[FAST-TRACK] VIP-9: Providing Liquidity on Mainnet in Preparation of the BIO Genesis Event

General
1

Summary

The upcoming BIO Genesis Event on the Ethereum mainnet may increase demand for GROW in our Uniswap pool, leading to higher slippage for users. To address this, ValleyDAO plans to temporarily add liquidity to the Mainnet pool to reduce slippage during the Genesis Event. Slippage is the loss in price one experiences when making a trade on a DEX due to a lack of liquidity in the pool.

ValleyDAO requests to move up to 1.5 million GROW from our Ecosystem Incentives budget to the mainnet pool to improve liquidity and capitalize on this event. We will mint an equivalent amount of GROW to replace the tokens that get deposited during the Genesis Event.

Background

What is BIO?

BIO is a protocol for funding and directing liquidity to Decentralized Science (DeSci) DAOs, including ValleyDAO, VitaDAO, and CryoDAO, etc, and supports their growth with resources and network access. BIO was previously known as “bio.xyz”, which operated under the Molecule umbrella, and drove over $30M in funding for bioDAOs. It is now spinning out of Molecule into a decentralized protocol for science funding and liquidity.

What is the BIO Genesis Event?

BIO is conducting its Genesis Event and will release the BIO token in June 2024 to seed the network. Participants must already hold a token from a bioDAO, such as GROW, to join the Genesis Event. The way for participants to seed the network and receive BIO is by locking their bioDAO tokens in the BIO protocol and getting BIO tokens in return. This process is expected to drive demand for bioDAO tokens, including GROW.

The Genesis Event is expected to start in the coming weeks, and will run until mid-June. Participants need to buy or already own a bioDAO token (e.g., GROW) to participate and get BIO.

Why does this benefit GROW holders?

  • Prospective BIO buyers will need to purchase GROW first, increasing its demand, potentially raising prices and trading volume on our mainnet pool.
  • More liquidity reduces costs for buyers and smooths the process of buying the GROW token during this event.
  • GROW tokens swapped for BIO will be locked into the protocol and removed from the circulating supply, unlockable only via a future BIO vote.
  • Having more GROW tokens participating in the swap will give GROW a larger stake in the BIO protocol, potentially giving us more voting power to steer BIO funding and incentives to ValleyDAO and the IP we fund.

The Proposal

To ensure sufficient liquidity for GROW, ValleyDAO plans to provide additional GROW to the Mainnet pool. The DAO seeks approval to use up to 1.5 million GROW from our Ecosystem Incentives budget for this.

Initially, 500,000 GROW tokens will be added to the Mainnet pool, with the option to add more if needed, up to a maximum of 1.5 million GROW.

Post-auction, we will replenish our ecosystem budget by:

  1. Removing remaining added GROW liquidity from the mainnet pool and returning it to the Ecosystem Incentives Budget.
  2. Minting new GROW equal to the amount locked in the BIO.xyz treasury and adding it back to the Ecosystem Incentives Budget.

Liquidity Pool Specifics

  • GROW tokens will be added single-sided to a Uniswap v3 liquidity pool at the upper bands of the current price distribution (above $1.50 USD/GROW).
  • Should the GROW price increase in response to the BIO event, GROW will get converted to ETH as the GROW price rises. If the GROW price does not rise to reach the specific bands, nothing will happen.
  • Proceeds from this event (in ETH and GROW) will be used to bootstrap the ValleyDAO treasury.

Voting and Implementation Timeline

The BIO Genesis Event is expected to take place from late May until mid-June. Upon approval of this proposal, the liquidity strategy will be implemented immediately, with the minting process following the conclusion of the BIO Genesis Event.

This proactive approach ensures that ValleyDAO capitalizes on emerging opportunities in the DeSci ecosystem effectively.

  • Agree
  • Disagree (comment is encouraged)
  • Needs revision (comment is mandatory)
0 voters
2

Are there any specifications on what exactly falls under “Ecosystem Incentives”?

Another possibility is that the community can view this additional liquidity as a ecosystem incentive so that we do not need to mint additional GROW.

3 Likes
3

We use the ecosystem fund to compensate contributors and service providers, and to support events and other initiatives within the ecosystem (like this one). You can find more details here.

This fund is important, which is why we plan to replenish it. The tokens we plan to mint will match the amount locked into the BIO treasury during the BIO Genesis swap.

1 Like
4

Based on how much GROW is needed for the bio.xyz auction we could potentially consider just using tokens from the ecosystem fund, and not mint additional tokens (to keep the circulating supply lower)?

1 Like
5

In support of this proposal. Let’s proceed incrementally and monitor the volume generated through this auction! Also liked Albert’s suggestion that we needn’t mint more ecosystem incentives unless we identify a need later on - thus the circulating supply remains unaffected but we hopefully GROW the community!

3 Likes
6

Agree that we could use the ecosystem incentive budget for this and not mint additional tokens until we actually need them, which is probably in the next 2-3 years when we expect the ecosystem incentive budget to run out.

1 Like
7

I agree that minting extra tokens should the utter last resort as it would have a lot of impact on current markets dynamics.

My assumption is that if GROW becomes more liquid, the more community members / external players participate as LP’s. DAO funds that currently flow into LP management would eventually be free’d up as the LP participation share decreases?

1 Like