[Temperature Check] Aura 2nd Vote Escrowed protocol on Arbitrum- RAMSES Exchange

Trantor
Wed, 22 Nov 2023 04:32:12 +0000
Temperature Check

Author: Trantor (with comment from GAMMA strategies)

TLDR:

Aura leverages Arbitrum momentum, friendly relationships between Aura Meditators and Ramses Exchange team and commences accumulation of a 2nd ve position as per the Aura “holistic ve” vision.

This Request for Comment (RFC) or temp check is based on the premise that Aura Finance would benefit from accumulating another vote escrowed position as part of the holistic ’ve’ vision. DeFi on Arbitrum has seen significant retail and institutional interest and has seen the effective development of Concentrated Liquidity (CL) pools which are rapidly becoming the standard for Liquidity provisioning.

This RFC is also based on the assumption that Aura will continue to dominate Balancer and that Balancer provides outstanding pool offerings, composability and liquidity depth across multiple chains and with multiple tokens. As such, this proposal does not seek to undermine Aura’s Balancer position but instead aims to provide Aura users with a choice. Users will be able to choose an Arbitrum-focused and hyper-efficient trading and farming opportunity with Ramses Exchange using a custom Concentrated Liquidity implementation.

For such a proposal to make sense, a partnership with GAMMA Strategies will be included so that Aura users can continue to deposit their LP without the need for active liquidity management and constant manual rebalancing. By working with GAMMA Strategies, Aura Finance will gain automated CL pools and then be able to use the custom boosted positions that Aura’s future locked RAMSES position would provide. This would be a mutually beneficial relationship.

Finally, whilst there is already a competitor for RAMSES exchange domination, the Ennead, they do not currently provide the same kind of offerings nor market exposure that Aura can implement. A GAMMA Strategies partnership, coupled with the same implementation that ensured that auraBAL remained closely pegged to veBAL, would see Aura rapidly accumulate a very large RAMSES position. This would provide users the opportunity to focus their liquidity pools across a range of eligible Arbitrum pools with very high volume to TVL ratios.

What is RAMSES Exchange:

Ramses Exchange is a small team comprising the following members: North, Dog, Ren6, Alpha, CNA, and Trantor.

The protocol launched in March of 2023 out of the ashes of the SOLIDLY mainnet migration. Since that time Ramses Exchange has iterated and expanded upon Andre’s initial vision to bring the best in class ve3,3 tokenomics. Ramses is currently one of the largest AMMs on Arbitrum and has achieved over $1B in aggregated volume and $1M in fees since launch. The incredible efficiency of Ramses’ custom CL implementation has seen RAMSES consistently placed in the top tiers of Arbitrum DEX across volume and fee generation. RAMSES continues to develop after receiving an ARB foundation grant.

Ramses Exchange has demonstrated exceptional market fit and significant potential. This exceptional market fit, based on a collection of dedicated DeFi users and custom implementations, has made such an impact that RAMSES exchange has become a target for both more partnerships and direct competition. RAMSES has recently received an incredible increase in the number of protocols seeking pools and integrations with various products such as bribe markets, new pools and collaborative incentives. Whilst this positivity remains a core tenet of partnerships and ideas with RAMSES exchange, success has bred envy. This envy has generally manifested as an undercurrent of fear-mongering focused on generally low TVL and depressed market cap.

Whilst RAMSES exchange indeed has a relatively low market cap, this provides the best possible starting point for Aura exchange to rapidly acquire a large veRAM position through actively converting veRAM positions from interested users and through a focused campaign of accumulation. With a large veRAM position, Aura will be able to provide users access to CL pools on a wide variety of pairs, providing excellent fees and a different approach to Balancer. This can be achieved relatively cheaply and using the existing infrastructure and Aura token.

Ramses Immutability

Due to the complexity of RAMSES’ v2 codebase, proxies are used in a custom diamond-pattern to fit within the code size limits of EVM contracts. All proxies are timelocked and any fundamental changes would be long discussed/gone through governance before actionable. No entity has the unilateral power to alter deposited funds or manipulate user deposits in any way.

RAMSES exchange partners:

Ramses exchange is currently partnered with several top protocols with many more partnerships to be announced in the coming weeks and months. Some of Ramses’ current partners include Alchemix, FRAX, Liquity, Swell, VELA, Yearn, Layer Zero, Olympus, Axelar and DAO Maker among many others.

Such partners will provide Aura with integrations across a variety of potential future collaborations to promote the long-term health of Aura and Ramses synergistically.

The opportunity to work with GAMMA for passive CL-focused LP

GAMMA is a Concentrated Liquidity-focused protocol that provides automated positions for users based on a rebalancing formula. Further details can be found at (Gamma - Provide Active Liquidity). Currently, there are 39 pairs supported at Gamma Strategies providing returns and ARB incentive grants to RAMSES pools staked there.

GAMMA Strategies does not currently have a partnership with Ennead for boost and instead is using a team-boosted veNFT for better returns. However, GAMMA would benefit greatly from a larger veNFT position to drive growth and greater returns. This is where Aura could conceivably achieve some excellent synergies.

GAMMA Strategies may consider depositing some of their veRAM position with Aura should this partnership be accepted (currently sitting at 0.93% of total supply).

The Competition and the Opportunity:

The Ennead (The Ennead | Optimizer) is currently the largest holder of veRAM (Ramses Wars) with a 21.8% position. This position has not increased in terms of percentages of veRAM for months as their inability to maintain the peg to liquid RAM has seen an efficient veRAM market open up which sells veRAM at above neadRAM prices. Essentially this has left neadRAM as the exit of last resort and has prevented them from receiving additional deposits of veRAM.

Aura would be very well placed using the same fee-sharing arrangements as auraBAL with a potential auraRAM position. By maintaining a consistent peg, Aura would be well placed to accumulate an ever larger veRAM position and thus provide depositors with the best possible boosts on the Aura platform.

Whilst there are a wide variety of ways to achieve this, an initial idea would be to allow depositors to convert their veRAM to auraRAM and then allow them to stake their auraRAM on Aura for compounding fees and auraRAM positions with Aura rewards as incentives. As a start point, there would be no auraRAM liquidity until an LP pool of at least $100K in value has been established with enhanced rewards being sent to that pool to ensure a wide variety of depositors. (this pool could even be an 80/20 pool on Balancer to demonstrate further composability!)

Aura would then seek to rapidly acquire veRAM and overtake the veRAM veNFT held by the Ennead to dominate this trading and fees-focused DEX which has shown incredible potential for growth on Arbitrum.

Balancer

This proposal makes clear that Aura already has a dominant position in Balancer that is unlikely to be directly challenged. Instead, the biggest risk to Aura is now likely to be the accumulation of very large Aura positions by other entities. A move to expand to a new user base is likely to further promote wide ownership of the Ara token.

In addition, the domination of Balancer is a notable achievement and thus means that Aura is well placed to simply continue the current model and support Balancer as it continues to evolve and develop. For Aura’s part, however, there now exists an opportunity to acquire a new ve position that specialises in trading fees and hyper-efficient swaps on Arbitrum. As an example, Balancer on Arbitrum has a TVL of over $100M with a 7-day volume of $36M. By comparison, Ramses, with a TVL of just over $13M has a 7-day volume of over $140M (https://defillama.com/dexs/chains/arbitrum ). It is clear that Arbitrum is not the focus of Balancer and so does not need to directly compete.

Potential expansion

RAMSES has indicated several potential future partnerships with some promising new chains. As a partner, this would enable Aura to have exposure to a variety of new chains such as Avalanche, Mantle, Linea, and Scroll, simply by holding a large veNFT position within the ecosystem.

Formal Audits

Ramses is audited by yAudit (Yearn’s auditing arm) and consistently performs internal reviews to ensure information assurance.

I would welcome any points of concern or clarification and look forward to the possibility of working together on this.

9 posts - 5 participants