Arbitrum liquidity via Double single side AMM pool

Grant Proposals
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Arbitrum liquidity via Double single side AMM pool

Request

Receiving Address: tbd (pool address formed upon approval)
AJNA Amount: 2,100,000

Applicant and Team Information

Applicant Name: Tesa (8 Golden Fish Investments), Henry (Double2Win)

About you and/or the team:
8 Golden Fish Investments is an investor in Ajna. Double2Win allows projects to provide single-side liquidity for an AMM pool and provides the other base side of liquidity (WETH, USDC, USDT, ETH).

Additional Links:
https://www.double2win.xyz
https://docs.double2win.xyz/

Project Information

1. What is it?

Double allows projects to provide single-sided liquidity in a traditional AMM pool on Arbitrum. Ajna would provide AJNA tokens and Capital Providers on Double would provide the capital (e.g. stablecoins, ETH, BTC) to pair with AJNA tokens. Doubleʻs capital providers earn 100% of the fees earned by the LP position.

2. What problem is being solved, how?

AJNA token has low liquidity with only 3 DEX markets on Mainnet Uniswap V3 and Uniswap V2. Because trading is only available on Mainnet, trading fees (including gas fees) are quite expensive. This proposal would create a new AJNA market on Arbitrum by providing single-sided liquidity through Double.

Ajna also benefits from earning incentives from Double - Double Dip Joy (DDJ), a utility ERC20 token that has no pre-mine and strong protocol native demand.

3. How will this project be a source of growth or success for Ajna? Please include a step-by-step summary of how you imagine the completed project will affect Ajna.

This project will create additional liquidity for the AJNA token and reduce the price impact of recent selling. AJNA tokens will then be available on Arbitrum, introducing the project to a new ecosystem.

4. What is/are the objective(s)?

The main objectives are to create additional liquidity for the AJNA token and reduce the trading costs by expanding AJNA to Arbitrum.

5. What is/are the deliverable(s)?

Creation of an AJNA / WETH pool on Uniswap v3 on Arbitrum.

6. What is the timeline for completing the deliverables?

If approved, this project can create a new pool within 2 weeks and commence marketing in 1 month.

7. What level of support do you anticipate needing through the duration of the project?

Henry He from Double will provide the technical support in the pool creation. Ajna would only be responsible for sending tokens to the Double protocol address.

  1. How often will progress reports be published in the forum?

Progress reports will be reported once the pool is funded and every month for 3 months post-set-up.

  1. What are the estimated costs associated with the full completion of this project?

AJNA pool liquidity: 2,000,000 AJNA tokens ~ 2% of current circulating liquidity
Marketing & set-up:: 100,000 AJNA tokens ~ $3,000 at $0.03
Total 2,100,000 AJNA tokens

The 100,000 AJNA tokens will cover the cost of sourcing capital providers, technical set-up, and 1-month of marketing.

  1. If applicable, How will the project be maintained after completion of the grant?

This project will be self-sufficient once the pool is created on Uniswap.

Additional Information

11. How will you handle a delay in your project timeline?

Tokens are transferred to Double once the pool is set up. There is no risk to Ajnaʻs treasury if the project is delayed.

12. How will you handle a scenario where the project can’t be completed due to insufficient funding or other factors?

Since the majority of funding is used for setting up the pool liquidity, the pool can be created with whatever token grant is provided by Ajna. A higher token allocation will ensure that there is adequate liquidity on Arbitrum.

13. How will you handle a scenario where the project is completed, but significantly under budget?

If Double is unable to find the matching capital for the pool, then the unused liquidity will be returned to the Ajna treasury.

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  1. Is it possible to have divert some of AJNA as bwAJNA? Having even a small market will greatly improve reserve auction on Arb1.
  2. Is there a security review on Double2win?
  3. Is it possible to use fast bridge for AJNA itself? Since AJNA token on Arb1 wouldn’t be used in reserve auction in the first place.
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Hi @gunboats.

  1. Iʻm not sure of this point but will ask.

  2. Hereʻs the link to the audit report.

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Very interesting proposal.

Initial Thoughts

I think 2.1m is a lot in terms of proportion to the total grant distribution. I recommend asking for 1.1m instead and coming back for more in future cycles if there is success.

Pros

I didn’t know dubletowin existed. Sounds like a great way to incentivize bid side liquidity.

I like having a liquid market on an L2 as it provides a couple of key benefits.

  1. Cross-chain dex aggregators can trade AJNA more affordably.
  2. Exposes the token to a new group of potential buyers; Namely, those who do not use mainnet.

Cons

  1. 2.1m tokens is close to 1/3rd of the total grant distribution this cycle. Prycto’s proposal failed last cycle because it was proportionally too large (2m/6.5m). On the other hand, 2m tokens is currently only ~50k USD value so I understand the requested size.
  2. Some have mentioned that bwAJNA liquidity is needed on L2s and that this doesn’t help with that. I think this is not a big issue at all. While having more liquid bwAJNA markets on L2s would make reserve auctions more efficient, it’s not as appealing to investors who want AJNA tokens to hold bwAJNA instead. Maybe after a healthy AJNA/WETH market is established there could be a bwAJNA/AJNA market to help with efficiency. Either way, not a major con given the pros I listed above.

Questions

  1. After what time period will AJNA be returned if no capital is attracted?
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The idea is to have AJNA tokens deposited into the vault once we know the amount of capital. We were targeting roughly $60k at the time of the forum post. So if only $30k was confirmed to be provided by the DoubleToWin, then only 1mm AJNA tokens would need to be deposited into the vault.

The marketing & set-up tokens would need to be deposited into a separate wallet.

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