[RFC] - BrincX - Real returns and analytics

Requests for Comment
1

Highlights

Use $ARB to deposit as liquidity (TVL) into ARB/USDC and ARB/ETH positions on Uniswap v3. BrincX is building vaults and analytics focused entirely on increasing Uniswap v3 liquidity on the Arbitrum network. Brincx aims to bring an integrity and credibility layer to DeFi by achieving three primary objectives:

1. Real yield for UniV4 liquidity vaults: a DeFi vaults, that provides rewards in stables and not native protocol governance tokens. Reduce Impermanent Loss on all vault positions and deduct from the APY calculations i.e. REAL APY.

2. UniV3 Analytics: mission to provide the most comprehensive data related to each of the uniswap pool vaults so that users can make informed decisions using blockchain data and analyses.

3.Liquid Vault Derivatives (LVDs): A cryptoeconomic primitive that will allow for the ERC4626 vault tokens to be used as collateral for lending applications built into Brincx

Introduction to BrincX

BrincX is a building a real yield application that generates fees for users by providing liquidity to Uniswap v3 pools. Yields are maximized by selecting and optimizing LP positions to increase fees earned while reducing Impermanent loss. The users will profit from the optimized yield LPs on Uniswap as the value of vaults increase over time. Brincx APYs are real values meaning that they are paid in USDC, net of Impermanent Loss, and do not include rewards token boosts.

Brinc_x provides alpha (α) which is its ability to beat the market, or its “edge.” Our alpha is the “excess return” in relation to a benchmark such as the APYs on USDC, DAI, USDT, and ETH on leading DeFi protocols.

Currently, the website displays only one Uniswap v3 position which is held by the protocol. With our mainnet launch schedule for Sep 1, 2023 we will be adding several new vaults and more features on its analytics.

BrincX is one of the earliest projects on Arbitrum originally deployed as Brinc.fi on Feb. 04, 2021 on the Arbirtum network with currently over 226,000 tokenholders.

Why this is needed for Uniswap?

The Uniswap AMM model distributes 100% of trading fees to LPs; As a result several projects have launched automated yield vaults and strategies and are seeking to provide yields to users that deposit funds to vaults. The problem is that most of the automated yield vaults are actually losing money, paying out in native protocol tokens and not US$, and hiding Impermanent Loss from calculations so as to overstate APYs.

Proper LP position management, strategies, and implementation can provide for better optimized fee yields. Also, more data analytics are needed to provide users with reassurance and objectivity in order to make more informed decisions.

Fair and Equitable ARB Distribution

We initially proposed a fair and equitable distribution of the ARB tokens by the foundation to allow for many of the projects that have submitted proposals to receive part of the distribution. With that, we would like to request a total of 250,000 ARB tokens in order to bootstrap our TVL in our $ARB liquidity pool vaults. The $ARB will not be distributed as liquidity incentives, instead will serve as liquidity to for the ARB token on Uniswap v3.

However, we have opted to joined the Liquidity incentive group led by Gauntlet and Arrakis as it has grouped together a large number of the proposals together.

13 Likes
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This proposal aims to maximize liquidity on the Arbitrum network and trading volumes on Uni v3, resulting in a mutually beneficial outcome for all three projects involved.

11 Likes
3

Looks good

I know Brinc.fi, so I have a lot of trust in them.
I wish you a successful project.

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4

Sounds good. Rewarding users in some form of USD stablecoin is a better measure of reward/yield than highly volatile tokens.

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We are proposing this as an option to “liquidity incentives”. Liquidity incentives is a short term solution with negative long term effects as Liquidity miners typically just end up selling the reward tokens (ARB). The ARB distribution should be used to help founders build real value applications that can help Uniswap volume grow on the Arbitrum network.

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BrincX’s approach to providing real yield in stablecoins and their commitment to transparency through Impermanent Loss deductions are crucial steps towards creating a more reliable and user-friendly DeFi ecosystem. I applaud their efforts to enhance liquidity on the Arbitrum network and provide users with comprehensive analytics for informed decision-making.

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One of the highlighted reasons for creating BrincX is because “most of the automated yield vaults are actually losing money”. Does this mean that users who use the BrincX vaults will not lose the tokens they invested? I’m curious as to how this will be prevented since I have lost money on Uniswap V3 before and this is something that would definitely interest me as a low risk investor.

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What this means is that there needs to be a more accurate tool for users to calculate yields when providing liquidity to Uniswap. With exisiting automated strategies: LP positions are coded into contracts based on rudimentary parameters causing Impermanent loss which are not deducted from Fee APYs. Brincx will provide “Real APY” calculations and analytics on all Uniswap v3 pools. It will provide a more accurate picture of what expected APY will really be after deducting any Impermanent Loss. What Brincx will do better than other existing protocols to reduce Impermanent Loss is better strategy contracts.

8 Likes
10

Some proposals are asking for $ARB to distribute as liquidity incentives, however, this is not the best use of the ARB distribution. Brincx’s prosposal is to use the ARB funds to build applications on top of uniswap that will create real and sustainable value and liquidity. Liquidity incentives are not a sustainable plan as users will likely use those protocols only to farm the ARB tokens then sell them for a quick profit. There is no long term or intrinsic value being created with this proposal. The ARB tokens should be used to build real value and use cases.

9 Likes
11

It seems very intuitive and nice that user can be rewarded with stablecoin.
The compensation of governance tokens is another uncertainty that makes asset management difficult.
Also, I like the fact that the APY can be disclosed transparently so that actual profits can be predicted. very looking forward to it.

7 Likes
12

IIt is indeed agreeable that ARB token incentives may not lead to “sticky” network effects within the Uniswap pools.
The primary concern lies in the likelihood of these projects predominantly possessing the liquidity within their respective vault pools, ultimately resulting in the founders being the primary beneficiaries of the rewards = No value created.

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LVDs - Liquid Vault Derivatives - will be a new crypto-economic primitive.

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Since this proposal is aiming to get a share of the ARB for distribution, what are your plans for the ARB you receive? I noticed that the project currently has an ARB-USDC LP position so I’m wondering if the ARB will be used for this as well.

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The ARB would be used to pay for operating expenses to build the yield vaults, analytics, and Liquid Vault Derivatives. As for depositing ARB into the vaults, it is possible depending on how many ARB we are awarded. But yes it would be a possibility as that would be literally putting our money where our mouth is (so to speak).

7 Likes
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LVDs proposed for Uniswap present an exciting opportunity to revolutionize DeFi. It introduce a new crypto-economic primitive that allows vault tokens to be used as collateral for lending applications built into BrincX, enhancing yield generation and capital efficiency within the Uniswap ecosystem. Kudos to the BrincX team for their commitment to increasing Uniswap’s liquidity and integrity through this innovative proposal!

7 Likes
20

Thanks for this proposal, and for your patience with the process. I think it’s important to make a distinction between your proposal and some of the others currently posted which seek to incentivize liquidity provision. Many of the teams that have written those proposals (Arrakis, Gamma, Angle, xToken, etc) have solutions working in production to which the DAO could send ARB that would be spent deterministically based on the parameters decided by delegates in the forum.

Because this proposal is requesting ARB to subsidize a private company’s operating budget, it is less deterministic and requires more oversight as it relates to accountability. That isn’t a bad thing! Funding teams building new products is an absolutely valid use of the Arbitrum airdrop. But to ensure that the funds are being spent as promised, it’d probably be best if such a grant were administered by a grant program such as the one described here or the UF as described here. This type of group can help to define scopes of work and deliverables, and to tie funding to development and product milestones in a way that just isn’t possible if every payment needs to be tied to a governance vote that gets 40m YES votes.

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Thank you for the feedback. If funding teams building new products is a valid use of the ARB airdrop then this is what we would like to propose. And to ensure that funds are being spent as promised we can provide detailed expenditure plan and report of such spending to a detail and specification level similar to the Grant program. We have already spoken to a person at UF that administers the Grants program and were told that UF is not looking to fund anymore projects like ours i.e. yield vaults. If the funding for operations will not work here then we would like to revise our proposal so the funds can be used to establish Yield vaults on our application which will be spent deterministically based on the parameters decided by delegates in the forum.

6 Likes
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I’m of the opinion that it may be better to add it to the vaults rather than using it to pay for operating expenses which would just add more ARB into active circulation. Since it looks like vaults will be in USDC, having the extra ARB will allow for increasing liquidity without needing to swap USDC for ARB.

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23

Agreed. Based on the feedback above we have revised the use of the ARB from funding development expenses to depositing and maintaining liquidity positions on Uniswap for ARB-USDC and ARB-ETH.

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Brincx provides analytical data to help providers of uniswap liquidity. For each pool of ARB/USDC and ETH/USDC:
TVL, Fees and Price Volatility, Active Liquidity Index(representing the theoretical maximum return for the pool), Concentrated Liquidity Index(The % of liquidity concentrated in a specific price range) is provided. In addition, Brincx provides charts of daily volume, liquidity distribution of each tick, and daily fees.

Brincx has created a position in the ARB/USDC pool on Uniswap v3, providing real-time information about our positions. Total TVL, ratio of assets and real APY, including impermanent losses, is disclosed in real time.

Brincx continues to work to provide more data that can help liquidity providers make better decisions.

7 Likes