Reflexer and Ondo | Rai-as-a-Service Proposal

This post seeks to outline a framework for a Reflexer and Ondo partnership. This partnership would build on Ondo’s Liquidity-as-a-Service offering and enable the use of $RAI (provided by the community) as liquidity for token issuers.

We propose that the Reflexer DAO incentivizes users to deposit $RAI and future partners’ tokens into Ondo Vaults with $FLX rewards.

About Rai-as-a-Service

Liquidity-as-a-Service (“LaaS”) is an offering from Ondo to make it possible for projects issuing tokens to increase the liquidity in their native tokens on decentralized exchanges by providing liquidity themselves. With RaaS, the community can deposit tokens into an Ondo liquidity vault with a flexible duration. Ondo and the Reflexer community will match those deposits with an equivalent amount of RAI to form a liquidity pair. In exchange for providing RAI, the RAI community will receive a fixed APY return on its provided liquidity. We also propose that Reflexer DAO provide additional incentives to users who deposit RAI (or the other side of the pair) into Ondo Vaults with FLX rewards.

Ondo provides several advantages over existing liquidity solutions. With Ondo, token issuers earn trading fees and rewards which reduce (or even negate) impermanent loss (IL) risk and the cost of capital. With small adjustments, Ondo vaults are well-suited to facilitating direct listings, establishing the first liquidity for a token. Direct listings could eventually replace or complement IDOs. We would love to work directly with Reflexer to build out these future offerings.

FLX Incentives

We propose that Reflexer incentivizes the community to use Rai-as-a-Service with FLX rewards for 3 months (12 weeks). The new Uniswap and Sushiswap liquidity pools in RAI that the program would create do not yet have histories of income from trading fees that investors can rely on for returns forecasting. As such, incentives will help with onboarding new token pairs to RaaS with RAI and will help bootstrap a sustainable model going forward, that will not rely on indefinite incentives.

Fei Protocol made a similar commitment of TRIBE incentives for its bootstrapping of LaaS. We recommend that Reflexer provides 10 FLX per week per $1M of liquidity added to RaaS. The amount of incentives provided would max out at 200 in FLX per week based on current prices (200 FLX per week assuming $20M in total liquidity). If more than $20M in total liquidity is provided, then the total FLX incentives from the program would be shared pro-rata with participants based on their contribution. We strongly believe that this initial expense will be well worth it to attract new partners and foster the growth of RAI.

Benefits to Reflexer

  1. Increase the supply of RAI and expand its reach
  2. A Fixed APY on all RAI used as RaaS liquidity
  3. Build out new and strengthen existing relationships with other communities
  4. Establish new Uniswap and Sushiswap liquidity pools based in RAI

Risks to Reflexer

  1. The fixed tranche side of our vaults (which RAI would be deposited into) can realize losses if the variable tranche side of the pair experiences about an 80% decline in price.
  2. Smart contract risk with Ondo. We have three audits available for review here. One of our audits is from Quantstamp.