Aavegotchi

Author: Dr Wagmi#6629 Gotchi IDs: 16635 Discourse Thread (Idea/Proposal): https://dao.aavegotchi.com/t/add-dao-liquidity-to-ghst-alchemica-pairs/4309

I propose that the Aavegotchi DAO add 50,000 GHST + matching alchemica liquidity to the GHST-Alchemica pairs. Further, I propose that we do not stake corresponding LP tokens for GLTR.

The benefits of adding liquidity are multiple:

• Allows for lower slippage trading which will attract more trading and investment
• Legitimizes the Aavegotchi ecosystem, its farming, and the native tokens
• Supports land investors and, more specifically, those actively farming their land
• Allows the DAO to earn trading fees on the liquidity provided

There are also some risks which should be considered:

• Impermanent loss may decrease the net dollar value of DAO treasury funds
• Asks a difficult question of whether or not to stake LP tokens for GLTR and compete directly against community stakers for rewards
• Paying for liquidity is an expense in our ecosystem. In the long term, revenue must outweigh expenses for the Aavegotchi economy to thrive and assets to gain value. We should seriously consider our expenses vs revenues moving forward as we incentivize liquidity, hence the recent passed proposal to terminate FRENS which will both decrease expenses and allow NFT distributions to generate revenues

There is currently only $732,000 TOTAL in liquidity among the four alchemica-GHST pairs. Anything above a 1500 GHST swap has a price impact >1% which is not acceptable for a GameFi blue chip looking to instill investor confidence and attract new, large builders. Let’s bolster liquidity now and develop a sustainable and predictable plan to continue to add DAO liquidity at an, ideally, expense neutral rate. We can partner with the incoming DAO Project Manager(s)
and community bounty hunters to further define DAO revenues and expenses to formulate our liquidity plan.

I have included amounts of 50k GHST + matching alchemica and 30k GHST + matching alchemica as well as an option to add zero DAO liquidity. Further proposals can be made regarding GLTR pools for which discussion is ongoing in the attached thread.

Thank you all, Dr Wagmi