[Draft] Partnership Agreement BalancerDAO <> PrimeDAO

We are requesting input and feedback from the BalancerDAO community for a potential DAO Partnership between BalancerDAO and PrimeDAO..

As I’m actively involved in both DAOs, I will try to let other members of both communities chime in as much as possible.

A docs version of this proposal with Comment rights open can be found here.

Partnership Purpose

The partnership aims to align the interest of the parties to intensify the collaboration between the organization. With PrimeDAOs relaunch, it seeks to further commit to the building on the Balancer Protocol and supporting the decentralization and development of the BalancerDAO.

The current Prime product suits, consisting of Prime Launch (LBP interface), Prime Rating (research sub-DAO), Prime Pools (DAO governed Balancer Pools) and Prime Deals (Interface for DAO agreements) aim to provide substantial value to BalancerDAO and aligned DAOs.

Background on the Partnership
The relationship between BalancerDAO and PrimeDAO goes back to Q4 2020. Since the launch of PrimeDAO in November 2020, the Balancer protocol has played a crucial role in the PRIME ecosystem. Initially coined the Prime LP Manager, PrimeDAO has governed all parameters of its main liquidity pool on Balancer, existing of 20% ETH and 80% PRIME via the PrimeDAO’s initial governance mechanism (Alchemy by DAOstack).

In Q1 2021, PrimeDAO set out to revamp the LBP experience for users and project teams alike after an uncomfortable experience with another launch product. Through a grant from Balancer Labs, the development of what is known as Prime Launch started. Prime Launch allows anyone to bootstrap a token without needing to write a single line of code. The product provides a crisp and user-friendly interface, support, and ecosystem of service providers that will enable the best decentralized launch experience (going live on December 13th, 2021).

With the development of Prime Launch, PrimeDAO became a Balancer v2 launching partner, and the collaboration extended to active technical and organizational development. In Q2 2021, Balancer and PrimeDAO made headlines by starting BLxPR, the first DAO2DAO pool, a shared liquidity pool between Balancer and PrimeDAO.

Since then, the teams have continued to work together, and various PrimeDAO contributors have supported the development of BalancerDAO and the Balancer Protocol.

After successfully re-branding and raising seed funds, PrimeDAO has grown to over 30 full-time contributors and is ready to launch its product suite and solidify relationships with aligned DAOs. Some of the DAO that have recently partnered include DeFI Safety and Gitcoin.

Commitment of the Organizations
Both parties agreed that they intend to contribute the following towards this partnerships:

D2D Collaboration

  1. PrimeDAO’s primary aim is enabling D2D collaborations and shares this vision with Balancer. PrimeDAO will support the development of the BalancerDAO and, where possible, share learnings and resources with BalancerDAO.
  2. BalancerDAO will get early access to Prime Deals, an Interface for DAO to DAO interactions, such as token swaps co-liquidity provision, and joint venture formation, to give input, to ensure the product serves the needs of BalancerDAO.

Technical

  1. PrimeDAO will continue to host Balancer LBP through Prime Launch and support the development of LBPs on Balancer.
  2. PrimeDAOs builders will continue to support the development of the Balancer Protocol.
  3. PrimeDAOs will support the development of the Balancer Protocol on alternative blockchains, currently evaluating the deployment of Balancer V2.0 on Celo and xDAI chain in collaboration with Symmetric, with the potential for it to develop into a Balancer Friendly Fork.

Operational

  1. Both DAOs will actively share DAO operational learnings and workflows, starting with a bi-monthly knowledge-sharing session covering three topics relevant to both DAOs. The first session will be organized in mid-January.

Marketing

  1. To ensure both entities will profit from each other’s reach and marketing or sales activities, we will do co-branded communication & services where applicable.

Co-liquidity provision:

  1. To align governance interests, between the two organizations, the creation of a co-liquidity pool is proposed with the following details; 25,000 BAL from the Balancer Ecosystem Fund would be transferred to PrimeDAO at the end of PrimeDAO own LBP to bootstrap a PRIME / BAL pool with 50/50 weights and 2,5% trading fees. Right after the conclusion of the PRIME LBP, PrimeDAO will seed a pool with the 25,000 BAL and match it with the same $ value in Prime. Once the pool is initiated, PrimeDAO will transfer 50% of the Balancer Pool Tokens to the Balancer Ecosystem Fund to complete the transaction.

The pool will again be called the Balancer <> PRIME pool (BLxPR) and function as a liquidity bridge between the two DAOs. The BLxPR pool will be one of the two main liquidity pools for PrimeDAO.

Governance

  1. The BLxPR token will be added to the Snapshot strategies of both DAOs to allow BLxPR token holders to participate in the Governance of both protocols.
  2. A new snapshot will be set-up with the BLxPR as the governing token. This snapshot will be used to govern issues related to this DAO agreement.

Pool Optimization

  1. PrimeDAO aims to create deep liquidity between BAL <> PRIME to be able to bring more projects and liquidity to the Balancer Protocol. PrimeDAO aims to do this by actively engaging in D2D agreement with other DAOs and creating PRIME / xxx pools on the Balancer Protocol.
  2. PrimeDAO also aims to leverage the various upcoming Balancer Pools in combination with PrimeDAOs existing products. Prime Rating could potentially be utilized to create research-driven managed pools and Prime Deals could be connected to the Balancer Protocol to allow multiple DAOs to bootstrap a pool together in a completely permissionless way.

Co-liquidity rewards

  1. Both DAOs commit to providing liquidity rewards for at least the first 8 weeks of the BLxPR pool. Balancer will provide at least 500 BAL, which will be matched every week by at least the same amount of $ value in PRIME tokens by PrimeDAO.

We look forward to continuing to integrate with and support the BalancerDAO!

4 Likes

Feels like the proposal is great for Prime, just OK for Balancer. Based on what you’ve written it seems there is a solid relationship between prime and balancer, but I sorta think maybe waiting until some of these products hit the market and gain some traction might make the value proposition clearer for Balancer.

Prime gets to keep their entire LBP raise and still seed a lot of liquidity for their token, courtesy of BAL holders. Most LBP’s have to use part of their raise to seed their token’s liquidity. BAL holders are taking on the big risk of IL without much compensation really.

Matching PRIME incentives with BAL is also skewed heavily in PRIME’s favor. Most LBP’s incentivize their liquidity far heavier than we do but in this case we’re matching. 500 BAL/wk is also higher than the highest tier Copper/Alchemist is offering to LBP’s (2k token holders, min 40 mil circulating market cap gets 400 BAL/wk).

All that said, thank you for taking the time to write this up. Might be a good idea to throw up a simple yes/no poll to get a better sense of community sentiment.

3 Likes

Thank you for taking the time for this initiative Luuk! As the PM of Curve Labs which is the development arm for PrimeDAO, I see a lot of value in this proposal in terms of coordinating incentives. We have been super aligned with Balancer’s vision and therefore have been contributing to the ecosystem relentlessly. Our dedication to the Balancer ecosystem goes beyond using the V2 contracts or the LBP designs, we have been collaborating with others within the ecosystem to support them with their goals. Our recent collaboration with Indexed.Finance which have been extremely fruitful for both parties is a great example of that. Looking forward to the resolution of this!

3 Likes

Thank you @LuukDAO for the proposal,

I like the idea, my only concern is the BAL to be deployed for the BL<>PR pool (at today’s prices we are talking about .5M$ effectively removed from the Treasury) and the LM incentives you are requesting.

While I see the value proposition, probably a BAL<>PR pool would not attract much trading volume and the opportunity cost for us, in terms of LM allocation, would not be so great.

Competition around Balancer incentives is getting tougher with new projects showing up by the day, all asking for visibility and incentives.

I would probably suggest to involve copperlaunch and hope for a successful LBP.

Apart from this, I’m looking forward to the increased collaboration between PrimeDAO and the Balancer DAO.

1 Like

Thanks for the input!

It might be good to clarify that PrimeDAO will be launching its own LBP infrastructure (Prime Launch) and will use this to seed liquidity for the new Prime Token.

Prime Launch will go live on December 13th and PrimeDAOs LBP will start on December 14th.

At the end of the LBP, we will create the Pool between PRIME & BAL, which means price discovery will already have taken place when we seed the BLxPR pool.

1 Like

ah, so there will be a big pile of PRIME liquidity from the LBP aside from BAL/PRIME pool. that seems good then

1 Like

Thanks for the very well thought out proposal Luuk. It’s really great to see PrimeDAO build a bunch of cool stuff on top of Balancer.

I think the pair BAL<>PRIME will very rarely be traded (PRIME<>ETH will be a much more desired pair) and therefore by far most of the trading volume will come from arbitrage bots. I think for this pool to have a chance of beating IL it will have to have high fees.

The coincentivization of this pool with LM is tricky as the liquidity mining committee is already struggling with connecting the dots for all important pools we already have and that have been long asking for a slot. I’d love to see if @bakamoto20 has a clear picture of where these 500BAL would come from.

I personally think LM is best employed for pools that have good chances of attracting actual trades (sometimes referred to as good flow, i.e not arb bots syncing the pool’s lagging price), which is not the case for BAL<>PRIME.

That said the rest of the proposal sounds great to me.

2 Likes

Hey Fernando,

The intention of the BAL <> PRIME pool is to have high fees (2.5%) and a 50% / 50% distribution.

The other Prime pool will be an 80% PRIME / 20% ETH pool with a 1% fee. We do indeed expect more trading volume to come from ETH and stablecoins, yet we expect a substantial part of the trades to be routed through BAL <> PRIME, generating value for both projects when it happens.

Pool Structure
An 80% PRIME / 20% ETH pool takes a bullish position on Prime, meaning that there is a dampened effect on price volatility for buy orders but a more significant effect on price volatility for a sell order, compared to a 50%/50% pool.

Because of this, we expect the two pools to function in the following way:

  • When small buys occur, most of the trade will occur in the Prime/ETH pool.
  • When large buys occur, the volume will be split between the PRIME / ETH and PRIME / BAL pool.
  • When medium sales occur, the volume will split between the PRIME / ETH and PRIME / BAL pool.
  • When large sales occur, most of the trade will occur in the PRIME / BAL pool.

This means when the price of PRIME is volatile, the PRIME / BAL pool will be able to capture a good chunk of the liquidity, creating value for both DAOs.

2 Likes

How many days is the LBP for? Would need to have the pool ready for either 16th or 23rd of dec, depending on which LM week we’d plan to start.

My other concern is the high fees and impact that will have on utilisation, for the BAL <> PRIME pool. Not sure much would get routed through that vs the ETH pool, due to gas fees on mainnet & limits for the SOR.

Perhaps it makes more sense to incentivise only one of the pools? And I think we’d need to go with lower fee on the BAL <> PRIME so that we had useful TVL.

1 Like

The LBP will start on December 14th and go on until December 17th, so in this case, the 23rd sounds more feasible, this also gives us more time to discuss the LM amount and effectiveness of the two pools.

For now, we have removed the Liquidity Mining part of the DAO agreement. Hopefully can agree on the basic DAO partnership and discuss the Dual Liquidity Incentives on the side.

If there are no other comments, this final version of the Agreement would be good to go from our side to put up for vote @DavisRamsey: Partnership Agreement BalancerDAO <> PrimeDAO - Google Docs

2 Likes

let’s do a poll for a few days then we’ll look to proceed to a vote.

  • Move forward with PRIME<>BAL swap & create PRIME/BAL pool (25k BAL)
  • Do not move forward

0 voters

1 Like

0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f this is the new DAO multisig where PrimeDAO should send the BPT’s

1 Like

Just to confirm - 0x567d220B0169836cBF351DF70A9c517096ec9De7 is the address of the Prime Treasury

https://vote.balancer.fi/#/proposal/0x5d6694d2517841cb9831ea75ea7ba6d66fa123f1064fada2c7b8155682dc3ced