Summary - After discussions with the $FOX community during previous governance calls and tokenomics meetings, ICHI has been encouraged to submit a proposal to launch an ICHI $oneFOX-$FOX Angel Vault. This would allow the FOX DAO to build a treasury of DAO owned buy-side liquidity and protect the $FOX price during a market crash.
Abstract - Liquidity is the money made available for trading. Most approaches to market making and liquidity involve putting up $FOX tokens and a base asset (usually ETH) for sale. This works great when $ETH is going up in value versus the dollar but leaves the $FOX price exposed to drops in the value of $ETH versus the dollar. Only single-sided $oneFOX is added to the proposed $oneFOX-$FOX Angel Vault. This protects $FOX price against market corrections.
Motivation - $FOX price would be better protected against bear markets without hurting the upside during a bull market.
Specification - Angel Liquidity Vaults are a Uniswap v3 liquidity management protocol that allows LPs to deposit single-sided assets into a Uni v3 pool. They combine the rewarding and simple experience of Uniswap V2 with the concentrated liquidity of Uniswap V3. They enable projects to build a treasury of project owned liquidity and everyday DeFi users to earn fees without needing to manage their pool positions.
- to read more about Angel Vaults.
Liquidity may be added to the Angel Vault in the following ways:
Direct deposits by the $FOX community treasury,
- Incentivizing deposits by LPs,
- Purchasing LP with programs such as Olympus Pro Bonds, and/or
- Leveraging the assets backing $oneFOX to mint more $oneFOX and deposit it to the Angel Vault.
- This liquidity should total a minimum of $2M $oneFOX to enable profitable rebalancing of the Angel Vault. $10M or more liquidity is recommended given FOX’s large Uni V2 FOX-WETH pool. We aim to decide on the appropriate methods and amount during the discussion process.
Benefits - ICHI’s Angel Vaults are the easiest and most cost effective way for projects to increase their liquidity floor, enabling:
LPs to earn more trading fees with less,
- Liquidity rewards to increase the amount of buy side liquidity without also incentivizing sell pressure,
- The inflationary cost of rewards to be offset by the deflationary minting of the project’s branded dollar, and
- DAOs to build assets under management (AUM) backing their branded dollar and supplying DAO owned liquidity.
Drawbacks - If $FOX price declines in value, $oneFOX will be sold for $FOX. LPs will only be holding worthless $FOX tokens if $FOX price goes to $0.