As a RAD token holder I want to provide liquidity to the market. I believe it will economically strengthen the token ecosystem. I also want to use Snapshot or Sybil to participate in governance and vote on important proposals.
Today the Uniswap (or Balancer) LP tokens don’t grant me any rights. They only represent my share in the liquidity pool. As they reduce the number of RAD token in my wallet, my vote weight diminishes. I would like LP tokens to grant me governance rights so I’m incentivised to do both: Provide liquidity and vote. I’ve seen other networks that allow to “Stake” the LP tokens. Staking LP tokens as a proof for providing liquidity would enable different mechanisms to allow governance participation. I’d like to get feedback on two ideas:
Liquid Treasury Delegations
There could be a system of smart contracts that delegates treasury funds to the “Staker” proportional to the amount of locked RAD in the LP.
Liquidity Pool Governance Derivatives
Alternatively there could be synthetic RAD token (sRAD) that allows participation in governance. These could be minted upon Staking.
As the amount of RAD in the liquidity pools rebalances, it isn’t straight forward and there might be other unforeseen challenges. The problem with moving funds in and out from LPs are simply the high gas fees. On-chain gas fees might be another problem for dynamically adjusting these governance rights.