| id | Title | Status | Author | Description | Discussions to | Created |
|---|---|---|---|---|---|---|
| TIP-128 | Allow treasury to purchase and burn discounted CC tokens | Draft | Danijel (@danthales) | Allow treasury to purchase and burn discounted CC tokens | https://discord.gg/thales | 2023-2-17 |
Allow treasury to purchase unlocked CC tokens at 25% discount on price=min(30 days twap, current price) and burn those tokens.
In TIP-9 we established a clear guideline that no CC is allowed to market sell his/her CC allocation. This is a rule not many DAOs endorse and a commendable one at that, and while I firmly believe in its value and want to continue ensuring its beeing adheered to, I feel compelled to also consider individual CC motivation and how to ensure they remain motivated and happy while resisting the urge to liquidate any of their CC allocation to the open market.
The original idea was focusing on OTC trades with trusted potential investors. This idea still remains viable, but in the current market it is my experience that even large VC funds opt to market buy as THALES liquidity is deep enough that even $500k position causes no more than 3% slippage for a patient buyer (wait for cross-chain arbs etc). This definitely is favourable to investors at this point compared to a discount and vesting terms treasury would offer for an OTC trade.
While I personally feel no need to liquidate any CC tokens, we have to as a DAO consider the motivation and monetary needs of individual CCs and ensure they are happy sitting on the sidelines and watching sudden price spikes without being allowed to publicly liquidate any tokens. Thats why I feel that as a DAO we need to provide them with more alternatives that still respect the original rule of no market selling and perhaps has an additional value for the DAO.
I want to propose an approach where CCs have a way to liquidate small chunks of their allocation at discount by doing OTC trades with the treasury. The benefit for the protocol here is twofold:
- No CC tokens end up in open market
- The total circulating supply is reduced by burning those tokens
The discount would be 25% for the minimum of two values - 30 days twap or current price.
A trade can only be allowed if the treasury runway per current cost estimates remains at least 3 years or higher after the trade.
A CC can not liquidate more than 5% or $10k of his/her allocation in a quarter in this manner.
A maximum of $100k can be spent by treasury in this way per quarter.
$5.4m in stables
$400k in AMM contracts
$800k in ETH
$400k in SNX and other crypto tokens
Total: $7m
Projected annual burn with buffer: $1.5m
Projected runway: 4.66 years
At this point treasury could comfortably offer CCs to buyback tokens at 50c for $100k total, thus burning 200k from supply without impacting the runway in a notable way.
Detailed treasury breakdown across all chains and EOAs can be seen here https://zapper.xyz/bundle/0xdac09f37e132d91b962f30e6ec40d2d08b82b0fa,0x489863b61C625a15C74FB4C21486baCb4A3937AB,0x4aAd282Dac74d79E41FD12833B1FAD7a18c778Ed,0x1777c6d588fd931751762836811529c0073d6376,0x2902E381c9Caacd17d25a2e008db0a9a4687FDBF
BuybackPrice = 0.75 x min(30 days twap, current price)
MaxNetValuePerQuarterPerCC = $10k
MaxRelativeValuePerQuarterPerCC = 5%
MinimumRunwayLeftAfterTrade = 3 years
MaxAllowedSpendingPerQuarter = $100k
Copyright and related rights waived via CC0.