This is a follow-on proposal to this temperature check post here.
I would like to proposal that Balancer add liqudiity to the BAL call options built on UMA. These calls are decentralized and permissionless, and secured by UMA’s optimistic oracle.
You can see the frontend they are already traded on at mysynths.finance
There was over $10M in trading volume across the life of the token that expired April 31st “out of the money.”
UMA has already used 7000 from our treasury to mint call options, plus about 500 more to LP. That gives us about $70k in liquidity in the pool.
We would like to ask Balancer to match that 7500 by minting 7000 call options and pairing that with additional BAL tokens into the Balancer pool here.
At the current price of .0762 BAL per call, that would be 7000 minted calls + 0.0762*7000 = 533 BAL, for a total of 7533 BAL.
This would double the liquidity in the pool and give the Balancer community a chance to experiment with this product and gather data and build some experience. The goal is to keep rolling this liquidity into next launches, as the market and BAL community has time to learn about this product and how it works.
Implementation & a note on IL
The calls can be minted using a Gnosis safe in connection with wallet connect using the mysynth.finance UI. Then, they would simply need to be added to the pool to achieve this outcome.
The UMA team will commit to communicating with the Balancer team and advise them when to pull the liquidity - It is not advisable to let the liquidity remain in the pool too close to the expiry date as the options can expire valueless, and thus the IL would be punishing.
These are the current call options supported by other projects look like this:
BAL presently: $70K with 7500 BAL locked ($400k value locked)
UMA - $4.5M in liquidity with 900k $UMA locked ($22M valued locked)
UNI - $190k in liquidity with 32.5k UNI ($1.35M valued locked)
SUSHI - 77.8k SUSHI (1.16M valued locked)
Please kindly reply with any questions about any details I might have left out. Thanks for your time and I look forward to working together and cross-promoting!