Increased KARRAT DEX Liquidity Strategy Using Arrakis Pro Vault (Withdrawn)

Final Proposals Withdrawn Proposals
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Proposal Name
Increased KARRAT DEX Liquidity Strategy Using Arrakis Pro Vault

KIP Type
Non-Constitutional KIP

Abstract

This KIP proposes a $500,000 KARRAT/ETH liquidity vault on Uniswap v4 using Arrakis Pro, funded by a discounted KARRAT sale at $0.025 per KARRAT, targeting $100,000 in USDC, which is converted to ETH for the vault. Managed by the MPH SubDAO Working Group multisig with a 1-month lockup after the vault launch, vesting 25% monthly over 4 months, distributed by MPH SubDAO multisig, it ensures stable liquidity and treasury diversification. The sale ends when $100,000 USDC is raised, with excess funds returned if oversold. If the USDC target is unmet, the vault proceeds with funds raised.

Motivation

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Price Impact Analysis for the KARRAT/ETH Liquidity pool (Dated 14.07.2025) on Uniswap V3 illustrates that swaps of $1k and more are not feasible with the current on-chain liquidity profile

KARRAT DAO’s limited onchain liquidity restricts trading capacity and deters larger participants. Traditional liquidity mining creates temporary “rented” liquidity and sell pressure. This proposal establishes Protocol-Owned Liquidity (POL) using Arrakis Pro for stable, long-term liquidity and treasury resilience, aligning with KARRAT’s community-owned ecosystem goals.

Rationale

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Price impact determines the magnitude of movement in the KARRAT/ETH pool price after the swap (data from 14.07.25)

This KIP prioritizes DAO-owned liquidity, eliminating emissions and sell pressure. Arrakis Pro’s non-custodial, algorithmically managed strategy on Uniswap v4 offers upto 10x capital efficiency, minimal slippage, and impermanent loss protection via audited contracts. Real-time analytics and MPH SubDAO governance ensure transparency, while ETH pairing diversifies the treasury for future DeFi strategies.

Key Terms

  • POL: Protocol-Owned Liquidity managed by the DAO.
  • Arrakis Pro Vault: Hybrid active liquidity strategy, DAO-controlled.
  • Multisig: Multi-signature wallet governed by MPH SubDAO Working Group.

Specifications

  • Total vault size: $500,000 USD
  • Composition: 80% KARRAT ($400,000 USD, treasury), 20% ETH ($100,000 USD target, converted from USDC raised via discounted sale)
  • Platform: Uniswap v4 with Arrakis Pro Private Vault
  • Vault control: MPH SubDAO Working Group multisig
  • USDC source: Community discounted KARRAT sale at $0.025/KARRAT, converted to ETH for vault deposit
  • Vault ownership: Fully DAO-owned, non-custodial
  • Continuation: If $100,000 USD USDC target is unmet, vault proceeds with funds raised, converted to ETH, adjusting KARRAT contribution to maintain 80/20 structure.

Arrakis Pro Overview

Arrakis Pro, a leading non-custodial liquidity platform, builds sustainable POL on Uniswap v4 for DAOs like MakerDAO, Lido, and Kwenta, handling over $2 billion in trading volume as of 2025. Its hybrid architecture ensures efficiency for KARRAT DAO’s $500,000 vault.

Key Advantages:

  • Security: Audited contracts by Trail of Bits and OpenZeppelin, funds in MPH SubDAO multisig.

  • Uniswap v4 Efficiency: Single pool design saves ~30% on gas; real-time tools reduce price swings.

  • Capital Efficiency: Upto 10x better, e.g., Gelato (66% volume with 25% TVL).

  • No Emissions: Organic trading avoids sell pressure.

  • Governance: Real-time dashboard and multisig updates for transparency.

  • Revenue: Retains 50% of trading fees (at 1% tier).

  • Scalability: Deployed on multiple EVM chains including Base, Arbitrum, BNB, Polygon, Unichain, Optimism, etc. with support for multiple DEX frameworks like Uniswap, Aerodrome, Pancakeswap and Velodrome.

  • Future-Proof: Fully compatible with custom Uniswap v4 hooks.

                 Learn more: https://www.arrakis.finance/

Historical Performance Examples with Arrakis Pro

Steps to Implement

  1. Announce discounted KARRAT sale: Collect up to $100,000 USDC, with a 2-week minimum duration, extendable by the MPH SubDAO Working Group based on market conditions, with extensions announced on Discourse. Participants buy KARRAT at $0.025, supporting DAO liquidity. The sale ends when $100,000 USDC is raised, even if before the 2-week minimum. If oversold, excess funds will be returned.

  2. Fund vault: Deposit 80% KARRAT ($400,000 USD) from treasury. Convert USDC to ETH and deposit 20% ETH (up to $100,000 USD) from sale.

  3. Activate Arrakis Pro strategy: Start automated, range-based liquidity management.

  4. Lock purchased KARRAT in DAO multisig for 1 month after vault launch, vesting 25% monthly over 4 months, distributed by MPH SubDAO multisig.

Timeline

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Timelines may shift due to technical setup or governance processes, with updates shared on Discourse.

Fees

  • Annual Management Fee: 1% of assets under management (AUM), charged by Arrakis Pro for managing the vault.

  • Trading Fees: 50% of trading fees generated by the vault are retained by Arrakis Pro

Overall Cost

Total cost to the DAO treasury: $500,300 USD, paid in KARRAT.

Breakdown:

  • KARRAT allocated to vault: $400,000 USD (for the 80% KARRAT portion of the liquidity vault).

  • KARRAT allocated for community sale: 4,000,000 KARRAT (used to raise $100,000 in USDC, converted to ETH for the vault’s ETH portion).

  • Operational and transaction costs: $300 USD of KARRAT converted for GAS.

Note:

- If the USDC raise does not reach $100,000, the vault structure will be adjusted using available treasury reserves or partial sale proceeds, converted to ETH. If the sale is oversold, excess funds will be returned to participants.

-If the community sale falls outside the legal framework provided, an alternative plan will be brought forward to market sell.

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Thanks for your continued interest in KARRATco governance. The foundation and community moderators have a few questions on how this KIP would be implemented.

  1. Are members of the MPH SubDao aware that they’ll be responsible for holding assets on behalf of the Foundation and implementing liquidity strategies, which may result in taking on certain legal risk (not to be construed as legal advice to SubDao members)? What controls would the KARRATco or the Foundation have over the MPH SubDAO to ensure accountability?

  2. Given the current price of $KARRAT, should we reconsider the size of the discount?

  3. How do we conduct the public sale? Will we use a token-sale platform or an OTC desk? Who’s in charge of that process?

  4. Will there be any KYC or geoblocking of users in the public sale in order to comply with money laundering regulations?

  5. How will we conduct the refund of public sale amounts above the $100K threshold? What happens if a wallet address refuses to return the $KARRAT?

Best,
-12GAUGE

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  1. Are members of the MPH SubDao aware that they’ll be responsible for holding assets on behalf of the Foundation and implementing liquidity strategies, which may result in taking on certain legal risk (not to be construed as legal advice to SubDao members)? What controls would the KARRATco or the Foundation have over the MPH SubDAO to ensure accountability?

MPH SubDao is aware, and is taking the necessary precautions with setting up a Delaware LLC. The MPHSubdao will have vault access to the DAO LP. Foundation can be whitelisted as well if the need occurs.

We are devising a plan for to market sell on the existing LP, to avoid all the pertinent questions/concerns on 2-5.

Funding KIP Brought forward for the LP, with a Market Selling KIP coming soon.