Lydia Labs, in partnership with RHIZOME Labs, proposes to use 50,000 bnUSD of CPS funding in order to acquire Network-Owned-Liquidity for the sICX/bnUSD pair on ICON’s flagship DeFi protocol, Balanced.
This proposal has a number of benefits for the broader ICON community. Here are the objective benefits that come to mind:
The money is not spent - As opposed to every other CPS proposal, this grant is not spent and the value does not exit the ICON ecosystem – while “value exiting the ICON ecosystem” to pay for developers and other costs isn’t necessarily a bad thing, we felt it would be good to mention this. The sICX/bnUSD liquidity could be withdrawn any time at the discretion of ICON Governance.
This proposal generates income for the CPS - As opposed to every other CPS proposal, this grant would earn income back for the CPS and pay for itself over time. The CPS would be earning BALN, locking it for four years, and earning its share of the fees distributed by Balanced. Over time, the cost of the grant, and more, will likely be earned back by the CPS.
Deeper liquidity for traders in the ICON Ecosystem - Increasing the liquidity in the sICX/bnUSD pool allows for more on-chain activity by ICON traders. The deeper the liquidity, the less ICON community traders will need a centralized exchange.
Deeper liquidity for traders outside the ICON Ecosystem - There are traders out there who just care about seeking out opportunities to make profit, and may not know/care about ICON. Increasing the liquidity of the sICX/bnUSD pool allows for a better arbitrage experience between sICX/bnUSD on Balanced and ICX/Stablecoin on centralized exchanges. More volume means more rewards for the CPS.
Better trade execution for the CPS - The CPS itself converts the ICX inflation it receives to bnUSD using the Balanced DEX. The deeper the liquidity on the sICX/bnUSD pair, the better trade execution the CPS will receive.
More ICX burned - Similar to point number three, more trading activity on Balanced leads to more ICX burned from transaction fees.
While all of these points are objectively true, I’d like to emphasize the first two points the most. This grant will actually generate direct returns for the CPS. It will almost certainly pay for itself over time.
Lydia Labs is a top validator in the ICON Ecosystem and actively contributes to many of ICON’s most successful projects. We have been part of the ICON community for nearly 5 years and counting.
RHIZOME Labs has been involved in the ICON ecosystem since 2018, and has made various contributions including developing the icon.community website, RHIZOME Tracker, and various open-source tools.
The implementation details would be developed by the Balanced community and would include the following methods:
supplyLiquidity - this method would be external and callable by anybody. It will first check to see if the contract owns both sICX and bnUSD. If it does, it will supply both assets in full (Balanced automatically returns any extra of either asset). If it does not have both assets, it will swap half of the asset it currently holds for the other asset, then supply both assets in full.
withdrawLiquidity - this method would be callable by the ICON Governance SCORE. It would withdraw the liquidity back to the CPS treasury in whatever assets it were held in. For example, if it were held in sICX and bnUSD, the sICX and bnUSD would be withdrawn to the CPS.
claimBALN - this method would be external and callable by anybody. It would claim any BALN earned from providing liquidity and lock it for 4 years to generate the maximum amount of income for the CPS
claimFees - this method would be external and callable by anybody. It would claim the network fees, convert them all to bnUSD, then send it back to the CPS treasury.
claimFunding - this will be used to claim the CPS funding assuming the proposal is approved.
Various getters - there will be a few getters to allow for easy tracking of the CPS’s holdings.
From an architecture perspective, the CPS funding will be claimed by a smart contract developed by the Balanced community with the aforementioned logic. This contract will have its ownership transferred to the ICON Governance SCORE to protect its integrity.
The contract receiving the funding will be a simplified fork of the Balanced DAO Fund, which already has the aforementioned POL-enabled features. Upon approval of the proposal, the funding will be claimed and supplied as liquidity shortly after. The progress report will provide the proof of transaction and current POL holdings.
The smart contract has been developed in advance and the deliverable will be the transaction hash of the executed liquidity provision.
No ongoing maintenance is required. Any changes to the contract will need to be done via ICON Governance.