PIP-XX: Deploy Liquidity into Liquity V2 VLR Pool

Governance Proposals
1

PIP-XX: Deploy Liquidity into Liquity V2 VLR Pool

Author: @citizen42 (Velora Growth Committee) & @Avantgarde
Category: Treasury Management

Abstract

This proposal seeks to deploy treasury assets to seed a liquidity pool on Aerodrome, on Base, drawing on existing pool deployments and BOLD incentives. The aim is to deepen VLR liquidity post migration and drive user participation by establishing VLR as a liquid, stablecoin-paired asset on the Superchain.

Goals & Review

Velora has completed its migration from PSP to VLR, and the DAO must now ensure that VLR liquidity is deep, stable and aligned with long-term ecosystem growth. Liquity v2 presents a strategic entry point. Therefore, we are proposing the following strategies:

  • VLR-BOLD Stable pool on Aerodrome leveraging Liquity V2 Protocol Incentivised Liquidity (‘PIL’) - By acquiring and staking LQTY, Velora can earn yield while influencing the flow of BOLD emissions. Channelling BOLD rewards from PIL in this pool would boost trading activity and offer new routes for arbitrage between existing pools on Base.

We recommend focusing on one Aerodrome pool and solely utilising funds from an existing treasury OP/PSP pool deployment and remaining funds from a Season 1 (~154,431.7 OP, which are allocated in a Foundation Wallet) grant to kickstart incentives and provide base liquidity, while projecting that BOLD emissions can further attract and retain users.

Means

This proposal does not require any additional Velora, external product or development other than the funds mentioned in the previous paragraph.

Implementation Overview

Step 1 — Asset Migration (Week 1–2)

  • DAO to delegate POL funds to Avangarde delegated EOA to withdraw assets from Velora’s existing OP pool (POL).

  • Complete PSP→VLR migration for treasury-held tokens.

  • Bridge POL from OP to BASE and convert into balanced allocations for pool seeding.

  • The Foundation will facilitate the transfer of the remaining OP from the Season 1 grant that is in its custody.

Step 2 — Pool Deployment (Week 2–3)

  • Allocate 100% of liquidity from the current OP/PSP pool to a VLR/BOLD pool on Aerodrome (Base).

Step 3 — Governance Token Acquisition (Week 3–4)

  • Acquire an initial 10,000 LQTY to stake in Liquity V2 using DAO ETH reserves.

  • Staking LQTY to secure yield and long-term governance influence in an innovative ecosystem.

Step 4 — Incentive Activation (Week 4 onward)

  • Leverage Liquity’s PIL mechanism to direct BOLD incentives toward the Aerodrome VLR/BOLD pool.

  • Coordinate with Laita Foundation to delegate the remaining Season 1 grant to explore additional co-incentives to deepen liquidity further.

Step 5 — Monitoring & Adjustment (Ongoing)

  • Measure TVL, trading volume and arbitrage flow across Aerodrome.

  • Adjust incentive allocations and treasury commitments based on pool performance.

  • VTM, elected in PIP-69, to provide quarterly progress updates to the DAO, if any adjustments or risks arise.

Budget

This proposal will utilize only existing deployed pool capital and previously allocated grant funds, with the sole exception of a one-time strategic acquisition of LQTY at an approximate current cost of $5,000. It does not request any ongoing or additional funding from the treasury.

Expected Outcomes

  • Entry into the Liquity ecosystem, strategically relevant for stablecoin liquidity pairing.

  • Arbitrage and cross-pool trading routes increase VLR transaction volume.

  • Staked LQTY allows Velora to influence future liquidity flows and integrate deeper with the ecosystem.

  • Leverage OP grant incentives from Season 1, with potential long-term continuation if the OP Grant reapplication is approved (though not a strict requirement). Pair these with BOLD emissions, both directed to Aerodrome, to drive user adoption and foster sticky liquidity.

Governance & Oversight

To ensure Velora’s participation in Liquity DAO remains transparent and strategically aligned, a Velora delegate will actively monitor Liquity governance, participate in discussions and provide regular updates to the DAO. The Governance Task Force will oversee coordination with all service providers to maintain consistency in positioning. At the same time, all governance activities, including forum engagement and votes, will be reported in a dedicated Velora thread for community visibility.

Delegates can submit interest and availability to take on this role and maintain the reporting cadence, ensuring Velora’s voice and interests are consistently represented within Liquity DAO. Given the strategic importance of this collaboration, it could also qualify and be rewarded with Contributor Points under VCP Cycle 2 (or its successors if the program is renewed). Position to be submitted for community vote as soon as this proposal has successfully passed.

Time of Implementation

The proposal will be implemented immediately after its passing.

Risk Assessment

Deploying capital in DeFi involves risk. As a fundamental step to address this, the infrastructure proposed herein has been thoroughly audited (see respectively Liquity V2 and Aerodrome). Other factors to take into particular consideration include short-term market volatility affecting pool health, yield variability from BOLD emissions, and operational oversight during liquidity migration. These are mitigated through treasury multisig execution, transparent reporting and quarterly VTM reviews. Overall, the initiative presents a low-risk, high-alignment opportunity that deepens VLR liquidity and yield potential while maintaining prudent treasury control.

Thank you for taking the time to review the proposal. We encourage all delegates and community members to share their proposal feedback here on the forum over the next week.

A special thank you to @citizen42 who has been the main driver behind this proposal, and whose continued contributions to the DAO ought to be recognised.

9 Likes
GTF third quarterly report - State of the VeloraDAO
Velora Growth Committee: Reflections and Recommendation from the Governance Task Force
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Thank you very much for this proposal.

In the interest of transparency, we would like to inform the community that we have collaborated with @citizen42 by providing feedback and helping shape the final text.

We believe this initiative could have a positive impact on the protocol by giving the token a new utility, which we understand should be one of the DAO’s priorities to support the protocol’s success.

The only cost associated with the proposal will be the creation of the VLR/BOLD pool and the purchase of LQTY. In any case, these assets will remain owned by the DAO, so this does not represent an expense but rather a small portfolio rebalancing that can be undone if the DAO decides to do so or if the proposal does not yield the expected results.

6 Likes
3

Thanks @Avantgarde and @citizen42 for putting this together and for coordinating across Liquity, Aerodrome and Velora. We are generally supportive of the direction; deepening VLR liquidity, utilizing the liquidity incentive program and the existing grants, but before we can comfortably support the proposal as written we would like to see a few missing points to be addressed:

Context on the existing OP/PSP POL and its mandate

The proposal reuses liquidity from the current OP/PSP pool and remaining Season 1 OP grant, but it does not restate the original mandate for that capital.

Could you explicitly reference and summarize the original ParaSwap Season 1 Optimism grant and POL mandate, including:

  • How much OP was allocated to protocol owned liquidity on Optimism in the original plan (35% per the Phase 1 proposal) and how much of that is now being repurposed for this new strategy on Base.
  • Whether there are any constraints or expectations from Optimism grants team about keeping that POL on OP Mainnet vs redeploying it to Base as part of the Superchain. (More on this later)

The proposal also does not mention the current farm configuration:

  • Is the existing OP/PSP POL deployed via Balancer + Aura or similar, and if so, what happens to accrued Aura/BAL/OP rewards when the position is unwound?
  • Will those historical and future rewards be claimed and returned to the Velora treasury, or are they already accounted for somewhere else?

A short “Current state of POL” section with numbers (current TVL, rewards, fees, realized APY, etc) would make this much cleaner for tokenholders and community members.

Why Liquity v2, BOLD and PIL, and how you evaluated them

We like the idea of pairing VLR with a credibly neutral, over-collateralized stablecoin. Liquity v2 and BOLD may very well be a strong choice, but the proposal lacks explaining the tradeoffs and risks.

Concretely, it would help to add:

  • A short Liquity v2 / BOLD explainer
  • A clearer description of Protocol Incentivized Liquidity (PIL) and how it works
  • Risk and due diligence:
    • What other venues and stablecoins did you compare against (e.g. USDC/USD-based pairs on Aerodrome, other BOLD venues, etc)?
    • How did you assess smart contract risk, peg risk and governance risk for Liquity v2 relative to those alternatives?

Right now this reads as “Liquity v2 is innovative, therefore we should integrate”. Adding a short evaluation framework and a couple of key metrics or references would make the strategic rationale much more convincing.

Use of remaining Optimism Season 1 OP grant

It would be helpful to clarify:

  • Has the Optimism Grants Council been explicitly consulted about using the remaining OP on Base (as part of a Superchain strategy) rather than strictly on OP Mainnet?
  • If yes, can you summarize their guidance or link to the relevant discussion?

This is especially important for accountability on older grants where the original scope predated the current Superchain framing.

Expected impact, KPIs and exit criteria

The “Expected Outcomes” section is directionally correct but still quite high level. For treasury risk, it would be useful to see:

  • Concrete targets:
    • Target VLR/BOLD pool TVL and depth at different price ranges.
    • Target slippage for a given trade size vs existing VLR pools.
    • Target share of total VLR DEX volume that you expect to route through this pool.
    • Expected BOLD incentive flow and LQTY staking yield under conservative and optimistic scenarios.
  • Time bound review and exit:
    • What are the quantitative thresholds or conditions under which the DAO would decide to reduce or unwind the position?
    • Is there a clear commitment that this is an experiment that can be rolled back with defined checkpoints, rather than an open ended, permanent reallocation?

Without those numbers it is hard to judge “how much impact this initiative can make” relative to other potential uses of OP and POL.

4 Likes
4

Velora needs a kick to accelerate user adoption and strengthen its brand in the market.

Financial risk also appears low, as the only cost is the onetime purchase of LQTY.

However, given recent volatility in VLR’s price, the pool could become imbalanced, potentially reducing the effectiveness of incentives.

A few questions:

  1. What is the co marketing plan with Liquity? Can we explore cross promotion opportunities?
  2. What could be the expected APYs from the incentives generated by just $5k USD worth of LQTY?
  3. Regarding BOLD, what is the initial emission rate, and is it sufficient to attract liquidity immediately?

Look forward to the team’s clarifications so DAO can make an informed decision.

2 Likes
5

Appreciate the team putting this together — overall I think the direction makes sense. Deepening VLR liquidity and tapping into Liquity V2/BOLD incentives is a pretty logical next step, especially after the PSP → VLR migration.

A few thoughts that might help tighten things up or give the community more clarity.

Since this uses existing liquidity + a small LQTY purchase, the risk isn’t huge, but it’s still good to know:

  • when would we unwind or rebalance the position?
  • what happens if yield drops or incentives dry up?
  • how will you monitor IL?

Even a lightweight plan would help set expectations.

More detail on incentives would also be helpful. It’d be useful to know roughly how strong the BOLD rewards might be and how long they last. Liquidity mining often attracts “in-and-out” capital, so just curious how you’re thinking about making the liquidity sticky or at least sustainable.

What’s the plan for the LQTY stake? Buying and staking LQTY is interesting — would Velora actually participate in Liquity governance, or is it more for yield? If governance is part of the value prop, it might be worth explaining how the DAO plans to use it.

6

Firstly, we think the timing and strategic alignment of this proposal is compelling. With Velora having completed the migration from PSP to VLR, bolstering liquidity around VLR is a natural next step. By acquiring and staking some LQTY tokens, Velora gains entry into the Liquity ecosystem, which broadens its governance and participation footprint. These considerations position the DAO to deepen its ecosystem engagement while keeping financial risk low.

Also, the approach targets impactful levers: deepen VLR liquidity, tie it to a stablecoin‐paired assets, harness emissions/incentives and reuse existing funds rather than freshly sourced capital. Some overall comments and points of possible improvement:

  • It would strengthen the proposal to include quantifiable Key Performance Indicators and exit criteria: target TVL, depth, slippage thresholds, time or performance‐based triggers for adjustment/unwinding.
  • Provide a clear comparison of alternative deployments: why Liquity V2/BOLD is preferred vs other stablecoin‐paired options or other chains, and an assessment of risks (peg risk, smart contract risk, governance risk) in that context.
7

The proposal’s goal is fine, and @Tane brings up some good questions that should be cleared up. Boosting $VLR liquidity is a solid idea too—I think about that a lot myself. But honestly, it feels like we’re putting time and resources into minor initiatives instead of tackling the real issue, which is fixing the token economy and actually driving token demand.

In a few recent proposals, we’ve spent a good chunk of our treasury on things that only indirectly help token utility, like PIP-67 Project Miro - Deployment of VLR on BSC and PIP-72 - Liquidity Funding for Futarchy Experimentation. And now we’re looking to put more capital into a new pool with incentives that won’t last.

Personally, I think the DAO should hold onto its resources and focus on initiatives that can make a bigger, long-term impact.

2 Likes
8

I support deepening VLR liquidity on stable pairs to improve execution routes, which aligns with Velora’s mission. However the concerns raised. Also the concerns raised by @PGov regarding KPIs are also valid extremely important to ensure this doesn’t become zombie capital. Please include Success metrics (Target TVL, Volume etc) , Exit plan and Governance strategies

9

I appreciate how clearly the proposal lays out each step of the liquidity plan. Using only already-allocated funds keeps things simple and avoids the legal and governance complications that come with new treasury spending. Staking LQTY also gives Velora a real voice in Liquity’s governance, which protects us from future policy shifts.

The reporting structure is a strong point. Many DAOs lose track of liquidity performance after deployment, so quarterly updates and a dedicated Liquity governance delegate will help us stay ahead of any issues. My only suggestion is to maintain steady communication during the migration period so the community understands what is happening.

Overall, I support the proposal. It is measured, practical and focused on long-term liquidity health. I appreciate the work behind it and look forward to next steps.

1 Like
10

Thanks, everyone, for the thoughtful feedback. I’m dropping a consolidated response below to cover the questions around rationale, risk, OP Season 1 usage, and the Liquity v2/PIL angle. I’ll incorporate these changes as we proceed with the discussion, so nothing is left ambiguous.

On Liquity v2, PIL and why this venue makes sense

Totally fair. Let me break down the reasoning more clearly and tie it to actual data:

Why Liquity v2?

  • It’s one of the very few credibly-neutral, fully-overcollateralized stablecoin systems on the Superchain.

  • Revenue is real and healthy, DeFiLlama shows ~$2.2M annualized protocol revenue and ~$115k annualized LQTY holder revenue, which puts it in the “sustainable” category rather than the “inflationary” one.

  • BOLD is already gaining adoption routes across Base, which gives VLR a stronger position than pairing against USDC (centralized risk) or non-yielding tokens.

Why PIL?

Because it’s a governance-driven, not mercenary, incentive model.
LQTY stakers choose where emissions go, which means:

  • Velora earns a say in BOLD flow.

  • BOLD emissions create sticky usage rather than fast-farm quick exit.

  • Arbitrage routes open naturally across Base/OP.

This is fundamentally different from temporary LM campaigns and could align well with how we want VLR liquidity to behave in the long term.

LQTY staking yield expectations

LQTY staking isn’t a farm — it’s fee-based.
The implied APR is currently ~0.46%, based on:

  • $114,961 yearly LQTY staker revenue.

  • ~24.89M LQTY staked.

So 10k LQTY earns roughly $46/year.

This means the $5k LQTY is not purchased for yield, it’s purchased for:

  • PIL voting power.

  • Governance access.

  • Emissions redirection.

The “return” is strategic access, not APY.

On the existing OP/PSP POL + Season 1 OP

Since the OP Season 1 grant predates the current Superchain framing, we’re taking a careful approach before adjusting its path.

I will attempt to chat with relevant OP folks to confirm whether Base-aligned usage fits into their updated interpretation. From what I can tell so far, there is flexibility when activities strengthen the OP ecosystem as a whole, plus rewards can be distributed on OP using Merkl without hurting objectives, but we’ll get a more concrete signal before implementation.

The important part is:

  • We are only proposing repurposing what remains.

  • Not spending anything new.

  • Not altering the original objective (incentivizing liquidity within the Optimism ecosystem).

If OP gives a green light, the DAO will have the option to either:

  1. Direct OP to bribe markets (for sustained BOLD flow),

  2. Reinforce the VLR/BOLD LP, or

  3. Keep OP untouched if the DAO prefers ultra-conservatism.

The proposal simply sets the structure, final usage depends on DAO sentiment.

On KPIs, exit criteria and mitigation

Agreed. Since this is meant as an experiment, I think it makes sense to keep the KPIs lightweight but clear:

Initial KPIs we propose adding:

  • TVL target: ~250k in the first 6–8 weeks.

  • Routing/Volume target: measurable flow vs existing pools.

  • Slippage: improvement to be observed as VLR was never paired with stablecoins.

  • Incentives: consistent BOLD drip (weekly).

  • Arbitrage activity: cross-pool movement on Base/OP.

Exit triggers:

  • Emissions dry up.

  • The Pool becomes inefficient vs other alternatives.

  • TVL remains stagnant after 8 weeks.

  • The downside risk becomes greater than the current activity.

  • Governance or peg risks emerge on the Liquity/BOLD side.

This keeps the DAO safe and avoids “zombie capital” situations.

On VLR volatility & pool imbalance

A very fair point — but specifically less relevant for stable-paired pools.

A VLR-BOLD pool on Aerodrome absorbs volatility in a way that:

  • Generates arbitrage activity (good for volume).

  • Maintains the peg safely due to BOLD’s design.

  • Emissions reinforced it.

  • It does not distort the treasury’s exposure.

This is actually the first pool design where VLR volatility is an advantage rather than a liability.

On co-marketing

This can be explored after deployment. Coordination on messaging, updates and community visibility is very realistic and can certainly benefit both.

On whether this is “too small” or “not tokenomics level impact”

I get the concern, but this is exactly why this proposal doesn’t try to solve tokenomics in one shot. Tokenomics redesign will come, but liquidity must be strengthened first, and the above seems an interesting case study.

This initiative:

  • Reuses existing capital.

  • Costs almost nothing.

  • Expands governance footprint.

  • Provides real stable-pair depth.

  • Strengthens future buyback/incentive designs.

  • Unlocks real data for bigger economic shifts.

It’s simply step 1, not the final evolution.

Final note:

We’re not committing the DAO to a new permanent structure.
We’re positioning Velora to understand what works in the Superchain liquidity landscape — and doing so safely, with reversible capital.

If this aligns with the DAO’s sentiment, we proceed. If not, we have the full picture to adjust course.

Happy to add any missing data points, just let me know.

4 Likes
11

Appreciate the solid research and clear rationale behind this proposal. Deploying liquidity into the VLR/BOLD pool on Liquity V2 strikes a good balance between capital efficiency and risk management, while also moving VLR toward a more sustainable liquidity model. If this pilot works well, it can become a foundation for future tokenomics experiments and more robust market depth for the token. Fully supportive of this direction and looking forward to seeing the results.

1 Like
12

Thanks for the detailed reply, @citizen42! The breakdown on the PIL mechanism really cleared things up for me—totally makes sense that we are buying governance influence/strategic access here, rather than just chasing a small APR.

I’m down to support moving this to a vote, I just want to double-check two operational things to make sure we don’t hit any blockers:

1. The OP Grant Confirmation You mentioned checking in with the OP folks about the Superchain usage. I think we should just make the deployment of that specific OP tranche conditional on their “green light.” Basically, if this passes, we can proceed with the pool setup, but let’s hold off on bridging the grant funds until we get a thumbs up from the Optimism Collective. Better to be safe than sorry so we don’t accidentally jeopardize our standing there!

2. Managing the Votes Since the main value add of the LQTY stake is directing those BOLD emissions, who is actually going to be pressing the buttons for the weekly/bi-weekly votes? Will the VTM handle that, or the Growth Committee? Just want to make sure it doesn’t become a passive hold where we forget to vote and miss out on the incentives we paid for.

I’m fully with you on the “plumbing first” mentality. We can’t solve the whole token economy overnight, so running a low-cost, 8-week experiment to test a stable pair seems like a smart move before trying bigger things.

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I support this initiative.

I like the strategy of getting VP (LQTY) to help to boost the yield on our pool. This is an classic example where POL makes the difference (as we also farm the rewards), and the DAO not only expend on incentives, but keeps the VP.

I was not able to identify what we want to to with the BOLD incentives we are entitled to. WHat iS the plan?

*Acquire more LQTY to increase our VP?

  • Pair it with VLR and increase our LP?

I would cote for the first option, at least in the beginning.

14

Thanks for the response. However, while I understand the importance of liquidity-provision strategies, the main question still remains unanswered: Is the Velora token struggling due to insufficient liquidity, or is the issue a lack of proper demand?

From my perspective, these two factors are both important mechanisms for price appreciation, but working on the demand side should be the primary step — and it’s something we haven’t properly focused on yet.

Approving a proposal like this might be fine on its own, but it will consume DAO resources and make it more difficult to allocate those resources toward the core issues that actually matter.
I will be happy to see such a proposal hit the forum.

1 Like
15

Thanks for your clarification, especially on why Liquity v2 and utilizing its incentive program. It would be great to incorporate those details into the official proposal itself.

From our experience in the council to review grants in the OP Collective, there has been a strong preference in utilizing OP on the OP Mainnet. We feel it’s required to settle this before moving to a vote. You should be able to consult PGov for the general direction as they are more familiar with the current structure and context of the OP grant system.

Does this mean the utilization of the remaining OP would be optional for the proposal?

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Hey all, apologise for long delay in addressing responses but a few clarifications are required before I can confidently answer, it will take me a few more days hopefully before Monday.

17

Hey guys,

From my perspective, spending time and resources chasing more liquidity won’t help, as the token already has a relatively high depth. The supply side is already in place; adding more won’t be helpful; addressing the demand would! Also, the rescoping of PIP-45 after 2 years is not making sense, and it’s definitely not fair as the full scope (and beyond) has been delivered… This will set a bad precedent for the trust in the DAO. The remaining amount should be used to fund development and infrastructure that enable Velora to stay afloat. The Laita team was very surprised to see this proposal pass the eyes of the governance facilitators and managers, and without any consultation to provide a feedback and clarifications for a topic we’re quite familiar with

4 Likes
18

Echoing the recent points on strategy ,if our liquidity depth is already healthy, we agree that funding demand makes more sense than paying for more supply. Looking forward for @citizen42 update.

1 Like
19

Thanks for the thorough work on this proposal and for the clarifications provided throughout the thread. After reviewing the updated context and the consolidated responses, we’d like to share our position and a few remaining points for consideration.

First, regarding whether the remaining OP Season 1 grant can be used for this initiative: based on internal clarification from Varit from our Curia Lab team, who currently serves on the OP Grants Council, and additional confirmation from Jun from PGov, we can confirm that allocating the leftover SS1 OP here is permissible. This aligns with the broader Superchain framing and does not conflict with the intent of the original mandate. Since this was part of the very first OP funding program, the funds are flexible and can be used at the DAO’s discretion.

So from a compliance standpoint, we are comfortable with this part.

On the design itself, we agree that pairing VLR with a credibly neutral over-collateralized stable asset and tapping into PIL offers a new liquidity surface for Velora. The structure is lightweight, uses existing capital, and provides a reversible experiment that can give us real data on routing, slippage, and arbitrage flow. We also appreciate the added KPIs and exit conditions, these make the initiative significantly safer from a treasury-risk perspective.

That said, we want to raise a few points that still feel important before execution:

  1. Liquidity depth expectations

    The TVL target and slippage improvements are helpful, but it would be useful to include a baseline comparison against existing VLR pairs so the DAO can more easily track whether this new pool becomes the primary routing venue or a complementary one.

  2. Co-marketing

    Since this was mentioned by multiple delegates: even a lightweight plan (shared announcements and update cadence) would help build confidence that this unlocks user-facing impact.

Overall, with the updated explanations and confirmations, we are supportive of moving this forward as an experiment. It’s a low-cost, reversible initiative that can strengthen VLR’s liquidity profile while giving us data to inform larger token-economic decisions later on.

3 Likes
20

Fully agree with your point on making OP usage conditional rather than assumed.
Given Curia’s recent clarification and huge thanks to them for syncing across OP stakeholders, we now know that Season 1 OP is flexible. Still, with recent coordination and findings, the remaining portion held in the Foundation has already been allocated under PIP-45 and can’t be used. Therefore, for this experiment, we will not rely on that tranche at all.

The proposal will proceed solely with the existing OP/PSP POL, and if the DAO later wishes to introduce VLR-based incentives (via bribes or LP reinforcement), that can be governed in a separate vote once sentiment is clear.

Great question.
The simplest and cleanest path is:

  • VTM handles the execution of the PIL vote.

  • Oversight comes from GTF + delegates.

  • Public reporting happens in a dedicated thread (if needed).

This ensures the LQTY position is not passive and that incentives are continuously optimized without adding new operational load to service providers.

Given the revised scope and conservative approach, the most reasonable path is:

  • Accumulate BOLD → every 6 months offer bribes/incentives for LPs → strengthen liquidity in stables.

At this early stage, attracting LPs is more valuable than expanding the POL size, in the event of PIL being deposited back in the pool. This can always be revisited once we observe how the pool behaves.

Totally fair concern.
This proposal is intentionally not a tokenomics solution but rather a liquidity experiment to utilise low activity OP/PSP POL, and is meant to provide real data before the DAO commits to anything more serious.

Concretely:

  • VLR has only been paired with ETH in an 80/20 configuration;

  • We have zero historical data on stable-pair routing, arbitrage flow, or slippage behaviour; and

  • We cannot simulate this ex-ante, it must be observed live.

This pilot lets us test:

  • Whether VLR benefits from a stable pair;

  • How routing behaves on Base between VRL/ETH and VLR/BOLD; and

  • Whether deeper stable liquidity meaningfully improves execution quality.

If the experiment shows no meaningful usage, we unwind. If it does add value, we have a new design surface for potential future tokenomics.

So this is intentionally a step, not the destination.

I will try to briefly answer below some of the points raised:

  • Why Liquity v2? Because it’s credibly neutral, over-collateralized, it has audited infra + organic BOLD growth;
    Why PIL? Because it has governance-directed incentives instead of mercenary LM; and
    OP clarification: Due to an oversight on my side, for which I apologise, the Season 1 OP in Foundation cannot be used; OP/PSP POL is available, acknowledging Curia’s confirmation that OP-aligned usage is permissible under SS1’s flexible mandate.

Absolutely, and this experiment helps us answer that empirically.

The DAO has data for ETH-paired liquidity only.We have no comparative metrics for: stable slippage, arbitrage corridor behaviour, routing choice between pools or user preference when a stable pair exists. Until we test a stable venue, we cannot know whether liquidity depth is sufficient or misallocated.

Last but not least, I really appreciate @Lup ’s perspective and feel it needs a little nuance. It’s true that liquidity alone isn’t the source of VLR’s challenges and that long-term demand design must sit at the centre of the DAO’s roadmap. The intention behind this experiment isn’t to distract from that priority, but to support it, creating the first stable-pair data point we’ve ever had, without consuming new resources or limiting future tokenomics work. Your points do strengthen the broader direction we should be heading toward, and I’m looking forward to contributing to those upcoming discussions.

Given Curia’s confirmation on OP flexibility, the clarification that the remaining Foundation OP is already allocated and won’t be used by this initative, and the DAO’s growing alignment around running a low-cost liquidity experiment first, I believe we can now proceed cleanly toward the next phase with the updated adjustments included.

This kind of discussions and feedback is exactly how we converge on stronger, safer proposals. Thanks, everyone, for the constructive input.

2 Likes