Overview
This proposal outlines a recommendation for the DAO to allocate $5m USDC of Protocol Owned Liquidity (POL) into the USDC/HONEY LP on BeraSwap. The intention of this proposal is to further grow the DAOs Protocol Locked Liquidity (PLL), as Berachain is a HydraChain, whilst also enabling the DAO to earn yield in a reasonable way.
If the USDC/HONEY LP is deployed on Berachain, the capital is locked within Stargate’s pools and minted on Berachain. Doing so enables the DAO to earn yield on that locked liquidity and also accumulate BGT which can be of strategic importance to the DAO given the success of Bera.
BGT is the Berachain Governance Token primarily used for governance purposes like Proof of Liquidity (PoL) asset whitelisting and native dApp governance (BeraSwap, HoneySwap and etc.). By accumulating BGT, the DAO can select validators to “boost” and increase the validator’s reward emission. The incentives earned by the validator will then be returned to BGT holders such as the DAO. On top of this, holding BGT will allow the DAO to receive a share of Berachain core dApp fees as well. You can read more about $BGT here.
If the DAO in future decides to deploy STG liquidity onto Berachain, this BGT will play an important role in the success of that position. A future proposal should determine whether or not to deploy a liquidity pair on a selected DEX on Berachain.
Proposal
The DAO has expressed the strategic value and importance attached to growing the protocols PLL through its adoption of HEP-1. Through the growth of HydraChains the protocol is able to grow PLL. In turn, this means the DAO emits less $STG incentives.
This proposal intends to grow Stargate’s PLL whilst also allowing the DAO to earn yield on its existing holdings. To do so it is proposed that the DAO deposits $5m USDC into the USDC/HONEY pool on Berachain.
This proposal aims to follow the Berachain governance phases.
Initially, during phase 0, the USDC/HONEY position will be on BeraSwap as it will be the only protocol to receive BGT emissions. As such, the DAO will deploy the USDC/HONEY assets into the pool on BeraSwap as soon as possible to begin accumulating BGT. The USDC/HONEY LP receipt token will then be deposited into the rewards vault for BGT emissions to be earned.
This proposal will run for the entirety of Berachain’s phase 0 with the LP remaining on BeraSwap. Subsequent proposals to move the LP position will be discussed in future under a separate proposal.
The Stargate Foundation will ensure any necessary audits have been completed.
Allocation Breakdown
The table below breaks down the recommended allocation, denomination of the deposit and where it should be directed:
| Pool | Action | Capital Allocation |
|---|---|---|
| Phase 0: BeraSwap USDC/HONEY | 1:1 USDC:HONEY | $5m |
The above recommended allocation should come from the following DAO wallets:
| Asset and Amount | Assets deployed currently | Wallet address |
|---|---|---|
| 5m USDC | Stargate V2 pools | 0x65bb797c2B9830d891D87288F029ed8dACc19705 |
This breakdown ensures an efficient use of POL and DAO assets which are currently idle.
Conclusion
This proposal indicates that the DAO should use some of its currently idle assets to
a) Create PLL through depositing to a strategic HydraChain
b) Generating yield on those assets in the form of swap fees and other rewards
c) Accumulate BGT to for redirecting incentives back to Stargate’s capital deployed pools