How “robust” an oracle is really depends on what the oracle is being used for. In our case it’s for market making, so it’s ultimately a matter of inventory management. The market price of mSOL is essentially always lower than Marinade’s staking rate. If we used your version of the oracle and the price of SOL dropped beyond the value of the rewards distributed during that epoch, we wouldn’t be selling when the price falls (as we normally do), resulting in IL.
However, if that version of an mSOL oracle is important to Marinade, we can create and open source two versions of the oracle – ours and yours. This would include:
The smart contract, which is just a simple program to record price data on-chain
Some examples (at least two) of how we can aggregate price and send transactions to the program
(Fyi we will likely be modifying the oracle that we plan to use as we gather actual trading data.)
I agree with you here, my comment was from a position of Pyth having several price failures resulting in faulty liquidations of mSOL collateralized loans, so having this as a backstop would help you
I see. That was likely because mSOL didn’t have much liquidity on CEXs. Again, and I’m sure you understand this, but this is why we need to create a custom oracle based on Pyth’s SOL price feed.
Following up on this with some back-of-the napkin calculations… Assuming 11.7M votes on the gauges this week (I didn’t get the exact amount the moment it closed), if Lifinity had voted with their 2M votes, they would have been allocated ~140K MNDE for the week.
That means after a month, if nobody else votes and without accounting for compounding, Lifinity would have accumulated an extra 560K votes.
Having said that, there are a lot of factors that could change these numbers:
We only got about 16% of the locked MNDE voting on gauges this week - higher participation would change the distribution;
Other protocols may decide to join the gauges as well.
So consider this only a rough guess, which I’m posting mostly since I said I would.
Assuming the stSOL-USDC pool (which among our pools has the most similar profile to a mSOL-USDC pool) generates a daily volume of $1M (the average so far)
If I understand correctly, you’re providing 1 million USDC + 1 million mSOL, and also running the pool.
What’s the monthly fee earned by Linfinity considering a daily volume of $1M ?
are you currently providing the service for stSOL?
We would provide $1M of liquidity, which would mean $500k USDC and $500k mSOL.
The stSOL-USDC pool hasn’t been running for a month yet, so it’s not clear. Also, both fees and MMP/IL will vary significantly from month to month. We also adjust our fees to maximize profit. It is currently set to 0.12%, so if we assumed stable volume and an unchanging price, we’d earn 1M * 0.12% * 30 = 36k. (Now that more time has passed, it looks like the average daily volume is actually lower than $1M).
We provide liquidity as a service to Lido, so they compensate us on a monthly basis based on the volume generated.
So that’s about 43.2% APY you’re collecting on the 1 million correct? $432k/year?
And since mSOL price is tied to SOL price, we will be paying you on top of that for the risk you’re taking that SOL goes way below current price, correct?
Our proposed deal with Marinade is a one-time grant, so no there will not be on-going payments (and even if you did pay it wouldn’t be for SOL’s price risk but rather the risk of us holding mSOL relative to SOL – smart contract risk etc.)
43.2% APY sounds nice, and Marinade contract risk is really low. I say you should do it anyway even if you don’t get the grant from Marinade.
The deal is a little strange, if you tell me you need to get paid to run MNDE<>USDC pool, that’s more understandable, but I don’t see it for mSOL<>USDC (maybe I’m wrong), that’s because mSOL is a SOL derivative, and Marinade contract risk is low… looks like something you should do just for the 43% APY IMHO
I think you are confusing profit from market making with incentives paid by the protocol for the service. The potential 43.2% APR is not from trading fees, it is from Lido paying us in LDO based on volume generated.
Your reasoning begs the question of why Marinade has incentivized mSOL-USDC pools until now. I think the obvious answer is that providing liquidity for it is too risky (especially in terms of IL) for people to be motivated to do it in the absence of incentives.
Those 36k/year make the 43% APR on 1 million USD you’re providing. I still don’t understand why do we need to pay you, for you to do something that looks very profitable on itself.
Regarding mSOL<>SOL liquidity, we have 23 million USD in our internal pool and 5 million more on ORCA, and SOL<>USDC has a lot of depth everywhere, so mSOL<>SOL is relevant to mSOL<>USDC
I’ve no problem partnering with Lifinity, but please explain why do we need it, please convince us that we depart from 2 million MNDE and get something of at least equal value in return.
I need to understand what are we buying, and I still don’t… what are we paying for? 1 million deep liquidity mSOL<>USDC pool? do we need it considering actual existing pools?. Maybe is me, and I’m not seeing the advantage, but TBH I still don’t see how this is a good buy for the DAO.
If we’re paying for the oracle, let’s put that in a separate proposal.
The 36k is just the fees and doesn’t factor in the possibility of IL or the price risk of holding mSOL. We are being compensated for the risk being taken.
