May Wrap-up

Arrr !

Another month spent aboard the ship with the fellas. In case you’ve been preoccupied lately, here is an opportunity to catch up on the recent developments.

Liquid Driver Wars

The past few weeks were marked by a structural shift of the xLQDR narrative — protocols outpacing retail in the xLQDR accumulation race. And it is just getting started.

Since inception, gaining exposure to xLQDR has allowed users to get a diversified and steady revenue stream of tokens from blue-chip Fantom protocols. Recent developments with key partners have changed the game completely by giving users liquid options. The idea was to give users as much flexibility as possible while granting them the maximum yield out of their investment. xLQDR now offers strong alternatives with regards to passive income generation.

The upcoming developments will enhance the governance utility of xLQDR. Users will soon be able to vote on the Liquid Driver’s front-end for $SPIRIT emissions on Fantom and $HND emissions across multiple chains. We are currently working on a new product that will give the full control of $LQDR emissions to xLQDR holders. Liquid Driver will become the first one stop Liquidity Hub.

Those who control xLQDR will control the liquidity.

LQDR wrappers

Creating a Liquidity Hub around Liquid Driver requires market participants to create wrapped products of LQDR. Accumulation has already started with GrowthDeFi launching cLQDR and Beluga launching beLQDR. Competition amongst wrappers will benefit the community but due diligence must be conducted to avoid any foreseeable damages such as a depeg. Any protocols can apply to whitelisting and need to submit a proposal consistent plan detailing:

  • Tokenomics of the wrapped LQDR
  • Acquisition strategy
  • Mechanics / planned actions to maintain the peg either in normal or stressed market conditions
  • Functionalities and value added to the community

The process is seamless and community driven. The proposal will be discussed and voted through a snapshot.

LIP009 & InSpirit acquisition policy — update

SpiritSwap V2 launch is quickly approaching with internal beta testing well underway. In preparation for this, Liquid Driver voted for LIP-009 last month. The proposal was intended to boost the velocity of inSpirit acquisition with the allocation of 8% of SpiritSwap revenue towards the $linSPIRIT Single Staking pool.

As a result, Liquid Driver’s inSpirit holding position has increased by 16% in a month and reached 36% of overall inSpirit circulation supply. The long term target is set at 51%.

Cross-chain development — First Phase

The DeFi is organised through ecosystems in which protocols are deeply connected to each other. Although in DeFi capital can move freely at the speed of light, venturing cross-chain is a move that requires a strategic approach.

Liquid Driver’s cross-chain development will be built on four pillars. First, EVM compatible chains are targeted for smooth deployment of the contracts. Second, Shadow Farms can be the first product deployed in an agile way since it does not require any emissions to drive revenue. Third, the DeFi ecosystem of the chain should have an existing or upcoming DEX(s) with xTokenomics and/or veTokenomics. Fourth, chains that offer incentive or grants programs are prioritized to facilitate further expansion.

The idea behind the first phase of the cross-chain development is to increase the revenue generated by the protocol while building strong relationships into the new ecosystem in order to be able to deploy the full protocol at any given time. Shadow Farms on the new chains could potentially have two revenue streams — first the performance fee taken on top of the strategy, and second the incentives/grant allocated thanks to the TVL attracted by the Shadow Farms.

To be implemented, Shadow Farms require DEXs with specific tokenomics such as xTokenomics or veTokenomics. DEXs that have xTokenomics allow us to implement Shadow Farms as is. However, DEXs that have chosen veTokenomics will require their own custom solution. Because the token needs to be locked & stacked to generate some yields, the creation of a wrapper is mandatory. In addition, the wrapper needs a specific type of a stablepool to exist in order for deep exit liquidity to exist without a significant price impact. These additional steps are worth being carried out thanks to the governance power accumulated over the DEX emissions. Further revenue could be generated through bribes generation and the possibility to set high incentives on top of Liquid Driver’s own products.

Cross-chain development — Leveraging governance power over Hundred Finance

Leveraging Liquid Driver’s veHND holding position will be another strategic tool to deliver the best yields across multiple chains.

A few weeks ago, Hundred Finance launched mirror veHND (mveHND) that allows veHND holders to vote for gauges cross-chain as well as to benefit from boosted farming. With more than 30% of the total veHND circulating supply, Liquid Driver’s holding position leads to many business development opportunities. On one hand, the boosted strategy can be deployed on any chain where Hundred is operating. Ongoing discussions with RoboVault are being held to determine potential implementation of such strategies. The synergies would be straightforward — RoboVault provides the strategy, while Liquid Driver secures the farming boost. On the other hand, cross-chain gauge vote is an interesting opportunity to generate bribe revenue from protocols keen on securing $HND emissions on top of their assets.

In other news

  • Morpheus Swap released a detailed proposal, still in the discussion stage, to create an LQDR wrapper. Once amended, the proposal shall be submitted to a snapshot vote to the Liquid Driver community. The proposal is available here.
  • The CDP based stablecoin $MOR from GrowthDeFi can now be minted with $cLQDR and $slinSpirit as collateral.
  • The Shadow Farms roll-out is still on hold due to the market conditions. The tech is ready to be deployed and business development has already started. The performance fee has been lowered to increase the TVL attraction as well as the competitiveness of the product once fully released.

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