Next week, the RAFT token will launch on the market and the liquidity on decentralized exchanges will play a pivotal role in ensuring a prompt and robust adoption of the token. The upcoming RAFT / R 80:20 Balancer pool will be the cornerstone of the ve8020 RAFT token design.
We have also observed that the Uni v3 TEMP / USDC pool has an excess liquidity compared to the actual needs and such excess liquidity reduces the efficiency of the price discovery. TEMP currently has almost $ 2.5 mln TVL combined across Uniswap v3 and Balancer. More than 40% of the circulating supply is deposited to decentralized exchanges as protocol owned liquidity, which is several magnitudes higher than other similar tokens.
Such a surplus of liquidity dampens the efficiency of price discovery. Moreover, Tempus owns a significant share of the liquidity in the pool and a high concentration of liquidity providers is not a desirable feature of a well-functioning token as TEMP aspires to be.
We want to ensure an adequate level of initial liquidity for the RAFT / R 80:20 Balancer pool.
We propose to remove $ 200k worth of USDC from the TEMP / USDC Uniswap v3 pool and allocate such proceeds to seed the RAFT / R 80:20 Balancer pool to be made available on trading when RAFT launches next week.
Benefits and Call to Action
The funding of the upcoming RAFT / R pool will enhance the ability to finance future expansions and integrations that could benefit Raft the most. Seeding the pool with protocol-owned funds provides a stable layer of liquidity on which other liquidity providers could build upon.
Furthermore, the reduction in the TEMP circulating supply will increase the efficiency of the price discovery mechanism and prepare the ground for the TEMP Staking Program.
We anticipate that the forthcoming TEMP Staking Program will increase TEMP’s trading volume. This increase is predicted to indirectly motivate a diverse range of market participants to acquire TEMP and provide liquidity to capture both trading fees and TEMP price appreciation. By doing that, the reduction in liquidity we are proposing will be partially or totally offset by the market with the additional benefit of widening the number of liquidity providers, without need for further intervention on our side.
A discussion period will take place until 3:00 pm UTC on Thursday 5 October, followed by a three-day Snapshot vote immediately after.
Your engagement in this decision is critical. We invite you to discuss, share your insights, concerns, and preferences in the comments below.