[RFC]: Proposal - Investing the Capital Pool in Uniswap v3 ETH/DAI

[oSaaT]

Thanks @DeFi_Dad for taking the time to post a response.

I’m with you regarding an ETH/DAI LP position not being particularly exciting (or a “hell no” as an ETH investment) - especially when looked at in a vacuum.

A clarification for all readers:
→ This proposal is really meant to be estimated together with the topic of asset/liability management (as mentioned in intro), which is being discussed in parallel on the forum at this page.

Excerpt of @Dopeee’s reply in that discussion (emphasis mine):

@Dopeee

From an insurance perspective, which I believe is the right framework to look at this through, Rei’s proposal is right. We should be matching our currencies with our exposure identically.
[…]
But right now, with our current capital efficiency we can afford to have some excess ETH. Having said that, I still think we should start moving in the right direction, but we don’t have to go all the way to a 1:1 match immediately.

ReeseWickham made his position very clear above.

@ReeseWickham

With regards to ALM, ‘no-action’ would be a better strategy for the mutual, compared with a UniV3 pool, in every scenario, except one in which price of ETH goes up, then down, below the average sale price for the ETH in the UniV3 position, AND in this moment, it is when a cover underwritten in DAI needs to be paid. Suffice to say, this is an unlikely scenario.

Although implicit in @DeFi_Dad’s reply, I assume you’re also in the camp:
keep max. ETH exposure on the asset side as long as max. gearing is not in sight; sell ETH for DAI to pay claims when needed.

Again, thanks for sharing your views!