Proposal to use Visor Finance to Manage BOND/ETH Liquidity

Summary

This proposal outlines a pilot proposal for the Barnbridge DAO to utilize Visor Finance to manage BOND/ETH liquidity purchased via Olympus Pro on Uniswap v3. Visor Finance is an active manager focused on liquidity provisioning strategies on Uniswap v3. Visor Finance currently manages over 20 pairs on Uniswap v3 and provides infrastructure & strategies for individuals and protocols to use their funds to provide liquidity and generate yield.

Description

Managing the price range on Uniswap v3 requires active management, which is provided by Visor Finance and its research organization Gamma Strategies. As the price of BOND varies, Visor will use the strategies developed by Gamma to manage price ranges so that the current price stays within range, sufficient liquidity is maintained, and impermanent loss is mitigated.

Motivation

The capital efficiency of Uniswap v3 offers many advantages. Given that much of the liquidity will be concentrated around the current price tick, there will be less slippage for same volume trades on the same amount of liquidity as on Uniswap v2. For example, concentrating liquidity around +/-50% band around the current price may have up to 4x the capital efficiency and require less than 25% of the liquidity as on Uniswap v2. See calculation here: BOND Capital Efficiency Calculations - Google Sheets .

Another advantage of Uniswap v3 is that providing concentrated liquidity allows the LP to generate a higher fee multiple. However, this must be counterbalanced with the potential for higher impermanent losses. In our experience, providing wide ranges during periods of high volatility and narrower ranges during periods of low volatility mitigate the effects of impermanent loss and allow higher returns than a Uniswap v2/Sushiswap passive strategy.

Specification

Based on Barnbridge’s bond program with Olympus Pro, Visor Finance can manage the purchased liquidity on Uniswap v3. Visor Finance will manage the ranges to ensure that the prices stay within range while also controlling for impermanent loss. For its management services, Visor Finance takes 10% of Uniswap swap fees and distributes that to stakers of VISR. 90% of the earned fees will be re-invested back into the liquidity position. All gas fees for rebalances and re-investment of earned fees are paid for by Visor Finance.

  • Based on bonding 15K BOND using Olympus Pro over 4 weeks, approximately $300K of liquidity will be managed on Uniswap v3 upon receipt of liquidity

  • All WETH/BOND purchased liquidity will be repurposed in a Uniswap v3 pool.

Argumentation

For

  • Managing BOND/ETH liquidity on Uni v3 can achieve lower slippage on the same amount of liquidity due to the capital efficiency, so the threshold level of capital needed for liquidity is reduced
  • Aligns with the ethos of having protocol-owned-liquidity and reducing liquidity incentives because of the potential for earning higher yields on Uni v3 and reducing the amount of liquidity needed

Against

  • Sudden price divergence in the price of WETH/BOND can cause larger impermanent loss in the short term if price ranges are not managed accordingly
3 Likes

BlockquoteBased on Barnbridge’s bond program with Olympus Pro, Visor Finance can manage the purchased liquidity on Uniswap v3

This would make it impossible to farm pool 2 though.
Might be interesting once the farming rewards have ended.

2 Likes

Proposal assumes BOND/ETH liquidity purchased via Olympus Pro on Uniswap v3. Our pilot program is currently targeting an LP position on Uniswap v2 or Sushi.

When the times comes for BarnBridge to establish liquidity on Uniswap v3, a liquidity management service may make sense… for now it does not.

1 Like

Custodial with missing funds history. Somehow in May the LPs that were suppose to be in the vaults were sitting on emergency funds.

Thats not true on many regards, 1] its not custodial, everyone mints their own vaults 2] there were never any missing funds, suggest you read the post mortem the affected assets were fully returned 3] I suggest you read about the system before commenting on it, the assets when deposited are added to the LP upon the next reinvestment, the emergency function is only live for beta product and is now multisig controlled. But again you would know all these things if you did some basic research first.

1 Like

Farming can still be done when liquidity is managed through Visor Vaults
Instead of creating LP tokens on uniswap and depositing to a farming contract, people would deposit assets to the liquidity position on their Vault, and and a farming rewards program can be allocated.

2 Likes

well, as a LP I am hoping that we’ll move soon to v3… V2 is outdated, v3 much more efficient. it’s an interesting proposal. but you’re right… They should talk with our team members about it.

1 Like

interesting so looks like it can be done with our current pilot program… I think you should talk with our team about it. uni v3 is much better…

1 Like

I would be very careful accusing someone of not telling the true. I held Visor on that day when the “hack” happened. I followed the developments in that case minute by minute at that time. Seems you are either working for them or have another incentive. Post mortem statements can be as inventive as the hacks themselves. The funds were returned from the reserve not from the “hacker”. Were suppose to be non custodial in a super safe vaults, but still “hacked”.

CertiK Security Leaderboard - Visor Finance See latest audit report from Certik. The “emergency withdrawal” features were part of the initial beta version of the vaults, but have since been removed. The vaults are noncustodial in that the position manager contract only has a limited set of functions such as set base range, rebalance, collect fees, and set limit range. There are no withdrawal capabilities. This is confirmed in that audit report and in the latest contract here: https://etherscan.io/address/0x9a98bffabc0abf291d6811c034e239e916bbcec0#code. Happy to answer more questions with regards to this.

Not at all, we understand that the position will be for Uni v2 or Sushiswap. But owning the UNI v2 LP tokens or SLP tokens means that the owner of those tokens can redeem for the underlying assets. Once the underlying assets are received Barnbridge can easily manage those assets on Uni v3.

The main point of Olympus Pro is to obtain the other side in ETH, using the governance tokens of the protocol. Given that the protocol would’ve spent liquidity mining rewards in perpetuity to source continuous liquidity, why not spend the liquidity mining rewards upfront and own the liquidity. It is quite a brilliant solution. I think Visor Finance complements that solution very well because by managing the purchased liquidity on Uni v3, you can save more on liquidity expenses and earn more through concentrated LP-ing.

If I’m not mistaken, the pool 2 rewards were for the BOND-USDC pool? If the BOND-ETH pool is currently not being incentivized, then the proposal still makes a lot of sense. For the BOND-USDC pool, it may be better for when the farming rewards have ended to use Visor to manage that pool. That way the protocol can redeem their own LM rewards for BOND-USDC at least until farming rewards have ended.

I wasn’t commenting on your investment or lack there of in Visor, I was just basing it off the incorrect statements you made. I don’t know who you are I can only see what you wrote here.