Ajna Perpetual Market Maker Top-up

Grant Proposals
1

Ajna Perpetual Market Maker Top-up

Request

  • Receiving Address: (0x7A85e146af25e9EF8De864c45A31CE685d41F338)
  • AJNA Amount: (1,000,000)
    • Allocated as follows:
      • PMM Price Point: 20,000 AJNA per ETH
        • Long term perspective to build liquidity in a bull market or after substantial Ajna has been burned. Also, this creates a longer-lived Flash loan facility at greater size.

Note: This submission will directly send funds to the existing PMM mechanism at the existing 20,000 AJNA per ETH price point, effectively setting a floor price as described in the Perpetual Market Maker whitepaper. Prototech are not seeking any fees as this contract is already live.

Applicant and Team Information

Project Information

1. What is it?
This governance submission proposes a top-up to the existing Ajna Perpetual Market Maker (PMM), an immutable, no-ownership, market making mechanism.

For further details on the exisitng functionality of the PMM please refer to the original post including the Perpetual Market Maker for AJNA/WETH on Uniswap V2 Whitepaper and the scenario descriptions to learn how the Ajna PMM is designed to be an autonomous and immutable mechanism to grow and perpetuate the Ajna ecosystem with minimal governance overhead except the initial funding requirement.

A Live Demonstration of the PMM

Furthermore, to demonstrate the functionality of the PMM mechanism in the wild, a 400,000 AJNA/WETH PMM was recently executed as a working example, which can be viewed here. Since the strike price of 400k Ajna is below the market price of Ajna at the time, this PMM was eligible for activation at the time of launch. After a small amount of Ajna was deposited into the PMM - imitating the action of Ajna tokens being deposited from the Grant Fund - a buy() function call shows that the PMM inspected the reserves of the Uniswap V2 AJNA/WETH, pairing any sold Ajna to ETH above the threshold price, and then re-deposited the ETH and AJNA to the V2 contract, thereby establishing an LP position in the pair, owned by the PMM in perpetuity. Since funding a PMM with a strike price below market is not recommended as it effectively lowers the market price overall, it is not recommended that this PMM be funded in a grant cycle, however it’s existence provides an example of how the PMM’s at higher strike prices such as the 20,000 price point will operate when the market cycle permits.

Conclusion

Adding additional funds to the existing Perpetual Market Maker will provide greater liquidity provision with more flexible flash loan capabilities.

2

IMO we should focus on Base liquidity for AJNA and bwAJNA. There’s enough in the PMM at these high price points that I don’t think this additional 1m AJNA will have much impact on actual liquidity. I am likely not going to vote for this proposal this cycle.

Prototech are collectively asking for 4m/6m of the distribution between this proposal and the other one. That is another factor weighing on my potential decision.

Top ups welcome in the future, just not seeing a big priority for this at the current moment.