GIVEN THE RECENT EXPLOIT ON VISOR FINANCE THE VOTE HAS BEEN SUSPENDED
See https://twitter.com/VisorFinance/status/1473306777131405314; thanks @NewOrder for bringing this to our attention
Liquidity Solution D – Visor Finance
Governance Proposal 1
Silo Liquidity Solution D
Authors: Chutoro
Edited By: BP (community manager of Visor Finance)
Related Discussion: Visor Finance Discord FAQ, Visor Finance Documentation
TL;DR
Visor Finance is a protocol that allows single or double-sided depositing of SILO or SILO and WETH into a Visor Hypervisor (or position manager contract) that manages SILO-WETH liquidity on Uniswap V3. It provides active management of liquidity to optimise for yields and slippage through automated range adjustments and auto-compounding in exchange for 10% of swap fees returned from the liquidity position. This will provide Silo with protocol-owned liquidity ( POL ) which is Silo DAO controlled, reducing our reliance on external liquidity providers.
ABSTRACT
High slippage is a consequence of low TVL and disincentivizes large players and other interested protocols from investing in or utilising a token. Currently, the largest market for SILO is Uniswapv3, with around $690K of liquidity in the 0.3% SILO-ETH pool. Currently 2/3 of that liquidity is being provided by a single liquidity provider, which can be risky if that liquidity is not rebalanced or if the liquidity provider decides to exit.
Having POL through direct liquidity provision via a Visor Finance managed vault will provide price and liquidity stability to SILO and allow retail and other investors to invest efficiently without worrying excessively about price impact.
Visor Finance allows the Silo Community Treasury to have either one-sided (SILO only) or double-sided (SILO and ETH) staking into their Hypervisor contract, which will be converted automatically into SILO-ETH LP Tokens and used to provide liquidity. Uniswap v3 introduced concentrated liquidity where LPs select target price ranges for their assets and will only provide liquidity for trades within those ranges. Whilst this provides for greater capital efficiency for LPs, prices beyond these ranges are unutilised and do not receive transaction fees.
Visor Finance offers active management of deposited funds and will automatically readjust price ranges, rebalance assets, and re-invest transaction fees. In contrast to passive Uniswap V3 liquidity provision, Visor is able to generate far higher yields by optimising capital efficiency, although VISR stakers will receive 10% of transaction fees. Note that this approach does not provide protection from impermanent loss which will be borne by the Silo treasury.
The Hypervisor contract is noncustodial in that only the treasury’s address will be whitelisted for depositing into and withdrawing from the Hypervisor. The deposits and withdrawals can be called at any time. The Hypervisor contract itself only has managerial functions such as readjusting liquidity ranges or re-investing earned fees back into the liquidity position.
In this approach, the treasury will deposit SILO, WETH, or a combination of the two and deposit it into the Hypervisor contract and receive SILO-ETH LP Tokens in return. Readjustment of price ranges, rebalancing of assets, and reinvestment of fees occur in the background with transaction costs borne by Visor rather than Silo. Silo will benefit from achieving higher transaction fees compared to passive liquidity provision.
MOTIVATION
This proposal aims to solve early liquidity issues for the SILO token. The liquidity will be protocol owned meaning that it does not rely on external LPs.
It will also result in greater returns from LP tokens compared to passive liquidity provision – these processes are automated by the Visor protocol. Gas fees for these changes are also borne by Visor.
SPECIFICATION & RATIONALE
Specification
To explain the process, we will use an example of $1M SILO and $1M WETH from treasury funds:
- Silo deposits $1M SILO and $1M WETH into the SILO-ETH Hypervisor contract
- The individual dollar amounts of SILO and ETH do not matter since Visor will automatically rebalance to form 50:50 SILO-ETH
- The $1M SILO and $1M ETH will be used to provide liquidity on Uniswap V3
- In the background, the following processes will be automated:
- Automatic readjustment of price ranges to optimise for yield and slippage
- Rebalancing of assets – note that this will lock in impermanent losses
- Reinvestment of 90% of transaction fees into the SILO-ETH 0.3% pool
- The remaining 10% of transaction fees goes towards VISR holders
The Visor protocol employs various strategies to optimise yields that will be reinvested into our SILO-ETH LP holdings, with 10% given to VISR holders. To see how price impact can change based on the liquidity provided, see this sheet here: SILO-ETH Calculations - Google Sheets
Rationale
Technical: N/A
Social: Visor Finance has a large range of liquidity management partners in the Defi space such as Tokemak, FEI, Tracer DAO, Index Coop, and mStable which could provide future collaboration prospects
Financial: Provides $2M of liquidity in some combination of SILO and ETH. Generates higher return from transaction fees than passive liquidity provision and gas fees for management actions are borne by Visor.
Governance: Since the SILO is still owned by the community treasury, governance will not be affected.
BENEFITS
- Provides liquidity that is sustainable and does not rely on external parties
- Generates higher return from transaction fees than passive liquidity provision on Uniswap V3 due to the active management strategies developed by Gamma Strategies
- Gas fees for price range readjustment, rebalancing of assets, and reinvestment are borne by Visor
- Can be initiated very quickly
- Single and double-sided staking options are available
RISKS
- Relying on third party protocol exposes us to smart contract risk outside of our control
- Treasury funds deposited are exposed to impermanent loss which are realised due to rebalancing
- 10% of transaction fees are paid to VISR holders
VOTING
You can vote for this proposal here: Snapshot
Yes – You are in favour of partnering with Visor Finance and depositing treasury funds into a Visor Hypervisor for automated management in order to provide liquidity for SILO token
No – You are not in favour of this proposal[quote=“chutoro, post:1, topic:65, full:true”]
Liquidity Solution D – Visor Finance
Governance Proposal 1
Silo Liquidity Solution D
Authors: Chutoro
Edited By: BP (community manager of Visor Finance)
Related Discussion: Visor Finance Discord FAQ, Visor Finance Documentation
TL;DR
Visor Finance is a protocol that allows single or double-sided depositing of SILO or SILO and WETH into a Visor Hypervisor (or position manager contract) that manages SILO-WETH liquidity on Uniswap V3. It provides active management of liquidity to optimise for yields and slippage through automated range adjustments and auto-compounding in exchange for 10% of swap fees returned from the liquidity position. This will provide Silo with protocol-owned liquidity ( POL ) which is Silo DAO controlled, reducing our reliance on external liquidity providers.
ABSTRACT
High slippage is a consequence of low TVL and disincentivizes large players and other interested protocols from investing in or utilising a token. Currently, the largest market for SILO is Uniswapv3, with around $690K of liquidity in the 0.3% SILO-ETH pool. Currently 2/3 of that liquidity is being provided by a single liquidity provider, which can be risky if that liquidity is not rebalanced or if the liquidity provider decides to exit.
Having POL through direct liquidity provision via a Visor Finance managed vault will provide price and liquidity stability to SILO and allow retail and other investors to invest efficiently without worrying excessively about price impact.
Visor Finance allows the Silo Community Treasury to have either one-sided (SILO only) or double-sided (SILO and ETH) staking into their Hypervisor contract, which will be converted automatically into SILO-ETH LP Tokens and used to provide liquidity. Uniswap v3 introduced concentrated liquidity where LPs select target price ranges for their assets and will only provide liquidity for trades within those ranges. Whilst this provides for greater capital efficiency for LPs, prices beyond these ranges are unutilised and do not receive transaction fees.
Visor Finance offers active management of deposited funds and will automatically readjust price ranges, rebalance assets, and re-invest transaction fees. In contrast to passive Uniswap V3 liquidity provision, Visor is able to generate far higher yields by optimising capital efficiency, although VISR stakers will receive 10% of transaction fees. Note that this approach does not provide protection from impermanent loss which will be borne by the Silo treasury.
The Hypervisor contract is noncustodial in that only the treasury’s address will be whitelisted for depositing into and withdrawing from the Hypervisor. The deposits and withdrawals can be called at any time. The Hypervisor contract itself only has managerial functions such as readjusting liquidity ranges or re-investing earned fees back into the liquidity position.
In this approach, the treasury will deposit SILO, WETH, or a combination of the two and deposit it into the Hypervisor contract and receive SILO-ETH LP Tokens in return. Readjustment of price ranges, rebalancing of assets, and reinvestment of fees occur in the background with transaction costs borne by Visor rather than Silo. Silo will benefit from achieving higher transaction fees compared to passive liquidity provision.
MOTIVATION
This proposal aims to solve early liquidity issues for the SILO token. The liquidity will be protocol owned meaning that it does not rely on external LPs.
It will also result in greater returns from LP tokens compared to passive liquidity provision – these processes are automated by the Visor protocol. Gas fees for these changes are also borne by Visor.
SPECIFICATION & RATIONALE
Specification
To explain the process, we will use an example of $1M SILO and $1M WETH from treasury funds:
- Silo deposits $1M SILO and $1M WETH into the SILO-ETH Hypervisor contract
- The individual dollar amounts of SILO and ETH do not matter since Visor will automatically rebalance to form 50:50 SILO-ETH
- The $1M SILO and $1M ETH will be used to provide liquidity on Uniswap V3
- In the background, the following processes will be automated:
- Automatic readjustment of price ranges to optimise for yield and slippage
- Rebalancing of assets – note that this will lock in impermanent losses
- Reinvestment of 90% of transaction fees into the SILO-ETH 0.3% pool
- The remaining 10% of transaction fees goes towards VISR holders
The Visor protocol employs various strategies to optimise yields that will be reinvested into our SILO-ETH LP holdings, with 10% given to VISR holders. To see how price impact can change based on the liquidity provided, see this sheet here: SILO-ETH Calculations - Google Sheets
Rationale
Technical: N/A
Social: Visor Finance has a large range of liquidity management partners in the Defi space such as Tokemak, FEI, Tracer DAO, Index Coop, and mStable which could provide future collaboration prospects
Financial: Provides $2M of liquidity in some combination of SILO and ETH. Generates higher return from transaction fees than passive liquidity provision and gas fees for management actions are borne by Visor.
Governance: Since the SILO is still owned by the community treasury, governance will not be affected.
BENEFITS
- Provides liquidity that is sustainable and does not rely on external parties
- Generates higher return from transaction fees than passive liquidity provision on Uniswap V3 due to the active management strategies developed by Gamma Strategies
- Gas fees for price range readjustment, rebalancing of assets, and reinvestment are borne by Visor
- Can be initiated very quickly
- Single and double-sided staking options are available
RISKS
- Relying on third party protocol exposes us to smart contract risk outside of our control
- Treasury funds deposited are exposed to impermanent loss which are realised due to rebalancing
- 10% of transaction fees are paid to VISR holders
VOTING
You can vote for this proposal here: Snapshot
Yes – You are in favour of partnering with Visor Finance and depositing treasury funds into a Visor Hypervisor for automated management in order to provide liquidity for SILO token
No – You are not in favour of this proposal