[RFC] Increase EUL liquidity on Uniswap

Euler DAO EUL
42

:handshake: I have revised the options on the poll. Happy voting everyone. Donā€™t sybil my poll please.

3 Likes
43

One point Iā€™d like to make is that these kind of events can be front-run if not planned well. Putting liquidity into Uniswap v3 allows people to sell EUL. There is therefore an incentive for someone to raise the price in an illiquid market now in order to sell later at a higher price after liquidity has been added.

I would therefore propose that if you folks are going to add liquidity, please consider doing it either side of a historical price. The standard is usually a 30 day historical TWAP. So you would take the average price of EUL from today, back to Dec 18th, and use that as the lower ā€˜buy sideā€™ price. The upper price would just be whatever the price is at the time of deploying the liquidity.

This would help limit the risks of market manipulation prior to the liquidity event, whilst providing just as good oracle security.

3 Likes
44

oh man, letā€™s just not complicate it even further guys

45

Agree with this here. DAOā€™s protocol-owned liquidity can be used to strengthen the oracle, let other LPs do more active liquidity management.

46

Euler Labs team was recently approached by Wonderland folks who work on a novel permissionless price oracle system that is built on top of Uniswap v3.

Itā€™s very experimental and I havenā€™t had time yet to fully dive in. It will be deployed on mainnet soon.

Iā€™m not gonna shill; anyone interested can read the docs and play with the dapp on Goerli:

https://dev.oracles.rip/

In general, the solution would let increase liquidity on Uniswap and in turn improve regular Uniswap TWAP oracle, as intended by the DAO. But also, it would allow to test the new approach to secure Uniswap TWAPs, and if successful, the solution might potentially get integrated with Euler to provide prices not only for EUL but also for other assets, if available.

Itā€™d be great to summarize the pros and cons having in mind that EUL would be one of the first assets to get on-boarded which is a risk but also opportunity.

1 Like
47

I am still against this proposal, I find that the liquidity is currently sufficient.

1 Like
48

Greetings everyone! We are thrilled to share our latest creation: Price Oracle. Our system is designed to be a step ahead of the current oracle solutions by offering a permissionless and reliable alternative.

We have reached out to the Euler team with a proposal which explains the product and how it aligns with Eulerā€™s needs. We will post this proposal shortly in the forum so that everyone can better understand our solution and its potential benefits.

However, we understand the importance of open discussion and would like to contribute to this conversation. In response to the comment above, we have identified both the advantages and drawbacks of having a Price Oracle for the EUL token.

Pros:

  • New level of protection against multi-block attacks enabled by PoS. This upgrade to the existing oracle solution would significantly enhance Eulerā€™s Oracle Rating.
  • The integration of Price Oracle implies depositing liquidity to the Full Range position without incurring fees. This would result in a more cost-effective solution compared to current alternatives.
  • The automatic on-chain management of fees by Price Oracle means that there is no need for any DAO members to allocate time or resources towards maintaining it.
  • The integration of Price Oracle would also enable higher price precision (12min TWAPs), reducing the risk of bad debt for the Euler protocol.
  • Euler can use this opportunity to test the effectiveness of Price Oracle in a real-world scenario. If the results are positive, it could be integrated for other pairs, thereby reducing the risk for many assets.
  • By integrating with Price Oracle, EUL could be integrated into other markets, increasing demand for the EUL token.
  • Price Oracle doesnā€™t icurr any fees. It is a permisionless public goods project.

Cons:

  • Price Oracle is a new solution with no prior track record, as it has yet to be launched on mainnet after successful testnet trial period.
  • The oracle is currently under internal audit. We also shared the code with the Euler team and other interested parties. As always happens with smart contracts, itā€™s still possible that unknown vulnerabilities may exist.
  • The unwinding process of the seeded liquidity is a multistep and heavily delayed process.

We are confident that Price Oracle will revolutionize the way oracles are used, and we look forward to discussing this opportunity with the Euler community.

This is a chance for Euler to take the forefront of innovation and play a crucial role in shaping a decentralized, open and secure future. By embracing this opportunity, Euler can demonstrate its commitment to advancing the blockchain industry and making it more accessible.

2 Likes
49

Thanks @wonderland !

Iā€™m happy to support this, itā€™s great to see new innovations like this.

The only worry I have is that itā€™s a new product and needs to be battle-tested in the wild. With that in mind would it make sense to deploy a smaller pool that could maybe be added to/redeployed after a set amount of time (maybe a month)? It could be a gradual step up in liquidity each month to reach a set limit. Keen to hear what you guys think.

2 Likes
50

I like this approach :slight_smile:

51

Hey @knightsemplar!
Thanks for your words. The contracts can only be initialized with a minimum deposit of 50WETH. After the first deposit, anyone can add any amount.
50WETH might seem like a lot, but itā€™s necessary to ensure a healthy and sustainable oracle. Also, only during the first two months (alpha version), Euler will be able to recover the funds by asking us to propose a migration, if you consider Price is not working as intended.

1 Like
52

Great. I would happily support this initiative.