# [NIP-13] Liquidity configuration options Authors: 1a35e1, ar-metaverse, kgbeader, bithexall ## Background * ~50MM NSFW+ has been claimed * ~15MM NSFW+ has been locked * ~35MM circulating in the market * 25k USDC of capital to deploy ### Option A: Optimise for buy side liquidity Uniswap v3 allows setting single sided range orders. Given our capital, we can configure the LP such that we allow users to buy NSFW+ ``` Step 1: * Determine "SEED_PRICE" * Pair as NSFW+/MATIC given its deep liquidity * Buys would be routed via MATIC/USDC and MATIC/WETH. * Pair NSFW+/MATIC with 10k Step 2: Add NSFW+ single sided liquidity * Provide 10MM NSFW+ single sided liquidity at +3% of the seed price Step 3: Once price stabalises * Provide 20MM NSFW+ single sided liquidity, and have it "managed" to keep it in range ``` **Benefits** * Allows purchase of NSFW+ * Staged deployment of LP capital **Risks** * Existing holders unable to exit due to low liquidity * New participants buying into potential selling pressure ### Option B: Provide 50/50 liquidity ``` Step 1: * Determine "SEED_PRICE" * Pair as NSFW+/MATIC given its deep liquidity * Buys would be routed via MATIC/USDC and MATIC/WETH. * Pair NSFW+/MATIC with 10k Step 2: Provide "managed" remaining 15k to pair after two weeks ``` **Benefits** * Allows purchase of NSFW+ * Staged deployment of LP capital * Existing holders can exit **Risks** * New participants buying into potential selling pressure * Capital provided for liquidity drained relativly quickly due to imbalance ## LP providers THE FOLLOWING IS EXTREMELY RISKY AND SHOULD ONLY BE CONSIDERED FOR EXPERT USERS. * We secured a provider to help manage v3 liquidity to ensure positions are always in range * We are exploring ways to provide NSFW+ incentives for users who would like to provide liquidity. ## On "managed" We have been in discussions with <https://www.gamma.xyz/> to help manage our v3 ranges. Normally in a v3 position it would require manual rebalancng to ensure we are always "in range". By outsourcing this to a protocol we are derisking the complexity of this management. ## Creating a "limit order" From the discussions in the forums it is apparent that some NSFW+ holders may wish to dispose of tokens. Uniswap ( V3 ) is unique in allowing such persons to place their tokens (only ) without having to provide an equivalent value of a paired token. These NSFW+ tokens can be can be placed on their own anywhere above the seed and later current price as the equivalent of a sell "limit order" that we are familiar with from centralised exchanges and is known as a single asset “range order’ in UniswapV3 Holders are urged to study the reference material at the end of this document to understand the unique capital efficient opportunity presented on uniswapV3 for such holders to dispose of their tokens at a price of their choosing ## Conclusion No matter how we configure the new LP, there is no denying we have very little liquidity. This is due to not having access to the original pool which still contains ~1.1M of permanently locked liquidity (https://dexscreener.com/bsc/0x8195143df00e94f320f3f60c48d5ed97a6bfabfc) There will be no realistic price discovery until the gap between the holders and the liquidity pool is bridged. This identifies and creates the very concrete objective of establishing a pool that sustain the currently imbalanced circulating supply vs DEX liquidity. It is the authors recommendation that we lean on Option A, to preserve capital and direct it towards activities that could potentially fill the gap and reach an equilibrium between pool liquidity and circulating supply. Which was the original thesis for the fixed yield vaults. ## Recommendations Any and all future net revenue should be directed to reaching an an equilibrium in the NSFW+/MATIC pool. Our current *estimates* place this to be circa ~500k ### Appendix * <https://www.youtube.com/watch?v=Ehm-OYBmlPM> * <https://uniswap.org/blog/auto-router> * <https://docs.uniswap.org/concepts/protocol/range-orders> * <https://finematics.com/impermanent-loss-explained/>