Tracer DAO integration - Balancer perpetual markets UI using BAL/veBAL as collateral

Governance General Proposal
1

Summary

This proposal aims to initiate an integration of the Tracer DAO product suite (e.g. Perpetual Pools V2) with the Balancer UI to allow ‘Ballers’ to get exposure to other assets using BAL, veBAL/other Balancer related assets as collateral. Tracer’s Perpetual Pools product allows for users to take long/short positions on underlying assets or group of assets (aka an index), using any ERC20 token as collateral for any underlying market with an oracle price feed without subjecting them to liquidation or margin debt.

Abstract

Tracer DAO is a decentralised derivatives infrastructure platform that aims to provide a product suite of capital efficient, risk management tools for communities. On behalf of Tracer DAO, we are appreciative of the relationship that has been cultivated with the Balancer community to date, particularly for facilitating the secondary market liquidity of our ‘Perpetual Pools’ v1 product. To date, this has facilitated a total of ~$130m of volume in trades. This proposal aims to strengthen the DAO-DAO relationship through a new opportunity for the Balancer community.

Motivation

The velocity of currency is vital to a healthy economy and the ability to use currency in a broad range of economic activities is critical to broad adoption of a currency. Tracer is looking to strengthen the Balancer community through the integration of Perpetual Pools V2 and other future infrastructure developed by Tracer to help support these goals.

Leverage can be a double edge sword particularly when liquidations drive forced selling and negatively impact other holders of the assets that are being liquidated. Perpetual Pools aims to mitigate this risk by providing the ability to enter into leveraged positions without being subject to liquidations by using a Power Leverage function (more information on Tracer Perpetual Pools can be found here).

Proposal

Tracer would develop a Balancer specific UI and hand over the code to Balancer to maintain the UI as subdomain within the Balancer Ecosystem. This UI will be built on top of Tracer’s Smart Contracts to allow Ballers to get exposure to other assets outside the Balancer Ecosystem without selling BAL, veBAL or other native assets deployed by Balancer DAO. If successful, this will reduce sell pressure on the BAL and veBAL tokens as the leveraged markets will be settled in native tokens, and the holder will be simply taking a directional bet of other assets against another holder of the native token. The goal is to create more utility value for the BAL and veBAL token while reducing volatility in its price action with day to day and long term market movement.

With minimal barriers, BAL & veBAL holders will be able to mint and burn Perpetual Pool tokens for existing markets, or for new markets created by the user that are settled in veBAL and BAL. Using Tracer’s Perpetual Pools, leveraged markets can be generated for anything with an oracle price feed (e.g. Chainlink).

The tokens for these markets will be fungible and can be traded across DEXes, like Balancer. The new Perpetual Pools V2 tokens are intended for long term holding and have a drastically reduced exposure to volatility decay. (simulations suggest 5% per annum in volatility decay in 3x markets (note: the higher the leverage the more decay realized) which will be mitigated by minting fees that are distributed to Pool tokens holders reducing decay even further - more information here).

Additionally, as Tracer develops other infrastructure to help support markets (e.g. vaults), we will work to provide access to these tools to Balancer DAO. If this proposal is successful, it is also proposed that “Powered by Tracer DAO” or something to the same effect is published on the UI alongside co-marketing efforts in line with other major partnerships with other protocols.

Additional Considerations

A portion of the fees (10%) generated by trading activity in the Balancer Perpetual Pool markets will flow into the Balancer DAO Treasury Contract. This is a standard amount baked into the smart contracts.

Specification

The following specifications will need the approval of the DAO via the means of a successful vote to be executed:

  • Formation of BAL/veBAL settled markets on Tracer DAO’s Perpetual Pools v2 product (e.g. using BAL to take a 5x long position on ETH/USD); and
  • Integration of a Balancer specific UI for Balancer to maintain and receive 10% of fees generated by trading activity on the interface.
Consensus check
  • Support proposal
  • Oppose proposal

0 voters

2

Wow this is a really cool proposal. I personally would support the proposal with no knowledge of how the UI could be maintained but I assume the DAO could find the resources to maintain it at a level that’s beneath fees generated to make it profitable.

3

Thanks for taking the time to make this proposal. TracerDAO has been a user of Balancer on Arbitrum for a long time which is greatly appreciated.

The concern here is our maintenance of the UI of course. Have you had discussions with anyone from Balancer about this? I think a commitment to take over the UI would be needed before I could vote yes for this.

4

Hi Tracer friends, thanks for the propsoal. I agree with Solar on the UI maintenance going forward being the biggest sticking point.

Is there a reason why Tracer wouldnt want to build a derivatives marketplace for Balancer (and potentially other projects as well) native tokens rather than Balancer needing to maintain its own distinct UI?

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