgal93exljj3fgka75wve0e3sazq724mqv2vqdm.
  3. The Kujira team executes the LP matching of the received amount of $50k OSMO and $50k MNTA in BOW (https://bow.kujira.network). Then Kujira team sends the LP tokens along with the rest of MNTA to the MantaDAO treasury address: kujira15e682nq9jees29rm9j3h030af86lq2qtlejgphlspzqcvs9whf2q00nua5.
  4. Members of the multisig on Osmosis match the received amounts of $50k MNTA with $50k OSMO on Osmosis. If there are some MNTA or OSMO left from the matching, that small amount of MNTA or OSMO is also sent to the Osmosis Community Pool. The pairing will be held in a +/- 5x Concentrated Liquidity position in the MANTA/OSMO Supercharged pool until they can be deposited into a vault to auto-manage the position. Tokens representing the position or vault holding must be sent to the Osmosis Community pool if possible. The liquidity position will be owned by the Community Pool even if the position is non-transferable and custodied by the multisig and no further operations beyond the scope of this proposal will be carried out without Osmosis governance permission.

As a result:

  • Osmosis community obtains a permanent $100k of POL for MNTA/OSMO on Osmosis.
  • MantaDAO obtains a permanent $100k of POL for OSMO/MNTA on Kujira.

Conclusion

The proposed token swap between MantaDAO and the Osmosis Community Pool represents a strategic collaboration that is expected to deliver mutual benefits and promote net positive-sum cooperation across the Cosmos. The partnership is a highly cost-efficient solution to deepen OSMO liquidity on FIN, enabling larger trades with reduced price impact, and opening up additional arbitrage routes between the two DEXs, resulting in a net increase in trading volumes on both sides. The deal is structured as a token swap, which means it is effectively a zero cost solution for both protocols. Given the liquidity will be owned by the Osmosis and MantaDAO protocols, it won’t require any LP incentive. Finally, it will enable Osmosis Community Pool to diversify its treasury and generate a source of income in the form of trading profits from market-making activities.

—-----------------------------------------------------------------------------------------------------------------

Appendix: MantaDAO Background

Initial MNTA Distribution & Future Plans

There is a total supply of 100m MNTA with 10.3m circulating, of which 5.0m were airdropped to KUJI stakers at genesis. The remaining 89.7m supply is DAO-governed and being utilized in a controlled, data-driven manner to build POL (mostly) and fund development of revenue generating products. Methods of fundraising include mutually beneficial treasury swaps and market-making arrangements, public OTC deals, bond sales, etc.

On the market-making front, two treasury swap deals have already been successfully conducted:

  • $50k swap + $50k LP matching with Stargaze community pool, resulting in $200k STARS/MNTA liquidity on FIN ($100k POL for MantaDAO).
  • $50k swap + $50k LP matching with Shade Protocol, resulting in $200k SHD/MNTA liquidity, of which half on FIN ($100k POL for MantaDAO), the other half on ShadeSwap.
  • Several treasury swap conversations are ongoing with other protocols.

MantaDAO has also started accumulating KUJI, wBTC, wstETH and stATOM, all paired with MNTA in BOW LPs. In total, MantaDAO has accumulated ~$780k worth of POL as of 15-Sep-23.

On the development front, several other products are in the making, including:

  • Various custom market making vaults that will place orders on FIN and complement BOW (Kujira’s first AMM built on top of FIN).
  • Squad, a DAO Platform allowing any project to easily launch a DAO on Kujira and manage its treasury (based on MantaDAO’s own governance smart contracts).
  • Various vaults, leveraging other pieces of the Kujira infrastructure, such as the liquidation engine ORCA, and the money market GHOST.
  • Each of those products will generate fees for MantaDAO.

MantaDAO

1600×804 112 KB

MantaDAO’s DAO Dashboard

MantaDAO has built the first custom built on-chain DAO platform for Kujira that includes a UI to allow the DAO to manage its treasury and deploy its own proposals for governance. This will soon be expanded as Squad Protocol, a DAO-as-a-Service dApp, for other DAOs on Kujira to use.

MantaSwap

1600×803 85.5 KB

MantaSwap UI on Kujira Mainnet

MantaSwap is a custom multihop router for FIN that allows for seamless any-to-any token trades (as opposed to being limited to trading within the pairs listed on FIN, e.g.MNTA<>OSMO). It enables users to find the optimal route from any input token to any output token and capture arbitrage between pairs listed on FIN. Swaps conducted on MantaSwap charge a 0.1% fee that goes to MantaDAO treasury. MantaSwap has been integrated as the default swapping interface on Sonar (Kujira’s mobile app) and will be integrated to Kujira web apps in the near future.

At time of writing, around 15% of all trading volume on FIN is routed through MantaSwap and the protocol has facilitated about $1.9m of trading volume since launch on 29-May-2023. Fees collected by MantaSwap have been distributed weekly to MNTA stakers and currently equates to ~5.6% APR.

3 Likes
2

Hey all!

Just wanted to jump in here and give my feedback on why I support this proposal.

Osmosis currently has over 90 million OSMO in its community pool. There is currently not nearly enough liquidity to support this many OSMO on the open market. This means that effectively, The bulk of the OSMO in the community pool has a real value of 0.

Utilizing some of this OSMO for protocol-owned liquidity converts these 0 value tokens to tokens with actual value while driving revenue for the protocol’s community pool.

Additionally, as both Manta and Osmosis are DeFi protocols, this will allow us to open up some additional arbitrage routes between the two trading venues, increasing volume for both protocols (and fees collected for this protocol-owned liquidity).

$100K in a supercharged liquidity pool should be adequate to support the bulk of the volume running through it and give the protocol a decent fee revenue relative to the capital outlay being requested here. I look at this proposal as an awesome test-case for protocol owned liquidity usecases as Osmosis begins to phase out incentives in favor of more sustainable fee models leveraging supercharged liquidity.

As a member of the multisig, I’ll probably abstain from voting on this proposal, but I majorly support this initiative.

4 Likes
3

This leads on to another question, if we would like to utilise community pool tokens in order to convert tokens from 0 value tokens to tokens with actual value, and we believe one of the best ways to do this is via a token swap and POL, then which applications/protocols would make sense to conduct a swap and POL deployment with?

In relation to this proposal, why does a token swap with MNTA (MantaDAO) make sense in addition to and/or instead of:

Osmosis applications:
Mars Protocol - MARS
IBCX - ION
Eris Protocol - AMP

Complimenting applications
Nolus - NLS
Umee UMEE
Quasar QSR
Stride STRD

More successful products/tokens than MNTA
Cosmos - ATOM
Neutron - NTRN
Stargaze - STARS
Axelar - AXL
Injective - INJ

My belief it that we shouldn’t just swap tokens with any old product/application/chain just for the sake of it, so that OSMO in the community pool are utilised and have real value… because instead we could utilise them in a better way and forge alliances with better teams/chains.

I am NOT SAYING that it DOES NOT make sense to enter this agreement with Manta DAO, I am just saying that we as a community should ensure that MantaDAO is the right project to conduct a token swap with from the perspective of Osmosis. We should ensure there is no opportunity cost to the token swap such as swapping with another project instead and we should ensure that an agreement with MantaDAO in the long term is likely to produce a net positive effect for Osmosis

Thoughts?

3 Likes
5

Thanks for your thoughts! Speaking on behalf of MantaDAO, I hope we were able to provide all the necessary information for the Osmosis community in order to present a clear picture of the current financial state of MantaDAO, its product line, and a clear economic justification for why this deal is mutually profitable for both parties. Monthly Transparency Report is here: 2023-08-31 MantaDAO Monthly Report.pdf - Google Drive . Everything else you can find in the text of the proposal to be able to create your own opinion on this matter.

As for other projects and their evaluation for similar deals, this is not the subject of this specific proposal. As RoboMcGobo mentioned, the community contributors of Osmosis plan to use the experience gained from the deal with MantaDAO for all similar ones in the future. Probably, this experience will be reflected in some framework, but here I’m already getting ahead of myself and speaking for others.

2 Likes
6

Thanks for the input, Liam. I would point out that the $50k OSMO swap value represents less than 0.15% of the current value of the Osmosis Community Pool. Suffice to say, the passing of this token swap deal would not materially impact or block other projects from stepping forward with similar proposals. In fact, as Robo aptly points out, it could serve as a great test-case and inspiration for other projects whom have not yet considered such a deal.

I think personal definitions of “Complimenting” and “More successful” products is quite subjective. Nonetheless, the existence and/or passing of this proposal between Osmosis and MantaDAO is not mutually exclusive with other projects drafting similar deals. Furthermore, some of the alternative products/tokens you reference are already constituents of the Osmosis Community Pool. For example, the Osmosis Community Pool currently holds roughly $4.4M ION, $370k AXL, $61k STARS, $31k AKT, etc. However, the overwhelming vast majority of the Osmosis Community Pool currently sits as $30.5M worth of OSMO tokens. As Robo points out, it seems that some further diversification of the Comm Pool is both necessary and beneficial, and this proposal draft would facilitate such diversification with no price impact and benefits such as trading volume + arbitrage routes.

3 Likes
7

I’m still halfway recognizing POL as the real path forwards tbh, but I like that your proposal text evolved a lot from what we saw on Stride (Commonwealth) and included a lot of the remarks mentioned over there.

Have to let it sink in for a bit ^^
What is your rough timing?

1 Like
8

Hey Liam!

Yeah just want to echo the other responses that I don’t think that this forecloses the ability for other protocols to make POL proposals.

In fact, with discussions around removing incentives from many pools picking up steam, I fully expect we’ll start to see more protocols looking to solidify minimum viable liquidity this way.

Imo this is a good thing. It incentivizes protocols listing on Osmosis to put some skin in the game by providing half of the liquidity, meanwhile Osmosis earns the full breadth of the benefit by increased volumes driven by these TVLs. This equates to more taker fees for OSMO stakers, as well as more protorev revenue for the protocol, all while not needing to put incentives into circulation.

Osmosis will naturally want to be selective with the protocols with which it chooses to enter this relationship, but I feel like a lot of the protocols you listed would also be good candidates.

1 Like
9

There is no exact timing for this one. I think we should give Osmosis community enough time to read the proposal before we start taking further steps. I guess, one more week or two will be enough.

1 Like
10

I don’t mean to FUD a proposal I’m a signer for but I did want to add some additional information that came to my attention recently. I feel this is an important consideration that should be discussed when deciding on whether to pass this!

There’s roughly 20 million MNTA being used as collateral on ghost (this actually appears to be the bulk of all ghost TVL). This represents roughly 200% of the MNTA circulating supply of 10m, and a far larger proportion of the liquidity that’s available to absorb it. Effectively what’s happening is that the Manta DAO team is borrowing against Manta to build its POL in certain pairs.

This adds additional risk to this proposal, because one can envision a situation in which a flash crash of the MNTA price leads to cascading liquidations into liquidity that is far too shallow to absorb it. In this case, the MNTA token goes to 0 and Kujira is left with bad debt.

All of that said, it appears that the Manta DAO is being extremely conservative in creating these positions to ensure that the debt doesn’t create an existential crisis for the protocol.

image
image1280×415 51.9 KB

From the above image, you can see that the largest LTV ratio position they have is just under 7% (I believe the liquidation threshold on Ghost is 70%?). I spoke with the Manta DAO team about this concern, and they indicated that they don’t intend to let these positions cross the 10-15% LTV ratio threshold, just in case a price decrease of the MNTA token occurs that requires action (like adding more collateral or simply repaying / paying down the loan using the portion of the Manta DAO treasury that holds other assets).

Given the above, I’d still be supportive of this proposal! If at any time this collateralization ratio begins to approach a danger zone, a new governance proposal could be raised to take the LP shares and remove the liquidity from this pool.

1 Like
11

Hi Robo,

Thanks, those are valid concerns. The risk you are worried about is that bad debt might incur due to a strong drop in MNTA price combined with an insufficient liquidation demand. I think your concerns can be mitigated by looking at the mint cap ($250k) in relation to the total existing MNTA liquidty ($1.39m at end of August) and a bit of xyk maths.

Let’s assume MantaDAO go crazy and borrow the $250k at 20% LTV (in reality we would most likely target 10% LTV), meaning at current price we would deposit ~4.8m MNTA as collateral to mint USK. To get into liquidation territory, the MNTA price would need to drop from $0.260 currently (at the time I made the analysis, prices is even higher now) to $0.087 (-66.7% drop). Based on xyk maths, and assuming there is 0 buyers showing up during the drop, for that to happen given current liquidity, it would require MNTA holders to sell ~1.96m MNTA in the open market. This represents 28.9% of the circulating supply that is not already into LPs, which would be a very material amount and seems quite unlikely. But that’s not it.
In reality, almost half of this amount is staked and subject to a 21 days unbonding period, which means there is only ~3.6m circulating MNTA available for sale. For a liquidation to happen, it would require that over 54% the supply available for sale be liquidated without any buyer stepping in. And for things to go bad, it would also require that nobody be wiling to participate in liquidation.

And actually, even that wouldn’t be enough to get us in trouble, because we have still plenty of non-circulating MNTA in reserve that we would use to top up our collateral before we get remotely close to be liquidated. And even if this wasn’t enough, the DAO currently owns over $315k (and would own an extra $250k on top if we had minted that amount) of non-MNTA assets in treasury. In the very worst case, we could liquidate part of that to repay some of the debt.
image

And here is the same analysis at 10% LTV (which is what we will likely target as a baseline), there wouldn’t even be enough MNTA available for sale to drop the price to a level that would trigger a liquidation.
image

We can never completely remove risk, but with that additional context in mind, if feels like the risk is very minimal with given targeted LTV and the current $250k mint cap on USK using MNTA as collateral.

Hope this helps address your concerns.

2 Likes
12

Just to add a bit more, our philosophy is similar to most startups (not only in crypto): use debt to grow while the project is young, and reduce debt via income and/or balance sheet as the project matures. MantaDAO is in the young, high-growth phase and also conveniently in a crypto bear market, so it makes sense to acquire blue chip assets like BTC and ETH in the treasury. As noted, we’re ensuring that the debt positions stay at extremely safe levels, and have several options for managing the debt if risk levels increase. Perhaps most importantly (as PragmaticMonkey pointed out), there currently isn’t enough MNTA available for sale to push the price down to liquidation levels.

Also to reassure you that we’re not biting off more than we can chew in terms of debt repayment, this is what MantaDAO revenue looks like as a function of daily swap volume:

$100k daily vol → $36.5k annualized revenue
$500k daily vol → $182.5k annualized revenue
$1M daily vol → $365k annualized revenue
$2M daily vol → $730k annualized revenue
$5M daily vol → $1.825M annualized revenue

That would just be revenue from MantaSwap API volume, not considering additional revenue from the upcoming vaults, nor appreciation of POL LPs from both trading APR and cyclical appreciation of the constituent assets. All of which should make it quite straightforward to reduce debt levels as the DAO continues to grow.

2 Likes
13

Seems low-risk enough for the value the cooperation between platforms may add. I’m just not sure about the reputation of the manta rays

14

Thanks for the concerns raised, Robo! I would also add here the following:

What you actually see is the result of long discussions in discord forums, and not some spontaneous decision.

In addition, all these actions were performed by MantaDAO governance (MIP 71, 72)

We really now have about 20% of the total supply as collateral on the Ghost money market , as well as on the USK market in the following distribution:
Ghost: MNTA - USK: 3m MNTA
Ghost: MNTA - axlUSDC: 3m MNTA
Ghost: MNTA - USDC: 1.5m MNTA
USK: MNTA - USK: 15m MNTA

As PragmaticMonkey mentioned, our financial model does not allow us to hold a debt position above 10%-15% LTV for a long time. The collateral assets have both been and continue to be controlled by the MantaDAO community. Everyone can view the status of debt positions by entering the cw3 MantaDAO address (kujira15e682nq9jees29rm9j3h030af86lq2qtlejgphlspzqcvs9whf2q00nua5) in read-only mode: GHOST by Kujira

Repayment plan:
We are planning gradually repaying the debt positions from the DAO’s operational income at a later market cycle. The plan is constantly getting rid of Ghost money market loans (with dynamic interest rate) in favor of USK debt, which IR is constantly 1%, by replacing MNTA as collateral by wstETH.

Until then we just make sure that the debt positions are safe and don’t contradict to our financial model.

2 Likes
15

One advantage is that the model has started in a bearmarket, and not in a bullmarket.

If we compare to for example UST, that only worked in a bullmarket and failed miserably in a bear. I do find it slightly scary though that we went from “we will likely target 10%” to “the model does not allow us to hold a debt position above 10-15% for a long time”. The latter meaning that it can go above (even briefly) after which it is supposed to go down again.
Also the statement that the non-MNTA assets can be utilized to save the value of MNTA is kinda worrysome, since that means you will liquidate the other assets in the pool to save MNTA as an asset.

For me this is still a big red sign not to do it imo.
I would like to see more safety measures in place. The debt-markets can be very rewarding, but also extremely risky.

1 Like
16

The current state of MantaDAO’s debt is public and subject to regular reassessment in the monthly financial reports as the one specified in this proposal. This is what was meant by the fact that the financial model does not allow holding debt above the range of 10%-15%. The ‘liquidatable’ assets are not related to MantaDAO’s treasury swap deals with the external projects (like Osmosis), but received as a result of operating activities. These currently include: $63k worth of wstETH, $67k worth of stATOM, $115k worth of wBTC, $50k worth of yieldETH.

This approach is significantly more reliable than what we can observe in the wider market, when unaccountable individuals can take a disproportionate amount of debt and simply allow it to be liquidated.

1 Like
17

Ok, so the 10-15% range is assessed on monthyl basis?
And not supported by automation?

18

Vlad’s saying that the monthly financial report for the DAO includes detailed information that breaks down all the revenue, debt levels, protocol-owned liquidity, emissions, supply changes, etc.

But the debt is public and can be viewed at any time by anyone, and MantaDAO contributors certainly assess the debt on a regular basis much more frequently than monthly. This process is manual at the moment; no automated debt management tooling has been built.

However, have you given Pragmatic Monkey’s post above a read? Based on current MNTA liquidity compared to MNTA in the hands of users, and taking into account the constant product formula, there actually isn’t even enough MNTA available to sell to get the price down to liquidation levels at our target LTV. So this relatively small amount of debt doesn’t actually carry liquidation risk (as intended).

1 Like
19

It’s being assessed on a daily basis. But financial model modulates the data on a monthly basis.

1 Like
20

Do you intend to use a Supercharged Liquidity pool? Or a more classic one?

Because the math for the MNTA price goes awry when using Supercharged.
If people deploy their funds wrongly, you run out of available liquidity faster.
And that can happen in general by the way, since Supercharged puts more liquidity (normally) around the actual price, but as soon as you get out of that range there is not much liquidity available. So prices go down (or up) much faster than with a classic pool or with full range positions.

I would surely be more open to supporting it if the steering mechanism would be more automated. Relying on manual adjustments is for me just too risky.
Especially when also more MNTA can be deployed. We have seen one example where this was done before and it didn’t end well for the complete crypto-space. I can imagine you are taking a more deliberate and cautious approach, but it is still humans working in a stressful environment. And under pressure errors are made, that is sadly just a simple but hard fact.

1 Like
21

I would address this question to Robo, because the Osmosis liquidity is supposed to be managed by representatives of the Osmosis community (multisig members). I think that we will be talking about a conservative strategy for providing liquidity to this pool, since multisig will not allow managing liquidity promptly due to the delayed nature of voting on proposals.