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Subject: IDOL / Arrakis DEX liquidity proposal — review summary + reproducible results

Hi Livepeer Foundation team,

Sharing our data-backed review of the “IDOL – Improving DEX / Onchain Liquidity” pre-proposal (topic 3151). We focused on (1) current onchain liquidity/UX, (2) whether the proposed structure creates asymmetric risk for the treasury, and (3) what a safer pilot would look like if the DAO proceeds.

Key takeaways (as-of 2025-12-20; numbers depend on onchain state/prices):

  • Current Arbitrum LPT/WETH Uniswap v3 pool has severe depth issues (e.g., ~$25k swaps ≈ ~7% impact; ~$50k sells can hit a ~45% cliff).
  • Current DEX volume is modest (~$74k/day; ~$223/day total fees at 0.30%), so fee income is unlikely to offset IL/LVR unless volume rises materially.
  • Adding ~$1M liquidity can plausibly reduce $25k impact into the ~1–2% range (fork sanity check), but strategy/range placement and governance guardrails matter.
  • Recommendation: treat as a smaller, time-boxed pilot with explicit KPIs/stop conditions, and require clarity on v3 vs v4 + exact contract/role/upgrade/approval surfaces.

Attachments / links in this folder:

  • Summary for sharing: reports/livepeer-foundation-summary.md
  • Full writeups: reports/executive-summary.md, reports/risk-assessment.md, reports/asymmetric-opportunities.md, reports/arrakis-case-studies.md
  • Reproducible outputs (slippage/volume/IL/audits): outputs/

Happy to walk through findings and help translate them into specific diligence questions / pilot guardrails for the vote.