Votes696
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As has been seen in the Forum Proposal, the least efficient pool in 2023 was MIN-ADA (which is highly incentivized) due to most of the liquidity not being utilized. In order to alleviate this issue, we believe some Protocol Owned Liquidity (POL) ought to be withdrawn and deployed in other strategies. The removal of Liquidity has to be done gradually and carefully, through very thought-out Proposals that present valid options for the MIN/ADA capital once it is removed. This is the first step in that direction, and thus can be considered more of an initial trial.
The Minswap Labs team has already seeded the MIN/ADA pool with a little capital to help kickstart the Lenfi V2 protocol. Adding more liquidity has several risks and benefits which can be read in the Forum proposal. It's also important to consider how we ratio this liquidity. The more borrowable ADA in the MIN/ADA Pool we deposit, the easier it would be to leverage long MIN. The more borrowable MIN we deposit, the easier it will be to leverage short MIN.
We propose different options for ADA and MIN amounts to be removed from MIN/ADA Liquidity from the Fee Switch (containing roughly 521k ADA and 8.6mn MIN):
Option 1) 100k ADA and 100k ADA worth of MIN.
Option 2) 100k ADA and 50k ADA worth of MIN, in which case the remaining MIN would be transferred to the DAO wallet.
Option 3) 50k ADA and 50k ADA worth of MIN.
Option 4) Do not remove POL to provide in Lenfi V2.
This Proposal is based on Proposal posted on the Minswap Forum provided by PurritoGeneral, CWSchub
