[AIP-66] Approve POL for L2 Liquidity

Proposals
1

Author

jameskbh

Summary

This proposal seeks approval from the Aura Treasury to bridge protocol-owned liquidity to the L2s where Aura is deployed and to provide up to 5% of protocol-owned liquidity (POL) of AURA-wETH for liquidity on each chain, natively.

Motivation

In collaboration with Beethoven X and Balancer, Aura has seen incredible growth and development on key layer 2 networks. Moreover, it has become evermore apparent from ecosystem partners that they would like to continue building on top of Aura and Balancer. Seeding protocol owned liquidity on L2s will help to accomplish this.

Therefore, to foster activity one those chains, to allow the use of Aura tokens by other protocols, and the current expansion of pools on the several L2s where Aura is currently deployed, Aura would like to continue this success by allowing integration opportunities via native L2 liquidity.

Upon community approval, Aura DAO will deposit liquidity into Balancer on Arbitrum, Polygon PoS, Polygon zkEVM, and Base. The creation of this pool will unlock users’ ability to trade AURA on these L2s and increase protocol integration potential.

Specification

This proposal seeks approval on the creation of an AURA-wETH pool on Arbitrum, Polygon PoS, Polygon zkEVM and Base with up to 5% of POL. Aura DAO will redeem 20% of the 80-20 pool on mainnet, then bridge the ETH and AURA over Arbitrum, Polygon PoS, Polygon zkEVM and Base, and finally create the pools on the L2s.

The POL will be held in Aura’s treasury on those chains.

Voting

This vote will be a single-choice vote. You may vote “For” or “Against” this proposal, or choose to abstain from the vote. By voting “For” this proposal, you are voting in favor of approving the Aura Treasury to provide up to 5% of POL for liquidity on each of those chains: Arbitrum, Polygon PoS, Polygon zkEVM and Base.

4 Likes
2

This is a good proposal!

3

A much needed move in my opinion. Purple army needs this!

1 Like
4

Liquidity on L2’s is most certainly needed, but it’s tricky. I’d love to see an analysis of how much depth would be lost on mainnet given this change, and how much would be created on L2s.

The sense I get is that either mainnet depth will take quite a hit, or there will end up being very very shallow pools if you split across so many chains.

The intention here is good, but I think a bit more research is required to make a good decision. Maybe it’s still better to focus on one chain?

Here’s my quick napkin math.

On new liquidty created:

There’s 146 ETH in the 80/20 pool. 20% of that is 30 eth. Split across the 4 chains you propose that’s under 10 ETH each.

If what is available is 30 ETH, it seems like it would make more sense to setup some kind of a CL range on 1 or 2 chains.

There’s 543 ETH in the 50/50 pool + 146 = 689 so that seems to make up about a 4% decrease in mainnet depth to pay for it.

5

Gotta agree with Tritium here. Having access to deep liquidity across chains is ideal, but not if it’s going to come at cost to mainnet.

However, if there’s data showing desirability of depth waning on mainnet and instead market participants/protocols wanting access on L2’s, then we should absolutely be led by that signal.

6

Thanks for your comments, guys. The idea here is to provide liquidity on the chains that doesn’t have any liquidity at all, to improve the user experience for those that receive Aura as a reward. For those chains, the only option right now is to bridge back to mainnet or Gnosis, for example, a suboptimal solution.

1 Like
7

https://vote.aura.finance/#/proposal/0x6eb2da5af8099cfeaad4079ec4cfe31b82136a13b09467e22b2b20d54471880d

8

So james wrote me in DM and shared with me that the idea is to replicate this OP pool on other chains:

This pool is doing like 1kish in volume a day and does seem to be used.

Further if you go to swap AURA for ETH on arbitrum, you can see that for under 1000 AURA slippage is pretty manageable/reasonable(costs less than a mainnet bridge for sure), while at 5k AURA you loose about 300 bucks in slippage.

I can see how this would allow small farmers to enter/exit on all these chains and makes sense.

1 Like