Hello,
I didn’t get as much feedback as I was hoping, so I’ll keep my suggestion almost as it was originally. So here is my Algorand Foundation’s proposal for allocating liquidity into liquidity pools:
Suggestion
Algorand is technologically very mature and technically superior compared to other big chains. However, Algorand’s main problem isn’t technology, it’s poor liquidity across the ecosystem. With this proposal, the Algorand Foundation can support the Algorand ecosystem to grow with a reasonably low risk by offering liquidity in liquidity pools without giving away their assets.
Goals
Improve liquidity in liquidity pools in core tokens without major risks.
Bring EUR stablecoin to the Algorand ecosystem.
Reason
One of the biggest difficulties Algorand is currently facing is the poor liquidity in almost all areas. The Algorand Foundation can allocate its assets via liquidity pools in major/core tokens in the Algorand ecosystem. As a result, AF assets are not wasted or lost, but allocated for a period of time. This requires assets to be allocated into low volatility assets such as stablecoins or ALGO itself.
I propose that AF allocate liquidity to the following pairs of LPs in the following amounts (in millions of dollars):
1mm$ in Tinyman ALGO-USDC, 2mm$ in Pact ALGO-USDC, 2.5mm$ Tinyman USDC-USDT, 0.5mm$ Pact USDC-goUSD, 1mm$ Tinyman USDC-goUSD, 2mm$ Tinyman USDC-EURS, 2mm$ Package USDC-EURS, 2mm$ Tinyman ALGO-EURS, 2mm$ package ALGO-EURS.
So a total of 15mm$. (Note the new EURS token here. Will be explained later.)
By allocating some AF funds into these liquidity pools, it is not removed from the AF treasury as AF is able to withdraw its assets whenever needed. But I propose that AF will hold these assets in these liquidity pools until each of the pools reaches the $5M threshold (excluding AF assets). The only exception is a situation where stablecoin starts to unpeg or AF urgently needs its funds elsewhere.
This will result in more efficient use of AF Treasury while supporting the ecosystem with relatively low risk due to the nature of stablecoins.
This measure will also increase the TVL of the Algorand ecosystem, which will be beneficial to the ecosystem.
New EUR stablecoin EURS
Stasis Euro (EURS) is a new token in the Algorand ecosystem. They seem to already have €10,000 worth of tokens in Algorand so this shouldn’t be a huge project to inject more liquidity from that end. It may be another stablecoin from Eur, but it seems almost there already.
Why EUR stablecoin?
Eur stablecoin in the Algorand ecosystem will benefit all Europeans using Algorand. Narratives have always revolved around USD stablecoins for one reason or another, but recent SEC-related events have put the industry in a position where people are starting to look at other options as well. So it might be time to introduce Eur stablecoin to the Algorand ecosystem and consider 344 million native Eur users. This will pave the way for wider adoption of the Algorand blockchain, particularly in Europe.
matters to be decided:
- Is AF ready to help the ecosystem with liquidity problems?
- Is $15 million an appropriate amount to put into liquidity pools?
- Is AF ready to help bring your stablecoin to the Algorand ecosystem?
- Are the LP pairs distributed fairly and are the pairs most relevant from an ecosystem perspective?
- How long are assets held in liquidity pools?
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