Hello StakeWise DAO,
It looks like we had a lot of great traction in this forum post for utilizing the idle rETH2 in the treasury.
We will take 50% (75.5 rETH2) of the current rETH2 balance (151 rETH2) in the treasury (balance snapshot as of 2022-Feb-13) and swap it for sETH2 using the rETH2/sETH2 pool. We will then create an LP position in the rETH2/sETH2 in such a way that it will minimize the SWISE rewards the pool would receive, but at the same time provide the whole sETH2 stack to traders.
This range would basically make SWISE rewards a whole lot smaller and would effectively provide the entire 63.5 sETH2 portion taken from the pool at the disposal of traders. The position is ~13-14 ticks to the left and one tick to the right, 0.98807-1.002. This uses the maximum amount of sETH2 possible, while providing very little rETH2 to the pool.
I’m not sure how much this would reduce SWISE APR exactly, but I know it’s significant because I pooled like this on the sETH2/ETH pool for a while to avoid loss of principal (since I staked early) and to maximize staking rewards even if SWISE rewards were lower.
Using this position though, the DAO would feel the change in proportions of rETH2 and sETH2 as other liquidity providers whenever a trade happens, but would retain the maximum possible amount of sETH2.
Special thanks to @tsudmi for helping construct this idea. Since he explained it best, I will just quote him on how this proposal will be executed:
It’s a bit hard to write a specification for it as the transactions have slippage settings and in case the price between rETH2/sETH2 will change, the transactions will become invalid. Also, currently, rETH2 is accumulated to the team’s multisig, we need to change that as well later.
I suggest we create a snapshot vote without transactions. If the vote passes, the team’s multisig will convert 50% of rETH2 to sETH2, create LP position and transfer LP NFT to the DAO address. That will be the easiest to execute technically.