Proposal type: CP-4
Author: jgreen (Integrations@HydraDX)
Technical/non-technical proposal: Technical proposal
Date proposed: 2023-05-03
We propose to mint 500,000 CFG and provide it cross-chain into the HydraDX Omnipool as an LP position controlled by the Centrifuge governance. The general intent is to seed initial liquidity and start trading CFG at https://app.hydradx.io/trade. Natively and efficiently within the Polkadot ecosystem.
CFG will be provided as an LP position into the Omnipool. Trustlessly and without losing control of the funds. The CFG position can be withdrawn at any time by the Centrifuge governance and CFG sent back to its treasury. All made possible by XCM.
Important distinction to realize is that this model is superior to alternatives, where teams have to spend capital to be listed on CEXes or aquire the other half of the pair for seeding common fragmented XYK pools on other DEXes.
The process consists of these steps:
- CFG governance approves & executes a proposal to mint and send CFG via XCM to the HydraDX Omnipool account (a system account with no private key with public address: 7L53bUTBbfuj14UpdCNPwmgzzHSsrsTWBHX5pys32mVWM3C1)
- HydraDX governance launches a council motion which is fast-tracked and enacted in 3-4 hours
- After step 2 is complete, CFG becomes tradeable within the Omnipool. Sender, i.e. Centrifuge parachain sibling account (7LCt6dFsJVukxnxpix9KcTkwu2kWQnXARsy6BuBHEL54NcS6), is set as the LP position holder so it can control the position via XCM Transact calls.
HydraDX is a next-gen DeFi protocol which is designed to bring an ocean of liquidity to Polkadot. Our tool for the job the HydraDX Omnipool - an innovative Automated Market Maker (AMM) which unlocks unparalleled efficiencies by combining all assets in a single trading pool.
This is a follow-up to the previous proposal to open HRMP channels (RFC: Open HRMP channels between Centrifuge and HydraDX), where this topic was partially discussed.
This action will improve the UX of users who will have the ability to trade CFG and use all the other unique perks of Omnipool listed below.
Cross-chain communication and cooperation is one of the core principles of Polkadot. Both sides, the Centrifuge DAO and HydraDX DAO, will benefit from moving this proposal forward. With growing liquidity and number of listed assets in the HydraDX Omnipool, everyone will be able to gain access to a decentralized, permissionless and frictionless way to trade (or accrue value of) CFG with high capital efficiency and low slippage.
Users will be able to trade native CFG within the dotsama ecosystem, no need to use CEXs or bridge to Ethereum anymore.
Omnipool will allow:
- Trading CFG vs. any other asset in the Omnipool (currently HDX, DOT, DAI, ZTG, wETH, iBTC, wBTC, native USDT + a lot more in the pipeline)
- Single-sided LPing
In a very short-term horizon (expected May 2023):
- DCA (dollar-cost averaging)
- Dynamic fees
In mid-term horizon:
- Stableswap pools
- Order batching
Note: Non-native dotsama assets are bridged to the Omnipool through Wormhole