Ecosystem State

The proposal to begin rollout of Spot v2 is live and so far showing solid support. This is a natural time to reexamine the structure of SPOT liquidity so we can ensure it’s serving the needs of the market and protocol.

@Togenkyo suggested here that the bands of the SPOT Arrakis vault are due to be updated. When the vault was first launched in January of 2023, the bands were set such that the AMPL price target was at the lower end. Now, the price target has approached nearly the top bound.

Demand for SPOT leading up to the rollout has exceeded these concentrated bands and, while the price has shown a remarkable ability to come down again towards the target, better liquidity provisioning could have reduced some of the unnecessary intermediary price action.

Another factor is that, provided the v2 rollout executes, we may expect more short term volatility of SPOT as the markets develop. So we should generally prefer wider bands in the near term, on top of moving them upwards.

Given the simplicity of the Arrakis v1 vault system, the best way to update bands is to migrate to a new vault. If so, this is also an opportunity to leverage new v2 architecture from Arrakis that can be more dynamic in its liquidity management. This could simultaneously increase LP efficiency (leading to more fees) and decrease the need for future migrations.

The DAO could consider future programs on satellite networks, such as Base. But it’s likely prudent to first ensure a healthy SPOT v2 ecosystem on Ethereum L1, before complicating the market and arbitrage structure with additional platforms. However, since these are open markets, anyone who would like to participate on the Base platform in the meantime can absolutely move forward as they desire. There is already $267k of SPOT liquidity on Aerodrome, and $557k of WAMPL liquidity on Base Uniswap v3.

DAO Owned Liquidity

The FORTH PALM Vault (dashboard) has been highly successful in delivering on the DAO’s goals of bootstrapping liquidity. The performance of the vault is +21% vs hodling. This performance is something we can double down on, by allocating more FORTH tokens to what is already in the vault.

The DAO currently owns ~$1M in FORTH/ETH liquidity, and ~$3.5M in AMPL/ETH liquidity. Additionally, the $500k USDC position can be used for future SPOT liquidity, if the DAO mints enough SPOT tokens to match.

Proposed Configuration

Geyser	Platform	Pair	Chain	FORTH Amount
Beehive v7	Uniswap v2	ETH/AMPL	Ethereum	25,000 FORTH
Fly v2 (Superfly)	Uniswap v3	SPOT/USDC	Ethereum	35,000 FORTH
Total				60,000 FORTH

Proposed allocation to PALM liquidity: 700K FORTH, which would bring the vault back to the 90:10 FORTH:ETH ratio it started with.