TELxIP: Diversifying Polygon Liquidity to Uniswap

Council Proposals TELxIP
1

Abstract:

This proposal aims to diversify TEL token liquidity to Uniswap V4 in order to decrease the dependencies on Balancer for DEX liquidity, while broadening the scope and optionality of liquidity provision for our community of LPs. In practice, the proposal involves deprecating the TEL/BAL staking contract and rewards, and then allocating those rewards to a new staking contract designed for the new TEL/ETH uniswap V4 pool on the Polygon Network.

The Problem: Concentration of Liquidity on Balancer limitations to 80/20 pools

  1. The Current Liquidity Scenario:

  2. Balancer: approximately 95% of liquidity in the TEL token is based on Polygon network and exchanged on a single DEX, Balancer. Balancer is relatively much smaller than its competitors

  3. Uniswap V4: There is approx 10% of liquidity based on Ethereum Mainnet exchanged in a Uniswap concentrated liquidity V3 TEL/ETH pool. This pool has seen tremendous yield with no incentive. Recently liquidity has been added to Polygon Uniswap V4 and V3 TEL/ETH. These pools allow creativity for LPs in concentration of liquidity and reduction of price impact for Telcoin app users.

  4. Inefficiency with TEL/BAL

  5. Liquidity: Nearly $1.6million in liquidity

  6. Volume: Volume per TVL is 0.1-0.2

  7. Trading activity: Modernization of aggregators and efficient multi-hop trades makes a TEL/BAL pairing irrelevant. Much of the aggregation of trades swaps through the highest volume tokens and hops to smaller volume token, thus the number of trades routed through TEL/BAL continues to decrease.

  8. Conclusion: Relative to other pairs and objectively, this TEL allocation is an inefficient use of limited TEL resources.

  9. Proposed Solution:

  10. Deprecate the TEL/BAL pool on TELx and

  11. Allocate those TEL incentives to bootstrap liquidity on polygon network in a Uniswap V4 TEL/ETH LP.

Functional Specification:

  1. Pool Creation: A Uniswap V4 pool with TEL/ETH has been established.
  2. TEL Rewards: In order to bootstrap additional liquidity to provide Base users better price execution for TEL trades, 2,777,778 TEL per 30 days will be issued to a new staking contract designed to incentivize LPs.
  3. Deprecation: The current TEL/BAL pool on balancer will no longer be incentivized.
  4. Allocation: That issuance will now go to the newly established polygon Uniswap V4 TEL/ETH pool.

Rationale:

TELx council is focused on increasing liquidity and access to users across the crypto economy. Uniswap has proven to be a high volume DEX with millions of users while Balancer is currently the 79th ranked DEX by volume on polygon. By incentivizing TEL LPs to provide liquidity on Uniswap we can dramatically increase our tradable liquidity and provide better trade execution for our users.

Why deprecate TEL/BAL? It does not trade meaningful volume and balancer polygon V2 (POS) is excluded from some aggregators.

Technical Specification: [Draft Pending Discussion with TAO]

  1. Deprecation: The staking contract for the 2,777,778 TEL per 30 days for BAL pool will be deprecated by the TAO according to standard practices.
  2. New staking contract: A new TEL/ETH uniswap staking contract will need to be created for LPT staking and rewards claiming on TELx.
  3. Website design: Work will also need to be done on TELx website to deprecate the BAL pool and display the TEL/ETH Uniswap V4 pool. Will need discussion with TAO to conduct feasibility, then either implement or outsource.

Implementation:

  1. Creating the pool: The pool has already been created (https://app.uniswap.org/explore/pools/polygon/0x9a005a0c12cc2ef01b34e9a7f3fb91a0e6304d377b5479bd3f08f8c29cdf5deb)

  2. Meeting with the TAO: The Author schedules a meeting with the TAO to scope out the work, tasks, and implement the following description of work.

  3. Description of Work:

  4. Deprecation: The staking contract for the 2,777,778 TEL per 30 days for BAL pool will be deprecated according to standard TELx practices.

  5. New staking contract: A new TEL/ETH uniswap staking contract will need to be created for LPT staking and rewards claiming on TELx.

  6. Website design: Work will also need to be done on TELx website to deprecate the BAL pool and display the TEL/ETH Uniswap pool. Will need discussion with TAO to conduct feasibility, then either implement or outsource.

Transactions:

Described in implementation above. In addition, we will need a quote for contract work for smart contract and web development.

Total TEL Distribution

  • Source of Funds: TELx Council Safe
  • Rewards: 2,777,778 TEL every 30 days harvested pro-rata from the TEL/ETH staking contract.
  • Development Costs: Pending budgeting conversations with TAO.
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