Add liquidity to DEX

VeBetterDAO
1

Good morning! I’m working on a proposal to launch on the DAO, which will first be posted on Discourse. What do you think?

Good morning, everyone. I’m a member of the VeChain community and an enthusiastic user of VeBetterDAO.
By gathering opinions across various communities, the aim of this thread is to collect critiques and suggestions to improve the proposal I plan to launch on VeBetterDAO, which aims to increase the liquidity of B3TR in the DEXs available to us.

The treasury currently holds about 20M tokens—not a huge amount, but not negligible either. As we know, at present, both new and existing users face difficulties in swapping between VET and B3TR due to low liquidity, which results in significant price impact.

Increasing the liquidity in one of the available DEXs would greatly facilitate swap operations without having to send tokens outside VeWorld. In my opinion, it would also be a step forward in attracting new users, including crypto novices.

I am aware there are some challenges, one of which is: which DEX should we choose? Unfortunately, at this stage, I don’t see the possibility of splitting a portion of the treasury among multiple DEXs.
The second issue concerns the amount. 10M might seem like a lot right now, but it could help prevent the significant price fluctuations the token is currently subject to.
The third issue is: who will provide the VET needed for the liquidity?

I hope this discussion is well-received and leads to building a proposal as soon as possible.

2 Likes
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Hello to all DAO members,
I’d like to thank Simone for raising such an important topic for the VeBetterDAO ecosystem. I’d like to contribute to the discussion with some thoughts to improve the proposal and address a few challenges.

1. The amount of B3TR to use

Considering that there is currently no stablecoin within the ecosystem, I believe that allocating 10 million B3TR is excessive at this stage and risks depleting the treasury too much, potentially limiting its ability to fund future activities or strategic initiatives.
Perhaps an allocation between 4 and 6 million B3TR would be a reasonable compromise, increasing liquidity without compromising the financial stability of the DAO. Specifically, 5 million B3TR could be a solid starting point.

2. The issue of liquidity in VET

The question remains of how to provide liquidity in VET since the required pool is VET/B3TR. If the treasury were to sell 2.5 million B3TR to acquire VET (assuming a 5 million allocation), some challenges might arise:

  • Impact on the price of B3TR: A sudden sale of large quantities of tokens could create downward pressure on the price of B3TR, negatively impacting the market.
  • Possible slippage: The current low level of liquidity could amplify the impact of the sale.

A potential solution could be:

  • Gradual sale: Break the sale of B3TR into smaller batches to limit the market impact.
  • Community contribution: Explore the possibility of incentivizing DAO members to contribute VET directly in exchange for rewards in B3TR, thereby reducing the need to convert tokens directly from the treasury.

3. Fairness among available DEXs

Another crucial issue concerns the choice of DEX. It’s essential that the proposal does not favor a single DEX upfront, ensuring fairness among the platforms available on the blockchain. A possible solution could be:

  • Comparative analysis of DEXs: Evaluate which DEX offers the best conditions in terms of volume, usability, and fees, and use that one as a pilot project.
  • Future allocation across multiple DEXs: Include a commitment in the proposal to gradually extend liquidity to other DEXs if this initial initiative proves successful.

In summary, I believe the proposal could be refined by:

  1. Proposing a smaller initial allocation of 4-6 million B3TR.
  2. Establishing a clear strategy to acquire the necessary VET while avoiding excessive pressure on the price of B3TR.
  3. Taking an impartial approach in selecting the DEX, with the possibility of extending liquidity to other platforms in the future.

I think these points can help improve the proposal and foster a broader and more constructive discussion. Thank you for your attention, and I’m available to delve deeper into any of these points if needed!

3 Likes
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Reflecting on the issue of VET liquidity, I thought it might be helpful to involve the community directly in a way that’s accessible to everyone while avoiding any negative impact on the price of B3TR.

Here’s the idea: we could create 5,000 NFT badges called “Liquidity Providers”. Each badge could be minted for 1,000 VET, which would go directly into the DAO treasury. If all badges are sold, we would accumulate approximately 5 million VET, ready to be used as liquidity.

What’s in it for those who mint a badge?
From the 6 million B3TR unlocked for this initiative:

  • 3 million B3TR would be used to provide liquidity on DEXs in the VET/B3TR pair.
  • The remaining 3 million B3TR would be distributed as weekly rewards, equally divided among all badge holders for a total of 10 weeks.

For example:

  • In week 1, 300k B3TR would be distributed among badge holders.
  • In week 2, another 300k B3TR, and so on until the 10th week, when the 3 million B3TR rewards are fully distributed.

This way:

  1. We avoid selling large amounts of B3TR on the market, reducing the risk of price pressure.
  2. We stimulate token usage, which could lead to an appreciation in B3TR’s value over the 10 weeks.
  3. Badge holders could recover their investment through both the rewards and a potential increase in the token’s value.

This approach allows us to achieve the liquidity goal sustainably while actively involving the community. What do you think?

2 Likes
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Good points, and a good discussion to have.

I just want to add the fact that we currently have two DEXes that weekly gets a part of the DAO allocation for dApps, and use that to incentivize providing liquidity for their $B3TR/$VET pools.
BetterSwap has a rapidly growing pool of around 1.6M $B3TR (3.2M needed since both sides are funded), and VeSwap has 300k $B3TR/$VET pool. I expect them to keep growing.

So my question is: Do we need to use both DAO allocations and treasury funds to get big enough pools in our DEXes?
Personally I think using the treasury would be smarter, so we could leave DAO allocation to fund rewarding of sustainable actions (and grow number of users), but I can’t see the need for both solutions.

1 Like
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Hello and thanks for your input!
You raise a great point regarding the current use of DAO allocations to incentivize liquidity in the $B3TR/$VET pools on BetterSwap and VeSwap. It’s clear that these pools are already growing, with BetterSwap showing significant momentum and VeSwap following behind. However, I think this discussion highlights a crucial decision we need to make as a community: how to best utilize our resources for sustainable growth.
I agree that it’s unnecessary to heavily rely on both at the same time. DAO allocations are critical for fostering sustainable actions and growing the ecosystem’s user base. If we divert too much of these allocations to liquidity incentives, we might miss out on broader ecosystem development opportunities.

On the other hand, using treasury funds could allow us to build robust liquidity pools without compromising the primary purpose of DAO allocations. It might also provide us with the flexibility to:

  • Strengthen existing pools: By strategically contributing to BetterSwap and VeSwap pools, we could accelerate their growth to a sustainable level.
  • Minimize overlapping incentives: If treasury funds are used for liquidity provisioning, DAO allocations could focus on rewarding impactful user activities and app usage.

Treasury funds are better suited for one-time or long-term investments, such as liquidity provisioning. By using treasury funds:

  • We could stabilize liquidity pools with a focused injection of $B3TR and $VET, ensuring users face minimal slippage.
  • It would free up DAO allocations to directly reward user participation, increasing the attractiveness of the ecosystem and encouraging more sustainable actions.

I agree that we shouldn’t adopt both solutions simultaneously unless there’s a clear synergy. One possible approach might be:

  • Use treasury funds to bootstrap liquidity pools to an optimal size (e.g., a combined $B3TR/$VET pool size of 6-10M? across DEXes).

This discussion brings up a key question: What is the optimal liquidity size for $B3TR/$VET pools? Once we have a target, we can decide how to best allocate resources (treasury vs. DAO allocations) to reach it without redundancy.

2 Likes
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I fully agree.
I think a 2M $B3TR/$VET per pool (4M $B3TR needed from treasury) would be a smart middle ground right now. It would incentivize trading but not lock up too much of the treasury funds. It could later on be added to with a new proposal when supply is higher, if needed.
It would be best to narrow it down to one pool, two at most. Not sure how to choose which one.

New question: How can we put a stop to a dApp getting DAO allocation to incentivize liquidity providers?
As it is now, any dApp can pay for endorsement (depending on enough nodes to endorse of course). The dApps gets a minimum of 36k $B3TR each week (before votes), so paying for endorsement is worth it.

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I completely agree with your perspective.
This is exactly why I believe that unlocking 6 million B3TR (with 3 million directly allocated to liquidity) is a good compromise. The first step is to secure the VET liquidity, and the NFT minting option seems like an ideal way to engage the community without causing too much market impact.
The second step is to think of the treasury as a kind of “central bank,” able to provide liquidity for the VET/B3TR pair to DEXes that request it. This approach would allow us to maintain strategic control over resource allocation and ensure that liquidity is deployed effectively.

Regarding your question about DAO allocations by dApps:
Stopping these allocations entirely isn’t straightforward, as they depend on node approvals. However, a DEX that already receives allocations could use them more strategically. Here’s a practical example:
If BetterSwap requested 800k liquidity from the treasury to stabilize the VET/B3TR pool, it could then use its DAO round allocations to incentivize liquidity in other B3TR pools, such as VTHO/B3TR, OCE/B3TR, or SHT/B3TR.
With the introduction of JSON-RPC (see VeChain Renaissance), DEXes will need to focus on competitiveness and diversification to further expand B3TR. Knowing that the DAO guarantees liquidity for the VET/B3TR pair, DEXes could redirect their weekly allocations toward other strategic pools, increasing B3TR’s utility and fostering a broader, more sustainable ecosystem.
This strategy wouldn’t just stabilize the VET/B3TR pair but would also encourage DEXes to be more proactive and innovative in creating new use cases for B3TR, making it even more central to the VeChain ecosystem.

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I am fully against DAO allocation to dApps that doesn’t reward sustainable actions (preferably being somewhat open for all), but that is a bit besides the topic I guess. I think VeChain grants or something else should fund infrastructure and services that is needed beyond VeBetter.

I think 300k $B3TR per week as rewards for providing liquidity (6% weekly return), paid by treasury, is too much. BetterSwap gets it done with 40-50k per week.

Suggestion:
VeChain can do a OTC trade and provide the $VET needed, for current token price. I don’t know if there are legal issues with this, or any other reasons that it can’t be done. I would think that they want part of their treasury to consist of $B3TR tokens anyway.
Then we would keep the 3M $B3TR in the treasury for something else.
Does anyone know if this is possible?

1 Like
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Thank you for taking the time to participate in this discussion.
I’d like to provide a quick recap and outline the points we all seem to agree on so far:

  1. Token Allocation: Considering the amount of tokens in the Treasury and the pools on BetterSwap and VeSwap, allocating 5-6M B3TR seems like the right approach. What if we split the allocation between the two DEXs to ensure they both reach an equal amount of tokens in their pools? For instance, we could assign 2.35M B3TR to BetterSwap and 3.65M B3TR to VeSwap, bringing both pools to around 4M tokens each. This could address concerns about fairness across the DEXs.
  2. Providing VET Liquidity: I really like the idea of using an NFT donation system. A 1000 VET contribution seems reasonable, though we can further discuss how contributors could be rewarded.

Regarding the idea of stopping the dApp from receiving DAO allocations, I believe this point should not be part of this proposal.

Let me know your thoughts!

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Simone, I think there’s been a misunderstanding regarding my suggestion.
My proposal involves unlocking 6 million B3TR from the treasury, but only 3 million would actually be allocated as liquidity to the DEXes. The other 3 million would be used as incentives, distributed over 10 weeks, to reward those who mint the “Liquidity Provider” NFT by contributing 1k VET.
Here’s the key point: why would a user mint this NFT? I don’t believe that simply doing it “out of love for the DAO” would be a strong enough motivation for the majority, even though some might participate out of goodwill. However, offering a concrete incentive makes the proposal more appealing and encourages more people to join. This way, we not only gather the necessary VET liquidity but also actively engage the community, creating a more fair and sustainable system.

Instead i disagree with the idea of directly funding only the pools of BetterSwap and VeSwap, thereby excluding other DEXes. In my opinion, all DEXes should have equal opportunities to access liquidity.
Now that we have potentially established how to gather VET liquidity without impacting the price of B3TR, the next step would be to define a fair method for allowing the various “clients” (i.e., the DEXes in the ecosystem) to access this “bank” represented by the DAO, which holds liquidity for the VET/B3TR pair.
On this last point, I don’t have a clear idea yet. If other DAO members have suggestions or proposals, they would be more than welcome.

1 Like
11

We should put our efforts on OceanEX the CEX.
Why because the team is supporting it for such a long time and proofed their dedication to the VET ecosystem. Any DEX has a much higher risk of being disbanded like VeRocket. Thus I would fully support OceanEx regarding liquidity increase

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I completely agree with this.

In my opinion the DAO allocation from the voting rounds should go to dApps that reward sustainable actions.

Not “secondary” dApps like dexes or vedelegate that help the ecosystem grow, but do not directly reward sustainable actions.

In my opinion these dApps should receive startup funds from a different pool, for example the treasury to kickstart them, but they should not depend on DAO allocations in the long run to become sustainable on their own.

Giving dexes:

  1. vechain grant
  2. weekly DAO allocations
  3. liquidity from the treasury

On top of that they are way easier to monetise (just look at how much vedelegate is making) compared to the dApps that directly reward sustainable behaviour.

All of that combined is just too much in my opinion…

2 Likes
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I disagree for several reasons:

  1. The topic of the discussion is clear.
    The discussion is titled “Add liquidity to DEX,” and it’s clearly focused on adding liquidity to DEXes, not to a centralized exchange like OceanEx.
  2. A seamless user experience is essential for the DAO’s success.
    I believe it’s crucial to simplify the way users interact with the DAO. The ability to swap VET directly into B3TR (or vice versa) from the VeWorld wallet, quickly and without intermediaries, is a significant advantage. This approach allows users to do everything in one place, improving the overall experience. OceanEx, on the other hand, isn’t particularly known for its speed or immediacy in processing withdrawals, which is a key factor for many users.
  3. I don’t believe VeRocket has shut down, perhaps you were referring to Vexchange? In any case, it’s important to emphasize that DEXes wanting to benefit from the VET/B3TR pool funded by the treasury need to step forward and express their interest. Otherwise, this discussion becomes pointless.
1 Like
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If we talk about liquidity to exchanges we should not limit it to DEX. Especially if we have an ecosystem CEX.

I have first hand experience for years with OceanEx and the deposit and withdrawal works in minutes if you have done KYC and whitelisted your wallet address.

Irrespective of the above …
I agree with you on point 3, exchanges need to come forward if they want liquidity otherwise the discussion is pointless.

Was this post started by a DEX owner?

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Hello there!
No, I am not a DEX owner and I am not related to any dapp, I am just a user.
Please, let’s remain kind and respectful to each other, and remain on topic.
I respect your opinion and it’s your right to move objections in a constructive way.
The aim of this thread is to build a proposal which will give more liquidity to our DEXs. I completely understand your point of you, and if you disagree you can avoid to support it or you can still vote against it if the proposal will gather enough support.

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I completely agree with you on this point, we shouldn’t limit ourselves to DEXes alone. However, this thread isn’t the right place for that discussion. I suggest opening a separate thread titled “Proposal to Provide Liquidity to OceanEx” where you can start building a discussion and work towards formulating a proposal with the help and input of the community.

The DAO currently holds approximately 26.5 million B3TR tokens (link to DAO treasury). It’s up to us, as community members, to create proposals that use these funds wisely to improve the DAO and its ecosystem.

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Hello everyone, and apologies for the delay in getting back to you.

After some reflection, I believe we’ve found the right direction to move forward.

I agree with unlocking 3M tokens for liquidity. To ensure fairness, we could allocate only the amount needed to equalize the pools between the DEXs.

I particularly like the idea of using an NFT mechanism and unlocking an additional 3M tokens as rewards for those who provide liquidity to these pools by contributing their VET. However, I think it would be wise to wait for feedback from the foundation on this matter.

Here’s a draft for the proposal:

Proposal to Enhance Liquidity and Incentivize Participation

Introduction:
This proposal outlines a strategy to improve liquidity in the DEX pools associated with VeBetterDAO. By ensuring balanced token distribution and incentivizing community participation, we aim to create a fair and sustainable system that benefits all stakeholders.

Objectives:

  1. To allocate 3M B3TR tokens from the Treasury to improve liquidity in the DEX pools.
  2. To equalize the liquidity across all DEX pools within the VeChain ecosystem.
  3. To introduce an NFT-based mechanism to incentivize community members to provide VET liquidity.
  4. To unlock an additional 3M B3TR tokens as rewards for liquidity providers.

Details of the Proposal:

  1. Token Allocation for Liquidity:
  • Unlock 3M B3TR tokens from the Treasury.
  • Allocate these tokens strategically to ensure fairness and balance between the DEXs.
  • Distribute tokens based on the amount required to equalize the pools.
  1. Incentivizing Liquidity Provision through NFTs:
  • Introduce an NFT donation mechanism to attract VET contributions to the liquidity pools.
  • Set a contribution target of 1000 VET per participant as a baseline.
  • Further discuss and establish a reward system for contributors, leveraging the unlocked 3M B3TR tokens.
  1. Unlocking Additional Rewards:
  • Unlock an additional 3M B3TR tokens as rewards for participants who contribute VET liquidity to the pools.
  • Ensure that the rewards system is transparent, fair, and encourages long-term engagement.

Next Steps:

  1. Await feedback and approval from the foundation to validate the NFT-based incentive mechanism.
  2. Finalize the details of the reward system and NFT distribution.
  3. Implement the liquidity allocation plan and initiate the NFT mechanism once approved.

Conclusion: This proposal seeks to address liquidity challenges while fostering community involvement through innovative mechanisms. By equalizing pools and introducing incentives, we aim to enhance the ecosystem’s functionality and attract both new and existing participants. Feedback and suggestions are welcome to refine this plan further.

18

Thank you for sharing this draft proposal. I’d like to provide some corrections and suggestions to make it clearer and more complete:

First Part

  • You mentioned unlocking 3 million tokens, but the actual amount is 6 million (3 million for liquidity and 3 million to incentivize users through the NFT mechanism). This needs to be clarified to avoid confusion.
  • Additionally, it’s crucial to get feedback from developers of DAO @vineet-codes before officially submitting the proposal. Including their input will reduce the risk of users not supporting the proposal during voting and will provide more certainty about its applicability.

Objectives

  1. Token Allocation:
    It must be clear that the objective is to unlock 6 million B3TR from the treasury.
  2. Equalizing Liquidity Across DEXes:
    The concept of equalizing liquidity across all DEX pools needs revision. No representatives from DEX teams participated in this discussion, and without assurances of their reliability, we need to proceed cautiously. I suggest focusing on the three main DEXes (BetterSwap, VeSwap, and VeRocket), which are the most used by the community.
  3. Incentivization through NFTs:
    This point is well explained and does not need changes.
  4. Rewards for Liquidity Providers:
    Specify that of the 6 million B3TR unlocked, 3 million will be used to incentivize liquidity providers through weekly distributions.

Proposal Details

Token Allocation for Liquidity:

  • Clarify that the total unlock is 6 million B3TR, with 3 million allocated to liquidity pools, distributed equally among BetterSwap, VeSwap, and VeRocket.

Incentives for Providing Liquidity through NFTs:

Rewrite this section as follows:

  • Introduce the “DEX Liquidity Provider” NFT badge, with a maximum collection of 5000 NFTs.
  • Set the mint price at 1000 VET per badge, with the VET proceeds sent directly to the DAO treasury.
  • Of the 6 million B3TR unlocked, 3 million will be distributed as rewards. These rewards will be divided over 10 weeks (300k B3TR per week) and distributed equally to all wallets holding the NFT badges.

Unlocking Additional Rewards:

This section is no longer necessary, as it is already covered in the previous points.

Next Steps

  1. Create a minting page: Develop a page on VeBetterDAO that allows users to mint the “DEX Liquidity Provider” badge by paying 1000 VET per badge. The VET proceeds will be sent to the DAO treasury.
  2. Distribute liquidity to the DEXes: After the minting process is complete, allocate the 3 million B3TR among BetterSwap, VeSwap, and VeRocket.
  3. Start rewards distribution: Allow users to stake the “DEX Liquidity Provider” badge to begin receiving weekly rewards.

Conclusion

This proposal aims to provide liquidity to DEXes while actively involving the community through an innovative mechanism: the minting of the “DEX Liquidity Provider” badge.
With this strategy, we seek not only to address liquidity challenges but also to incentivize community participation, strengthening the entire ecosystem.

If I were you, I would structure the proposal like this:

Proposal to Improve Liquidity and Incentivize Participation

Introduction:
This proposal aims to improve liquidity in the DEX pools associated with VeBetterDAO by actively involving the community through an innovative mechanism based on minting NFT badges. By ensuring strategic token distribution and incentivizing participation, we seek to create a fair and sustainable system for the entire ecosystem.

Objectives:

  1. Unlock 6 million B3TR tokens from the Treasury to improve liquidity and incentivize participation.
  2. Allocate 3 million B3TR to provide liquidity to the leading DEXes in the VeChain ecosystem: BetterSwap, VeSwap, and VeRocket.
  3. Introduce an NFT-based mechanism to incentivize community members to provide VET liquidity.
  4. Distribute the remaining 3 million B3TR as rewards for liquidity providers, spread out in weekly incentives.

Rationale for Choosing the Three DEXes:
The selection of BetterSwap, VeSwap, and VeRocket as recipients of liquidity is based on the following factors:

  • Active pools: These three DEXes currently host the primary VET/B3TR liquidity pools, ensuring immediate utilization and significant impact on overall liquidity.
  • Active usage: They are the most utilized DEXes by users in the VeChain ecosystem, ensuring the largest community impact.
  • Accessibility: They offer simple and user-friendly interfaces, making it easy for users to swap between VET and B3TR.
  • Risk diversification: Allocating funds across three platforms reduces the risk of concentrating liquidity on a single DEX.

Additionally, since no representatives from DEX teams participated in this technical discussion, we focused on the three DEXes with the most liquidity in the VET/B3TR pools, based on current data and usage.

Proposal Details:

1. Token Allocation for Liquidity:

  • Unlock a total of 6 million B3TR tokens from the Treasury.
  • Allocate 3 million B3TR to provide liquidity to BetterSwap, VeSwap, and VeRocket, distributing funds equally.

2. Incentives for Providing Liquidity through NFTs:

  • Introduce an NFT badge called “DEX Liquidity Provider”, with a maximum collection of 5,000 NFTs.
  • Set the mint price at 1,000 VET per badge, with proceeds going directly to the DAO Treasury.
  • Of the 6 million B3TR unlocked, 3 million will be distributed as rewards.
    • Rewards will be distributed over 10 weeks (300k B3TR per week) equally to all wallets holding the NFT badges.
    • Rationale for the 10-week distribution:
      • Gradual release of B3TR tokens reduces the risk of significant price impact, avoiding sharp fluctuations due to a large-scale distribution.
      • Over the weeks, the B3TR token could appreciate in value due to increased usage, effectively compensating liquidity providers with potentially higher returns.

3. Next Steps:

  1. Create a minting page: Develop a page on VeBetterDAO that allows users to mint the “DEX Liquidity Provider” badge by paying 1,000 VET per badge. The proceeds will go directly to the DAO Treasury.
  2. Distribute liquidity to DEXes: After the minting process is complete, allocate the 3 million B3TR equally among BetterSwap, VeSwap, and VeRocket.
  3. Launch rewards: Enable users to stake the “DEX Liquidity Provider” badge to start receiving weekly rewards from the dedicated pool.

Conclusion:
This proposal aims to improve liquidity across DEXes in the VeChain ecosystem by actively involving the community through the innovative minting mechanism of the “DEX Liquidity Provider” badge.
Through this strategy, we seek to address liquidity challenges, diversify risk, and incentivize community participation. The choice of the three DEXes is based on current data regarding their activity and the presence of active VET/B3TR pools, given the lack of direct participation from DEX teams in this technical discussion.

:point_up_2:I also invite again all the dormant members of the DAO to be active and interact with this discussion because this is not a problem that concerns only a few users but it is a problem that must concern EVERYONE!

1 Like
19

If the first option for providing liquidity takes too long to implement, I’ve thought of a possible alternative to obtain immediate liquidity right after the proposal’s approval (assuming it’s voted favorably).

We could request direct support from the Foundation to provide the equivalent amount of VET needed for the liquidity pools (LP). This solution could help us overcome some significant obstacles:

  1. Time savings:
    With the Foundation’s support, we could have liquidity in the DEXes much faster, minimizing the technical time required.
  2. Optimization of treasury funds:
    The Foundation’s assistance would allow us to unlock a smaller amount of B3TR from the treasury, leaving more resources available for other initiatives to further grow the VeBetter ecosystem.

Of course, it wouldn’t be necessary for the Foundation to provide the equivalent VET for the pools of all DEXes. It would already be a great help if they could assist in creating the LPs for at least the two most relevant DEXes in the ecosystem.

However, to pursue this path, it’s crucial for the Foundation to weigh in on this point and confirm whether they are willing to offer their support.

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