TLDR
- MantaDAO is proposing a $50k SOMM<>MNTA token swap with the Sommelier Community.
- Each party will match the received token with another $50k of their own token in a BOW LP (the AMM built on top of FIN, Kujira’s orderbook DEX).
- This will result in $200k of SOMM/MNTA liquidity that will make SOMM tradable with limited price impact against a wide variety of assets (axlUSDC,USK, wETH, wBTC, ATOM, KUJI, etc.) thanks to MantaSwap’s multihop router.
- Half of the LP ($100k) will be owned by Sommelier Community Pool; the other half ($100k) will be owned by MantaDAO.
- This will sustainably deepen liquidity for SOMM in the form of Protocol-Owned Liquidity, at zero cost for Sommelier, and without the need for any incentives.
- This will also enable the Sommelier Community to diversify its treasury and generate a source of income in the form of trading profits from market-making activities.
- As part of the deal, MantaDAO also commits to acquire $50k worth of yieldETH that will be matched with $50k worth of MNTA and deposited in a BOW LP, creating the first market for yieldETH in the Cosmos with $100k liquidity.
- After the deal, ManatDAO will continue to look at building-up liquidity for Sommelier’s yield generating strategies on Kujira.
Introduction
MantaDAO is a decentralized autonomous organization based on the Kujira blockchain and governed by the MNTA token. The DAO and its token are backed by protocol-owned liquidity (POL) and revenue-generating products, one of which is MantaSwap, a multihop router built on top of FIN, Kujira’s CLOB DEX.
MantaDAO’s mission is to support the entire Kujira ecosystem towards delivering a best-in-class experience to both traders and protocols looking to list their token on FIN, while being profitable for MNTA stakers.
To achieve that, MantaDAO operates two complementary activities: (i) a Development arm building applications and tooling to improve users’ experiences and opportunities across the Kujira ecosystem, and (ii) an Investment arm focusing on deepening liquidity on FIN’s orderbook via long-term protocol-owned liquidity and sustainable market-making programs (i.e. not requiring token incentives).
MantaSwap is the first product developed by MantaDAO and at the time of writing, it is responsible for approximately 23% of all volume on FIN, which generates about ~8.5% APR for MNTA stakers.
Over the last three months, the DAO has accumulated ~$670k (as of 23-Aug-23) of POL spread across 6 MNTA LPs (KUJI, wBTC, wstETH, stATOM, STARS and SHD) and ~$30k in stablecoins ready to be deployed to acquire yieldETH as part of this proposal (the remaining ~$20k will be raised shortly after). MantaDAO is in discussions with several other protocols and communities to deepen their token liquidity via treasury swaps and sustainable market-making programs such as the one discussed in this proposal.
The utility of the MNTA token is primarily to protect the MantaDAO treasury from governance attacks. MantaDAO stores POL in the form of LP tokens inside the DAO treasury. POL is constantly being increased and extended to new assets in order to boost the trading volumes and fees from MantaSwap router, which works on top of FIN and BOW. Each staked MNTA token represents a share in MantaDAO and enables stakers to receive regular distributions from operational income (MantaSwap revenue at present, more revenue generating products will be developed in the future). Since Kujira on-chain governance proposal 450 passed, MantaDAO is able to independently create new pools and trading pairs in BOW and FIN, and, most importantly, flexibly configure existing ones. Thus, MantaDAO truly owns its liquidity at the code level.
A long-form introduction on MantaDAO can be found here.
Proposal
Token Swap
MantaDAO is offering a token swap deal where Sommelier would receive $50,000 of MNTA in exchange for $50,000 of SOMM from the Sommelier Community Pool (exchange ratio will be based on 20-day TWAP at the time this proposal is executed).
MantaDAO will pair the received $50,000 SOMM with an additional $50,000 of MNTA from its treasury to be provided as liquidity on BOW (the AMM built on top of FIN, Kujira’s orderbook DEX) into the SOMM/MNTA pool.
Likewise, Sommelier Community will pair the received $50,000 MNTA with an additional $50,000 SOMM from the Community Pool that will be provided as liquidity on BOW into the SOMM/MNTA pool.
If accepted, this proposal will greatly increase SOMM liquidity on Kujira, and facilitate several liquidity routes through the SOMM/MNTA pair. In particular, this would enable users to trade SOMM across most the pairs available on FIN, including axlUSDC, USK, ATOM, KUJI, wBTC, wETH, at very low slippage via MantaSwap’s multihop router. This is made possible by routing trades via the >$200k MNTA/KUJI LP mostly owned by MantaDAO that acts as an intermediary step to the deepest KUJI pools on FIN (e.g. to trade SOMM for axlUSDC, the route would be SOMM<>MNTA<>KUJI<>axlUSDC).
This will result in a total of $200k in liquidity for the SOMM/MNTA pair on BOW, and $100k in revenue-generating POL for both the Sommelier Community Pool and MantaDAO.
yieldETH Acquisition
As part of the deal, MantaDAO also commits to acquire $50k worth of yieldETH that will be matched with $50k worth of MNTA and deposited in a BOW LP, creating the first market for yieldETH in the Cosmos with $100k liquidity. This will make yieldETH easily available to Kujira users, including mobile users via Kujira’s Sonar Wallet. MantaDAO has already ~$30k lined up for the yieldETH acquisition and will raise the balance (~$20k) once the token swap deal has been confirmed.
MantaDAO plans to continue building up liquidity for Sommelier’s yield generating strategies on Kujira in the future.
Benefits to Sommelier
The proposed token swap will provide several benefits to Sommelier:
- Sustainably deepen liquidity for SOMM in the form of POL, at zero cost for Sommelier, and without the need for incentives.
- SOMM and MNTA are locked in liquidity pools, thereby reducing risk of either protocol causing unnecessary sell pressure.
- Facilitate intelligently routed swaps for SOMM on FIN and allow traders to trade against axlUSDC, USK, wBTC, wETH, ATOM, KUJI and more at very low slippage.
- Diversify Sommelier Community Pool treasury and create a new source of income in the form of trading profits from market-making activities.
- Besides the BOW LP, Sommelier might benefit from complementary market-making strategies that will be developed by MantaDAO in the future. Such strategies might also be made available to the Sommelier community as alternative options to put their SOMM at work.
- As part of the deal, MantaDAO will also make yieldETH available to Kujira users via a $100k yieldETH/MNTA liquidity pool on FIN entirely funded by MantaDAO.
MantaDAO is seeking to collaborate with the Sommelier Community to continue its strategy of expanding POL and forming market-making partnerships across Cosmos.
MantaDAO has a first fully built product (MantaSwap) already generating ~$25k of annualized revenue and growing fast (last 7 days’ fees equal the cumulative fees generated over the prior 6 weeks). The MNTA token is already backed by ~$640k of POL (corresponding to ~25% of the MNTA circulating market cap), with clear plans to further expand, thus representing a much lower risk to the Sommelier Community Pool than pre-development protocols.
MantaDAO Background
Initial MNTA Distribution & Future Plans
There is a total supply of 100m MNTA, of which ~13.39m are already circulating (5m airdropped to KUJI stakers, 1.1m distributed for grants for MantaSwap and Squad, 1.9m exchanged in two treasury swap deals, the balance sold in public OTC deals to start diversifying POL). The remaining 87.4m will be used to build POL via a variety of mechanisms (i.e. mutually beneficial treasury swaps and market-making arrangements, public OTC deals, bond sales, etc.), and also fund development of additional revenue generating products.
On the investment front, two treasury swap deals have already been successfully conducted:
- $50k swap + $50k LP matching with Stargaze community pool, resulting in $200k STARS/MNTA liquidity on FIN ($100k POL for MantaDAO).
- $50k swap + $50k LP matching with Shade Protocol, resulting in $200k SHD/MNTA liquidity, of which half on FIN ($100k POL for MantaDAO), the other half on ShadeSwap.
- Several treasury swap conversations are on-going with other protocols.
MantaDAO has also started accumulating KUJI, wBTC, wstETH and stATOM, all paired with MNTA in BOW LPs. In total, MantaDAO has accumulated ~$670k worth of POL as of 23-Aug-23.
On the development front, several other products are in the making, including:
- Various custom market-making vaults that will place orders on FIN and complement BOW (Kujira’s first AMM built on top of FIN).
- Squad, a DAO Platform allowing any project to easily launch a DAO on Kujira and manage its treasury (based on MantaDAO’s own governance smart contracts).
- Various vaults, leveraging other pieces of the Kujira infrastructure, such as the liquidation engine ORCA, and the money market GHOST.
- Each of those products will generate fees for MantaDAO.
MantaDAO
MantaDAO’s DAO Dashboard
MantaDAO has built the first custom built on-chain DAO platform for Kujira that includes an UI to allow the DAO to manage its treasury and deploy its own proposals for governance. This will soon be expanded as Squad Protocol, a DAO-as-a-Service dApp, for other DAOs on Kujira to use.
MantaSwap
MantaSwap UI on Kujira Mainnet
MantaSwap is a custom multihop router for FIN that allows for seamless any-to-any token trades (as opposed to being limited to trading within the pairs listed on FIN, e.g. SOMM<>USK). It enables users to find the optimal route from any input token to any output token and capture arbitrage between pairs listed on FIN. Swaps conducted on MantaSwap charge a 0.1% fee that goes to MantaDAO treasury. MantaSwap has been integrated as the default swapping interface on Sonar (Kujira’s mobile app) and will be integrated to Kujira web apps in the near future.
At time of writing, around 23% of all trading volume on FIN is routed through MantaSwap and the protocol has facilitated about $1.4m of trading volume since launch on 29-May-2023. Fees collected by MantaSwap have been distributed weekly to MNTA stakers and currently equates to ~8.5% APR (MantaDAO’s UI is showing a lower number because the APR calculation is based on a 90-day window, but distribution started less than 50 days ago).
Risks
- Divergence Risk: Assets may experience significant divergent price movements during high volatility periods, resulting in impermanent loss (IL).
Proposed Execution Process
Note that while the language of the proposal mentions a $50k swap, each party utilizes a total of $100k of its assets in this collaboration to provide a total of $200k in liquidity for SOMM/MNTA.
After addressing any questions or concerns with the Sommelier community on governance forum, should the proposal pass, the token swap deal and LP provisioning process will be as follows:
- The Kujira team will act as the intermediary for Kujira on-chain operations. MantaDAO community launches and votes on the proposal to send $100k worth of MNTA from the governance-controlled MantaDAO treasury wallet to Kujira team operational address: Kujira Finder.
- $50k of this amount will be used for direct exchange with the Sommelier community. The remaining $50k MNTA will be used for LP matching with $50k SOMM received from the Sommelier Community Pool .
- The Sommelier team will act as the intermediary for Sommelier on-chain operations. MantaDAO community posts the on-chain Community Pool Spend Proposal for the Sommelier community in order to transfer $100K SOMM from the Sommelier Community Pool to the Sommelier team operational address: [address TBC].
- $50k SOMM of this amount will be used for direct exchange with the MantaDAO community. The remaining $50k SOMM will be used for LP matching with $50k MNTA received from the MantaDAO community.
- If the on-chain proposal passes, the Sommelier team performs the IBC transfer of $100k SOMM to Kujira team operational address: Kujira Finder.
- The Kujira team executes the LP matching of the total received amount of $100k MNTA and $100k SOMM in BOW (https://bow.kujira.network). Then Kujira team sends half of the LP tokens via IBC back to the Sommelier team operational address: [address TBC] - and the other half to the MantaDAO treasury address (Kujira Finder).
- The Sommelier team funds the Sommelier Community Pool with the LP tokens received on their operational address.
As a result:
- Sommelier community obtains a permanent $100k of POL for SOMM/MNTA on FIN.
- MantaDAO obtains a permanent $100k of POL for SOMM/MNTA on FIN.
Conclusion
The proposed token swap between MantaDAO and the Sommelier Community Pool represents a strategic collaboration that is expected to deliver mutual benefits. The partnership is a highly cost-efficient solution to deepen SOMM liquidity on FIN, enabling larger trades with reduced price impact. It will also allow users to trade SOMM in a 100% on-chain orderbook DEX. The deal is structured as a token swap, which means it is effectively a zero cost solution for both protocols. Given the liquidity will be owned by the Sommelier and MantaDAO protocols, it won’t require any LP incentive. Finally, it will enable Sommelier Community Pool to diversify its treasury and generate a source of income in the form of trading profits from market-making activities. MantaDAO will update the Sommelier Community periodically regarding the performance of the LP.