Proposal to Work with Tokemak Reduce Sell Pressure

Introduction
Currently, the Abracadabra Money uses a large amount of $SPELL to incentivize and bribes for liquidity on Curve. MIM-3crv is one of the most profitable pools on Curve, at the cost of Abracadabra Money’s treasury of unallocated $SPELL. Large incentive results in a large sell pressure on the $SPELL token, as farmers are dumping them as soon as they got rewards.

Enter Tokemak
Tokemak is a novel DeFi primitive designed to generate sustainable liquidity. Token Reactors are token-specific, IL-mitigating depositories where “Liquidity Providers’’ are incentivized to deposit tokens (OHM, ALCX, SUSHI, etc.), and holders of the native protocol token “TOKE” can stake their TOKE as “Liquidity Directors’’ to direct those assets to DEXs as liquidity. As Reactors are approved and launched by the Tokemak protocol, ETH and USDC held in their reserve pools are then paired with those tokens and deployed as liquidity. This enables deeper liquidity for protocols, without having to pay unnecessary and expensive liquidity incentives. The aim is to build long-lasting and sustainable liquidity. Tokemak’s active liquidity deployment is set to launch in Q4 2021.

Proposal
I propose the Abracadabra Money team to pursue a close relationship with Tokemak team and work to set up a $SPELL Token Reactor in the next round of C.o.R.E event where Tokemak users vote which token they want to boostrap the liquidity. By launching a reactor, the Abracadabra Money could reduce the number of incentives paid to liquidity providers in the Curve pools and conveivably reduce the sell pressure on the $SPELL token. The ultimate goal is to have a more sustainable and less cost-intensive liquidity and retain as much value as possible for $SPELL holders.

7 Likes

Great explanation and a great proposal, i have seen Tokemak but didnt fully understand it until you have explained.

2 Likes

I’m not sure why Abra hasn’t gotten their own reactor yet. While buybacks are nice, I do believe that obtaining their own reactor can reduce spell pressure which would be a nice addition to push the abra ecosystem forward.

+1

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This would be a much needed improvment in liquidity efficiency i think, probably the single easiest way to decrease emmisions without comprising depth of liquidity. Anyone run the numbers on how much this would save in terms of total SPELL emitted?