FLOAT-USD on Uniswap V3

Aggregating the discord discussions on UNIV3 with Will Sheehan | Parsec on accessing greater FLOAT liquidity with a tighter curve.

Prior Pairs

Non-pegged 0.05% pairs:

  • USDC/EURS: two primary ranges (+/- 3.9% and +/- 8%), 7 day range = 2.43%
  • RAI/DAI: 2-3 ranges (+/- 0.8% and +/- 3.8%), 7 day range = 3.7%
  • FEI/USDC: ranges (+/- 1.17%) 7 day range = 1.92%
  • USDC/ETH: 3ish ranges (+/-0.12, +/- 14%, +/- 36.79%) 7 day range = 10.6%

Fee Tier

5bps

The LP returns are much lower, but due to the low fee the volume would theoretically be much higher.

30bps

If the 5bps fee tier was chosen the LPs return profile gets chopped pretty good, I’d personally advocate for the 30bps tier as a starting point considering the asset is new and volumes aren’t that large yet

Possible Parameter Ranges

5-10% range from target price

Rationale
FLOAT 7 day range (is approx 1.50 - 1.63).

Impacts
10% range => 20.44x fee increase so up to “1% fee”, $10k equivalent $204k in capital.

[1.28, 1.82] (2 Sigma Range from 33 days of data)

Rationale
FLOAT 33 day 2 sigma should give a very comprehensive range, but this data also includes some very large drops and an auction spike due to delay.

1 Like

Is it a proposal or just a discussion? I think we should make this more clear in the forum threads.
In principle I’m in favor of having a UNI V3 pool. Makes a lot of sense for FLOAT.

Could we get a template for proposals like yearn or REN have?
REN distinguishes between RFC (Request for comment) and actual proposals with snapshot vote.

REN RFC example
REN proposal example

So this in the “Ideas & Improvements” so is a discussion, while FIPs are full on proposals.

Currently 1 leg of FLOAT-ETH pool is volatile, which may discourage users to participate as LP. With FLOAT-USDC both the legs are stable coins so there is a lot of incentive for people to participate. And since we’re looking at 30bps fees it should provide significant fees for people to participate. I’m sure even with the low volumes overall APR will be better than supplying on Aave or Compound. I guess we won’t know the actual APR unless this pool is created and people start contributing.

What are the next steps here, does it need any governance vote ?

Can someone ELI5 what FLOAT’s purpose is if it achieves price stability through a pool that as an admin-controlled stablecoin (USDC) on the other side of the trading pair?

I didn’t get it with OHM having DAI, which again holds USDC before, and I don’t get it with FLOAT now.

Hey! I’d argue there is a big difference between backing with a admin-controlled stablecoin (USDC) and having a trading pair with one.

Having a stablecoin pair doesn’t ensure price stability on its own - look at any of the “failed” stablecoin projects for that, it just makes it far more economical to do the last few percentage points. In addition the bands mentioned above are wide enough that we can deviate from target quite a lot.

The auctions ensures that FLOAT stays within a profitable band, but the swapping fees do add a lot of additional cost (0.3% for two swaps + gas fees).

This means that final push to stay exactly on target it trickier, because of the expense to adjust it.