Treasury HDX Liquidity Provisioning

What are the implications to overall protocol health if treasury HDX is added and then volume does exceed $5million?

Is LRNA stable enough to withstand a rally of that nature if it is concentrated in HDX buys?

For example, ASTR just has a $70mil market buy the other day due to the listing on UpBit. Would this type of market behavior warrant adverse side effects to the protocol as a whole?

@7Lb6...21YU The protocol is healthier with treasury HDX than community HDX.

Reasons:
1. LRNA generated from a large rally in HDX price will not be dumped on the omnipool. The omnipool's hubassetimbalance will hit 0 and omnipool will start bidding HDX.
2. Technically, there is a difficult to implement attack vector if a single entity gains too high a share of any individual LP pool. It is prevented by LP caps and treasury LP. In the future it will also be prevented by mechanisms that halt omnipool actions if unusual behavior is detected.

If instead of a price rally, we just have a $5M volume rally, the protocol makes the profit from fees instead of the individual community LP providers, but HDX holders can vote to do whatever they want with that profit, including distributing it fairly.

I would be in favor of the above considering it would benefit community by not allowing them to get rekt from not understanding what they are doing and also max bid HDX

Excessive concentration of chips is not a good thing for the health of the agreement. For this reason, I agree with you. However, in doing so, will it raise questions about the agreement LP? Because it seems to be a common practice for all DEXs for ordinary investors to participate in LPs, and we are now depriving them of the right to participate.

@PDMCNODE Yes, I think we should be all be prepared to ELI5 why it's beneficial to limit ordinary investor participation in the HDX pool.

I know many people feel like they want to be staking, farming, or earning yield on their assets. We can offer that earning will come from the omnipool imbalance reaching 0. While imbalance is 0, LRNA earned from the 0.05% protocol fee will be added to the HDX pool, thereby increasing the value of HDX compared to other assets in omnipool.

Potentially we could vote to distribute fees earned by protocol assets although I personally would not support that at this time.

I would also be in favour of the above, just that it wouldn’t be nice to restrict community members to participate in providing liquidity, but I would agree that the majority of the pool shares should be POL, for greater stability.

ok, it seems to me that we are going in a good direction regarding the participation of the community

Taking everything into account, I think it's a good idea that the largest LP in HDX is also the treasury, in order to ensure that this liquidity is not withdrawn at any time, and that the LRNA will not be dumped either.

now getting into numbers, if at the end of Q1, we have around 11m of TVL, and the HDX weight cap is lowered to 5%

this would allow us a maximum of 550k $ worth of HDX

which leaves us with only $300k to be added during the next liquidity additions

Should that remaining amount be added entirely by the treasury?

maybe it is something that the community does not like very much, it should be changed to 90% - the treasury and 10% available for the Community?

With respect to distributing the fees generated by the HDX side, it is something that I would think about in the future, at this time I prefer that the protocol acquire more POL

I am personally a supporter of the HydraDX treasury providing a large portion or all of the HDX liquidity for the Omnipool - we have already agreed in referendum #18 to provide up to $250,000 worth of HDX to the Omnipool as liquidity; so it should not be controversial to begin adding some HDX liquidity along with the ongoing execution of the Q1 POL strategy.

Omnipool looks to attract sticky LPs, or provide liquidity through POL - as these are stable and low/ zero cost.

Plus, increasing the proportion of HDX liquidity in the Omnipool will mean a higher % of the HDX LP fees going to the protocol - and there are other more interesting ways to utilise those fees ;)

@Jose Crypto
The treasury only controls about 7.3% of HDX shares currently, snapshot:
"shares": "14,773,004,875,448,596,484",
"protocolShares": "1,077,599,249,941,965,011",

I would argue any HDX added in the sort term should be protocol owned. We have a lot of catch-up to do.

If we get significant pushback at the next treasury LP addition, we can reassess, but overall I think the argument for protocol owned HDX LP is strong. Given time, I suspect those who currently disagree will come to see the advantages - just as I did myself.

I believe that much thought has been given to this, and I agree full heartedly. I think that liquidity providing is a tough concept for uninformed community members to understand and limiting their involvement in this is actually a net benefit considering the imbalance mechanism will actually provide value rather than dilution of their stack through staking or LP’ing

@PDMCNODE

I think we can avoid community negative feedback by explaining that this is a mechanism by which the protocol will provide passive returns to investors that differs from staking/LP’ing

@amphibiousParakeet Certainly, if the Treasury places all the missing LP during this Q1, we would still barely exceed 50% of the shares, so well, there is still a lot to fill

We need more people to use our products. Even if we turn the Ominipool into a central bank, but no one uses it, what's the use? Maybe we can:

1. Start liquidity mining as soon as possible;
2. Increase marketing;
3. Enter more CEXs to increase exposure, and the registration fees required by some CEXs can be deducted from the state treasury;
4. More HDX income. For the early HDX holders, they have not seen a lot of profits, and even many people have lost money.
   These are my opinions.

I would vote yes with conviction on a proposal such as this. Let's do it.