Considerations on current PLAY allocation
Hey all, sharing here some personal considerations on the current PLAY allocation, its limits and potential.
Several items compose a “long tail” of not very meaningful allocations (the sum of 9 smallest allocations account for 10% of PLAY in total), despite having introduced a min 2% allocation for each asset during the past rebalance
The thin liquidity available on DEXes for several assets is representing a concrete bottleneck for the minting of decent-sized batches of PLAY (issue is encountered for any minting > 10 ETH of PLAY). Furthermore, for some assets with most of liquidity on Uniswap V3, this can result even more challenging due to its range-concentrated allocation.
The need to limit the size of each batch exponentially boost up the gas cost incurred when minting liquidity for PLAY.
NOTE: the minting of PLAY for last SLICE distribution turned into a nightmare 'cause of this liquidity issue, incurring in some quite important slippage and high gas cost for the required minting across multiple batches.
Liquidity shouldn’t represent such a big deal for a high-potential product like PLAY, given both its recent performance and the hype consolidating around the Metaverse space: PieDAO should urge to turn PLAY into a winning product, positioned on multiple venues (L2 included), ideally also leveraging on some professional support for its market making (MM). Note that PLAY is quite a complex product to MM, again given its long tail which makes hedging almost impossible for the majority of its underlying assets.
Proposed action points
A possible way to address most of these issues would IMHO require the following action points:
-> Remove all assets with negligible liquidity on DEXes, also capping the allocation of each asset in order to always keep its slippage below 2% when minting PLAY. (this by making each asset’s allocation also a function of its DEX liquidity)
-> Drastically cut the current long tail mentioned at point 1, getting down to 8 underlying assets total
Below the relevant data considered
The computation of the above aspects as part of the allocation methodology would suggest the following output to be up to vote:
Resulting in this final allocation for PLAY
NOTE: This resulting allocation was optimised in order to mint up to $1m in value of PLAY in a single transaction, with a total slippage of 0.75% (target < 1%)
You can consult the full sheet here.
Looking forward to collecting as many preliminary feedback as possible, to eventually assess the general sentiment of this proposal through snapshot vote.