Liquidity Challenges for $RARI on Rari Chain

[dzonson.eth]

Hello everyone,

I’m opening this important discussion to highlight a pressing issue affecting our community: the severe lack of liquidity for the $RARI token on the Rari Chain.

Currently, the only available liquidity pool for swapping $RARI on Rari Chain is on Camelot, with an extremely low TVL of approximately $150.

This results in massive price impacts even when swapping small amounts (e.g., swapping just $50 worth of $RARI leads to around a 50% price impact). Clearly, this is not sustainable and significantly diminishes the utility and attractiveness of participating on Rari Chain.

This issue has become particularly critical in light of the recent staking initiative. The staking program promotes “NO LOCKUP” periods, which is technically accurate.

However, due to liquidity constraints, users face a substantial indirect lockup if they choose to bridge their tokens back to ETH mainnet (the only location with sufficient liquidity). The only official bridge available via Arbitrum involves a waiting period of nearly 14 days, severely undermining the “no lockup” promise.

This situation poses a serious risk of discouraging both new and existing community members from staking or participating actively, limiting overall adoption and growth.

Previously, when I raised this issue with the RARI Foundation team last year, I was informed they were unable, for legal reasons, to allocate reserve funds directly to liquidity pools. Although no detailed explanation was provided, I respect their position and acknowledge the complexity around legal and compliance frameworks.

Given the Foundation’s constraints, I propose we, as a community and DAO, explore alternative solutions:

• Community-driven Liquidity Mining Program: Introducing modest incentives or liquidity mining rewards to encourage community members to provide liquidity on Camelot.
• Targeted Liquidity Boost: Even a relatively small allocation (between $10,000 to $50,000 USD) could substantially improve liquidity conditions, enhancing staking participation and attracting arbitrage traders who would further increase chain TVL and transaction fees.

I would love to gather your perspectives, insights, and additional ideas on this matter. Let’s collaborate to create a practical solution beneficial to all stakeholders. If there’s general support, we can follow up with a formal proposal.

Looking forward to your constructive thoughts and contributions.

[Jaf]

@dzonson.eth

• Community-driven Liquidity Mining Program: Introducing modest incentives or liquidity mining rewards to encourage community members to provide liquidity on Camelot.
• Targeted Liquidity Boost: Even a relatively small allocation (between $10,000 to $50,000 USD) could substantially improve liquidity conditions, enhancing staking participation and attracting arbitrage traders who would further increase chain TVL and transaction fees.

I agree with @dzonson.eth 's rationale in this thread.
Actually, these two can work really well together.

[forexus]

@dzonson.eth

• Community-driven Liquidity Mining Program: Introducing modest incentives or liquidity mining rewards to encourage community members to provide liquidity on Camelot.
• Targeted Liquidity Boost: Even a relatively small allocation (between $10,000 to $50,000 USD) could substantially improve liquidity conditions, enhancing staking participation and attracting arbitrage traders who would further increase chain TVL and transaction fees.

Right now bridging $RARI tokens back to Ethereum in order to be able to sell them is a long road (14 days), it would be great to have liquidity added on camelots RARI/ETH pool so everything gets more accessible for everyone. Right now everyone almost gets forced to keep their RARI tokens on RARI Chain, and exchanging is not possible.

Thank you for writing this out @dzonson.eth , you are on point.

I tend to go with a fast solution, a Targeted Liquidity Boost and let the Foundation do it, or maybe even give a loan to a professional liquidity provider. We could use funds from the treasury diversification funds if I am correct.

[sohobiit]

Dzonson’s proposal is very accurate for the short term (injecting liquidity and doing liquidity mining), but for $RARI and Rari Chain to grow healthy and sustainable, they need to build a more robust infrastructure and an ecosystem that supports constant token movement and usage.

Additionally, the bridge is a clear bottleneck, so investing in a fast and secure bridge will be essential. It’s also key to diversify liquidity and expand the network of users and projects to create real and ongoing demand.

Without these steps, any liquidity program will be temporary and prone to outflows or lack of interest. Therefore, I would like to know what proposals are being considered for the short, medium, and long term, since this is a crucial topic that definitely needs to be addressed with a clear and well-thought-out strategy.

[bitblondy]

Thanks @dzonson.eth for raising this (again), fully agree with the argumentation and @forexus additions.

My understanding from the last community call was, that foundation wants to take over DAO treasury management, and also is actively working on liquidity. Can you give us an update on that @Anria or @insider0x?

Given there was no support for the proposal to establish a DAO treasury committee, and also no apparent effort to find a joint solution, that’s generally a frustrating topic to me.

[Anria]

Hi @bitblondy yes, sure! We will give updates on the current status and discuss it during our next governance call.