[RFC] - Abracadabra and Ondo | MIM-as-a-Service Partnership

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[RFC] - Abracadabra and Ondo | MIM-as-a-Service Partnership

Summary

This post seeks to outline a framework for an Abracabra and Ondo partnership. This partnership would build on Ondo’s Liquidity-as-a-Service offering and enable the use of $MIM (provided by the community) as liquidity for token issuers.

We propose that the Abracadabra DAO incentivizes users to deposit $MIM and future partners’ tokens into Ondo Vaults with $SPELL rewards.

About MIM-as-a-Service

Liquidity-as-a-Service (“LaaS”) is an offering from Ondo to make it possible for projects issuing tokens to increase the liquidity in their native tokens on decentralized exchanges by providing liquidity themselves. With MaaS, the community can deposit tokens into an Ondo liquidity vault with a flexible duration. Ondo and the Abracadabra community will match those deposits with an equivalent amount of MIM to form a liquidity pair. In exchange for providing MIM, the MIM community will receive a fixed APY return on its provided liquidity. We also propose that Abracadabra DAO provide additional incentives to users who deposit MIM (or the other side of the pair) into Ondo Vaults with SPELL rewards.

Ondo provides several advantages over existing liquidity solutions. With Ondo, token issuers earn trading fees and rewards which reduce (or even negate) impermanent loss (IL) risk and the cost of capital. With small adjustments, Ondo vaults are well-suited to facilitating direct listings, establishing the first liquidity for a token. Direct listings could eventually replace or complement IDOs. We would love to work directly with Abracadabra to build out these future offerings.

SPELL Incentives

We propose that Abracadabra incentivize the community to use MIM-as-a-Service with SPELL rewards. The new Uniswap and Sushiswap liquidity pools in MIM that the program would create do not yet have histories of income from trading fees that investors can rely on for returns forecasting. As such, incentives will help with onboarding new token pairs to MaaS with MIM and will help bootstrap a sustainable model going forward, that will not rely on indefinite incentives.

Fei Protocol and Frax Protocol made a similar commitment of TRIBE/FXS incentives for its bootstrapping of LaaS. We recommend that Abracadabra provides $10,000 worth of SPELL per week per $1M of liquidity added to MaaS. The amount of incentives provided would max out at $500,000 in SPELL per week based on current prices ($500,000 SPELL per week assuming $50M in total liquidity). If more than $50M in total liquidity is provided, then the total SPELL incentives from the program would be shared pro-rata with participants based on their contribution. We strongly believe that this initial expense will be well worth it to attract new partners and foster the growth of MIM.

Benefits to Abracadabra

  1. Increase the supply of MIM and expand its reach
  2. A Fixed APY on all MIM used as MaaS liquidity
  3. Build out new and strengthen existing relationships with other communities
  4. Establish new Uniswap and Sushiswap liquidity pools based in MIM

Risks to Abracadabra

  1. The fixed tranche side of our vaults (which MIM would be deposited into) can realize losses if the variable tranche side of the pair experiences about an 80% decline in price.
  2. Smart contract risk with Ondo. We have three audits available for review here. One of our audits is from Quantstamp.
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This is an interesting idea, but considering we are trying to move towards zero emissions it could be difficult. Would love to hear everyone’s opinions on this…

2 Likes
3

Thanks, me too. Would love to see some engagement

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I have nothing bad to say about Ondo, but arent we getting tired of all this liquidity deals? There is a Curve pool and other pools with gazzilion of MIM, i dont really think we have liquidity issues.

Again nothing against Ondo product but if we want to scale upwards we need to move away from all these incentives that are connected to basic liq provision inside numerous dex or similar pools, and find actual utility and demand for MIM.

Provide MIM into pool get Spell as reward…its same thing we been doing (and doing quite well) from the start. Lets find some other leeways for it.

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The proposal that I posted is actually exactly designed to create genuine utility and demand for MIM. The proposal would allow MIM to be used as part of our Liquidity-as-a-Service offering, meaning MIM would become the base asset for several other DeFi tokens. @hoffman

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Yes I understand that , and sorry if my comment sounded negative. LaaS is just too similar to liquidity mining for me, especially if Abraca again needs to incentive community to use it with Spell.

What I meant with new utility, is to find one that will not need any incentive to use. USDT doesnt need incentive when Binance Futures uses it exclusively, or UST because Anchor only accepts it as collateral. That kind of utility.

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Makes sense, I see what you’re saying. I was simply recommending that MIM match Frax/Fei/Rai’s incentive program to stay competitive but I understand the criticism.

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Its not criticsm at all, for all i know we might be loosing whats now called “curve wars” without stuff like this, so maybe I am not informed into the stablecoin wars as much I should be. Your proposal is nicely done, and I apologize for sounding like a dick.

I joined the forum the other day, as im involved in Abracadabra from Day 1, and would like to see our DAO grow. But only a handful of proposals (catpull and kujira as Inoticed) stand out as different, everything else is about “enhance liqudiity” or “approve our token for lending”.

I’ll leave others now to talk :slight_smile: