Funding Proposal for the Honey Liquidity Tap

[paul]

Proposal Description

Growing shared liquidity with our dynamically issued $HNY is a remarkably sustainable, scalable way to grow value for the Honey token. It’s also an easy way 1Hive to support other web3 communities and grow network effects for an entire ecosystem of projects at once.

This proposal is requesting 1,500 to be sent to the Council Safe to be added to a Funding Pool in 1Hive’s v2 Garden dedicated to supplying HNY for shared liquidity.

From this Funding Pool, members can propose to pair HNY with another token by listing the following information in the Proposal Description:

• Token to be paired with
• Community + Token description (what does the project / token do?)
• Source of tokens to be added to LP
• Exchange + Network to be added on
• Links/addresses for existing token liquidity and treasury sources

Proposals can set the 1Hive Council Safe as the token beneficiary (0xc6c2E9EFB898A42DB4137B07b727b45e0C353d81) where LPs will be held. The Proposer also has the option to propose a different process for managing LPs, but any other process should show a clear path for how 1Hive can dissolve these LPs if needed.

To protect 1Hive from systemic risk, the 1Hive Council Safe will enforce the following safety margins for shared liquidity:

• Max 50% of paired token’s total liquidity provided as shared liquidity with HNY
• Max 50% of paired token community’s AUM outside of LPs provided as shared liquidity with HNY

If these margins are breached while LPs are held by the Council Safe, 1Hive will dissolve the LPs and return tokens to their original funding source.

Proposals can also request to remove existing shared liquidity by making a Funding proposal in the Pool requesting 0 HNY (needing only minimum conviction to pass), along with evidence of community consensus to remove the liquidity.

Parameter settings in the Funding Pool on the 1Hive v2 Garden:

• Voting Weight System: Unlimited
• Pool Voting Protection: Any member can vote
• Collateral to Create Proposal: 20 xDAI
• Collateral to Dispute Proposal: 20 xDAI
• Ruling Time: 7 days
• Default Abstain Resolution: Approved
• Tribunal Address: Gardens Safe - 0x1B8C7f06F537711A7CAf6770051A43B4F3E69A7e
• Spending Limit: 50%
• Minimum Conviction: 15%
• Conviction Growth: 10 days
• Minimum Threshold Points: 100

To boost the initial funding available in this Pool, 1Hive will add 1,590 HNY (~$3,600) currently sitting inactive in various 1Hive multisigs to the 1,500 HNY from this Proposal:

• 696 HNY ($~1,600) from TWAP Safe on Gnosis Chain
• 684 HNY (~$1,500) from Council Safe on Gnosis Chain
• 210 HNY (~$500) from Quests Common Goods Safe on Gnosis Chain

And to boost the stability of the Honey token and make this Liquidity Tap more attractive for other projects, 1Hive will provide an additional $10k of HNY/sDAI liquidity using tokens from its Treasury.

Proposal Rationale

It’s been over 3 years now since 1Hive launched its first experiment in shared liquidity:

1hive - Shapeshift Partnership (HNY-FOX LP) Vote 1 of 2

Proposal description: An accurate and detailed description of what you are proposing This vote is requesting approving the following action: 350HNY to be sent to a 4 of 6 partnered multisig where 3 members are 1hive and 3 members are shapeshift. Intentions are: Pending the outcome of Shapeshifts vote, 335,000 fox to be sent to the multisig. A second 1hive vote will be posted after the passing of the shapeshift and 1hive vote to send a matching amount of HNY needed to pair with the 335,00…

In the year following 3 more campaigns for shared liquidity were executed:

$1M in Shared Liquidity for BRIGHT<>HNY on Honeyswap, split between 1Hive and Bright DAO

$1M in Shared Liquidity for BRIGHT<>HNY on Honeyswap, split between 1Hive and Bright DAO Proposal Information Proposal description: 1Hive and Bright DAO have both expressed interest in splitting DAO-owned liquidity for BRIGHT<>HNY on Honeyswap, funded from each DAO’s Common Pool. This proposal is being made in tandem with Bright DAO. Because of the size of this proposal, we’ll use 5 separate funding proposals to add the liquidity in steps, following this process: 1Hive requests $100k in HN…

Water💧 Shared Liquidity Proposal

Background: Following the success of the shared liquidity proposals with Shapeshift and BrightID, we went to the drawing board on a more scalable shared liquidity solution that could benefit many projects at once. This proposal is seeking [updated] $100k in HNY to be paired with Water💧- a to-be-minted shared liquidity token. This is a joint effort between the token projects that have expressed interest in joining: 1Hive Shapeshift BrightID Giveth Panvala Opolis Agave Token Engineering Common…

hiveWATER - an experiment in sustainable liquidity for Honey

Proposal Information Overview: [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] Proposal description: This proposal is requesting 800 HNY (~$10,000) from the Common Pool, along with $8,000 xDAI from the Treasury Swarm Gnosis Safe to fund the creation of hiveWATER, a DAO whose purpose is to provide sustainable, scalable liquidity for the Honey token on Honeyswap by serving as a proxy for liquidity with strategic tokens such as xDAI, WETH, and/or WBTC. 100% of funding from…

Today these make up the vast majority of all liquidity for the Honey token!

The Honey Liquidity Tap is a longer overdue expansion of 1Hive’s shared liquidity program that takes advantage of the relatively low market cap of Honey compared to the size of the treasury managed by the community.

A successful Honey Liquidity Tap will benefit 1Hive by:

• Forging partnerships with other communities in a clean, economically mutually beneficial way.
• Solving a known web3 pain point in a way that also builds network effects for 1Hive’s economy.
• Attracting new contributors by exposing more people to 1Hive.
• Growing sustainable and scalable value for the Honey token
• Expanding 1Hive’s presence by making Honey more readily available on more networks and more exchanges.

The seeds have all been planted… it’s time to grow

Expected duration or delivery date (if applicable):
The Council Safe can execute transactions to fund the Pool within 1 week of this proposal being executed

Team Information (For Funding Proposals)

1Hive Council Safe: https://app.gardens.fund/gardens/100/0x71850b7e9ee3f13ab46d67167341e4bdc905eef9/0xe2396fe2169ca026962971d3b2e373ba925b6257/6

Funding Information (For Funding Proposals)

Amount of HNY requested: 1,500

Ethereum address where funds shall be transferred: 0xc6c2E9EFB898A42DB4137B07b727b45e0C353d81

[paul]

Shared Liquidity Tap Funding Proposal #2

Requesting 1,500 more Honey to add to our Shared Liquidity Tap in 1Hive’s v2 Garden.

Team Information (For Funding Proposals)

1Hive Council Safe: https://app.gardens.fund/gardens/100/0x71850b7e9ee3f13ab46d67167341e4bdc905eef9/0xe2396fe2169ca026962971d3b2e373ba925b6257/6

Funding Information (For Funding Proposals)

Amount of HNY requested: 1,500

Ethereum address where funds shall be transferred: 0xc6c2E9EFB898A42DB4137B07b727b45e0C353d81

[lkngtn]

Thanks for organizing this @paul. I think strategic shared liquidity between Honey and other tokens can very much be a mutually beneficial arrangement and something we should definitely pursue.

However, I think the benefits and risks are somewhat nuanced, so figured I’d add some thoughts on some of the different points.

@paul

The Honey Liquidity Tap is a longer overdue expansion of 1Hive’s shared liquidity program that takes advantage of the relatively low market cap of Honey compared to the size of the treasury managed by the community.

How is this taking advantage of the fact that the market cap of Honey is currently lower than the total value of the treasury? And if it is dependent on that, in the case where the market cap of Honey increases in value over that of our treasury, does this then become problematic in some way?

Personally not sure why this is related, so it ends up making me confused why its here.

@paul

• Forging partnerships with other communities in a clean, economically mutually beneficial way.

Agree on this but I think expanding on it would be helpful. Tokens which are connected by liquidity pools will result result in some degree of price stickiness between the two tokens, when one token rises it will lift the other token up with it, and when one token falls it will drag the other token with it.

This can be a great opportunity since both projects benefit from increased liquidity, and there is also an underlying incentive for encouraging our partners success and vice versa – since success in either direction will spill over to the other.

@paul

Solving a known web3 pain point in a way that also builds network effects for 1Hive’s economy.

To clarify I think the pain point being discussed here is attracting sufficient liquidity for a token project but its not totally clear…

I think its worth noting that this is really only a significant pain point for small communities that lack significant trading volume, but for those communities it can be a huge pain point. In these cases, getting in and out is risky or disruptive due to volatility, trading volume will probably remain low. With some initial liquidity then you may see more trading interest and trading volume can increase. Once trading volume increases enough there are solid incentives for liquidity providers to increase liquidity further.

I think this makes a lot of sense for us to work projects in their early stages, we can help them overcome the hurdle of getting some initial liquidity which can help them grow faster. However if we are considering connecting these sorts of tokens we have to be careful to assess the risk/reward of each token carefully.

@paul

Attracting new contributors by exposing more people to 1Hive.

I’m not totally sure how likely this is, but I’d be interested in understanding a bit more how you see it happening.