eIP61: Updated Liquidity Parameters

Title: [eIP61: Updated liquidity parameters]
Author(s): @river0x
Submission Date: June 6 2025

Abstract

This proposal suggests updating the Euler DAO’s liquidity provision in eiP58

Motivation

Taken from a comment on eIP58:

I want to refresh eIP58 as it doesn’t really seem to have made a difference. Liquidity is poor due to the generalized nature of the position. The refresh involves a small revision from our current configuration. Instead of the liquidity being full range, we should provide it at 50% down and 200% up. Tighter liquidity in a fixed range would reduce the inefficiency currently experienced.

If the price falls to 2021 prices and no DAO member will be upset that there’s no liquidity to buy. If the price goes above 200% from here, we can rely on a buy wall around a $300M FDV. Once again any member of the DAO would likely be pleased with this outcome. This buy wall will enable many new entrants to reliably gain voting power in the DAO, creating new contributors.

Given feedback from others it feels appropriate to have a distinct discussion on this topic as opposed to joining it with other IPs.

There is still sufficient time to get this done before the protocol launches though as we want to facilitate governance token distribution - something current LP configuration (and subsequent market conditions) does not enable. To time the launch with simultaneously appropriate liquidity would be optimal.

I am aware that this eIP61 is precisely what I outlined I did not want to happen in eIP58. This is not lost on me.

Specification

  1. Withdraw the current full range liquidity.
  2. Move the full liquidity provision to 50% down and 200% from current price.

Voting

Option 1 = Keep $500K at full range

Option 2 = Move the liquidity to $500K at 50% down and 200% up

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