So we’ve talked to a couple market makers at this point, but we think only one will work for us with the sticking point that they’re the only one who does Uniswap V3 LP strategies. Given that we’re not currently on many cexes, it doesn’t make very much sense to partner before with someone if they can’t help much immediately.
The services they provide:
We’re most interested in: Uniswap V3 trading strategies, expertise in how we can adjust our rewards to maximize liquidity, and connections to cexes. Although getting on a cex is never a sure thing and the primary focus is volume, they can aid in that regard and having an MM with us already is a very good look.
The cost is a 1 year loan option of $1.5M worth of ARMOR tokens with a strike price at the 7 day average of the first week of trading. This means that if ARMOR has an average price of $0.10 during their first 7 days of trading, we will send them 15M tokens to use for trading. After 1 year, they have the option to either return the 15M tokens or purchase them from us at $0.10. This plan usually entails they liquidate a portion of the tokens for Ether as a pairing token, but we would prefer using a bit of our treasury to also send the pair to avoid market impact with the low liquidity we have at the moment (amount to be decided, likely $100k or so worth of Ether).
I believe we can share the name of the company if needed, but they preferred we don’t make it too public given contract details are usually private (they said it was fine to share within the community if we ask you keep it private, but I don’t think private is much of a thing on public forums so I suggested just sharing contract details without company name).
What are the community’s thoughts? I believe this is absolutely necessary as we’ve seen in the past few weeks even a few influencers can affect price dramatically with the current liquidity we have. We will also be able to use their expertise to optimize our rewards strategy and liquidity provided by the community and protocol in addition to what they’ll provide.
Other thoughts are: is $1.5M worth of ARMOR tokens too much to provide, should we look for that to be lowered? Is it a good time to start at current prices? Kinda sucks to start now, but liquidity will be very important in recovering. Should we set specific performance indicators they need to meet? Any dissenting opinions on not having one at all or taking another strategy?
P.S. Also to be clear about this, they do not do wash trading at all. Their DeFi strategy entails no trades but simply V3 LP strategies. When using cexes in combination with dexes, they make trades when profitable in the same way arbitrageurs would. With cexes alone they make markets in the traditional sense.