SDIP#9 BIS - Use part of our performance fees and of inflation to fund liquidity

Archives Approved SDIPs
#1

Use part of our performance fees and of inflation to fund liquidity

Summary
This proposal seeks approval to use part of the performance fees and of the inflation to acquire our liquidity and reduce the selling pressure coming from liquidity mining.

Motivation
Our liquidity currently costs us c.20k SDT per week, which represents an inflation of 0.3% weekly in our total liquidity, i.e. 16% annually. Acquiring liquidity has been an effort during the past months, and the faster the DAO acquires its liquidity, the faster the inflation can reduce.

Specification
We have worked intensely to acquire our liquidity over the past couple of months, and today, the DAO owns 12.75% of its liquidity accross Sushi, Uni and Cometh pools. This has been performed thanks to the Olympus Pro bonding program. However, recent analysis showed that our bond program was currently too aggressive and resulting in selling pressure for SDT. Therefore, this proposal suggests bringing the SDT emissions dedicated to Olympus pro to 25k SDT per week (from 50k currently), and redirect inflation to pair the other 25k SDT per week with revenues from performance fees, and pool it in the Sushi LP and Cometh LP. This could run until the total liquidity of the DAO reaches $20m. At this rate, the DAO would acquire $200k of liquidity every month, which is equivalent to the current Olympus pro rate. The two programs combined should enable reaching a good share of the liquidity reasonnably quickly.
We could soon reduce further incentives to Liquidity mining, and save a lot of SDT from their inflation.
This program should be accelerated as the DAO revenues increase.

To bootstrap this program, we could use 100k SDT from the treasury and pool it with the equivalent from our reserves as soon as this is voted.

For
Acquiring the DAO’s liquidity and reducing selling pressure from liquidity mining.

Against
Part of the performance fees will be put at work rather than distributed.

5 Likes
#2

Crystal clear as always, i support this proposal.

Maybe we can discuss about adding some our ETH c. in the Treasury (around 95ETH) to boost the first months of the program, or to reduce the impact on the 25k$ taken from the fees each week.

3 Likes
#3

Yes, I agree. having self liquidity is a must and way more beneficial. to reach $20m in a faster way. I think we should also consider stopping reward distribution for 3 months (apart from the sanctuary). I think long-term holders will definitely find value in this as a win-win situation.
Question? – With and without sanctuary how many SDT are distributed??

Thanks for putting this together.

2 Likes
#4

The SDT allocation per block is here : Weekly SDT allocation - 2nd December 2021

1 Like
#5

This was going to change to ~3 per block from 9th, correct?. Also aprox how many ether block happen in a month?

1 Like
#6

I think it makes sense. Let’s work a bit on that before putting forward the SDIP

1 Like
#7

yes, but progressively, to not create huge APY drop

1 Like
#8

Maybe Olympus Pro could be put on hold completely until SDT has more purchasing power? Set a desired SDT/ETH price and maximum time on pause, see which comes first. With current SDT/ETH it could be considered expensive to continue even with 60% of current allocation.

2 Likes
#9

Liquidity bonds incentives for the c. week are 0.90 sdt per block, down from 1.15 : Weekly SDT allocation - 9th December 2021

It affects the proposal.

We may need to increase the cut : 50 or even 60% (from 40%) of the sdt emissions dedicated to Olympus Pro.

1 Like
#10

We already started decreasing Olympus due to high selling pressure, doesn’t mean it should have a negative impact on this proposal.
Let’s specify the amount of SDT per block rather.

1 Like
#11

SDT price $1.5 → 0.35 sdt per block to match the $25k from fees.
SDT price $1.7 → 0.30 sdt per block

2 Likes
#12

something like that would work, or just say we actually do 25k SDT per week plus equivalent in ETH

1 Like
#13

Also, did some digging on the treasury.
To bootstrap the program, we could do 100k SDT plus equivalent coming from perf fee reserves

1 Like
#14

We were on “$25k+equiv sdt” and we are going towards “25k sdt + eth equiv” instead ?

2 Likes
#15

25k SDT per week is 0.52 SDT per block.

2 Likes
#16

yes. I edited the proposal
Think we should move it to vote

2 Likes
#17

The sooner, the better.

3 Likes