Idea: Automate entry to capped LPs

How many times do you get a (Gelato-powered) HAL email notification that space has opened up in a Bancor pool you want to LP into only to get there and find that the space has already gone?

Rumour has it this is because some people run their own bots to get into the in-demand pools. Could Gelato level the playing field and give normal users a way to queue up LP positions so that when space becomes available the tokens get added automatically?

Not sure how gas would work under this scenario (at least on L1 Ethereum) but maybe users could set a cap on how much gas they’re prepared to pay and if it’s too expensive to enter then you just get left on the queue. As protocols like Bancor move to Arbitrum/Optimism this issue should mostly fall away.

Other related ideas/builds:

  • queue position could be based on your holding of GEL tokens
  • holding of GEL relative to amount you want to LP could be used to level playing field with whales

How feasible is this?

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I think this can open up another whole lot of possibilities.

It has become more and more common to see products like LP managers, insurance cover pools, or some specific vaults with a cap for deposit. Having a decentralized network of bots monitor and automate depositing would effectively democratize the participation to those products.

Given what @freshaspect has proposed, I think a POS like system can be implemented in deciding the queue positions, which also means the possibility of pooling both $GEL and the tokens to be deposited, to

  • increase the chance of small holders/depositors being positioned more towards the front of the queue, and
  • deposit the tokens from small depositors in one go to both save gas and reduce the risk of LP positions being taken by depositors outside of the network before all small transactions are complete

A challenge I can think of now is the size of the available LP position. For instance, if finally there is an available LP position from a pool, but it is too small compared with how much liquidity is queued, what should the bot do? It is certainly not economically friendly to enter the pool every time when there is just a small LP position opening up, especially if it occurs many times in a row.

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re: how to manage space becoming available

I think the only equitable way to handle space becoming available is that the first LP in the queue that fits into the space freed up is the one that gets added. This does raise the issue of how to handle failed transactions if the space is used up before the deposit is confirmed. I suspect this reinforces the idea that supporting L1 Eth may well not be viable.

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Maybe there is a way to wrap a capped pool like how G-UNI does it with a Uni V3 pool. That way it’d be easier and cheaper to implement the mechanism “directly” into the vault. I agree that the barriers would be a lot lower if it’s on L2.

This is what I have in mind now. It’s the single vault concept taken from Balancer V2 and Bentobox from Sushi swap. In our context, one pool can be the actual pool in demand, the other one is the waiting pool.

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I like this idea a lot. And maybe on top of that, Gelato can deposit “funds in waiting” into an interest-earning protocol such as AAVE or something.

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That’s a fantastic idea and would further incentivise people to queue up LP positions knowing that they are at least getting some baseline return before they get into their target capped pool.

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This makes a lot sense! The earned yield while waiting can at least be used to offset the transaction fees for moving funds between smart contracts, and the user can set up periodical notification on the the status of their fund in the waiting pool or even set a predefined period over which the fund will be automatically reverted back to their wallet.

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Great to see some discussions going on the forum with a few recognizable faces! This would definitely be a cool idea and would fall under automated task prioritization relative to GEL token holdings. Everything that can be automated eventually will. I can see many opportunities and aspects of automation being translated over into the ETH L2 ecosystem. Let’s keep a close eye on that and see what needs arise there.

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