GSR Market Making Proposal

Governance Proposals (SDGP)
#1

Gm Stake DAO community!

Summary/Abstract:

The following proposal is published to present the market-making terms for the SDT token to the StakeDAO community, and getting the community approval to:

  • Authorize GSR as a market maker for the SDT token.
  • Transfer 1,250,000 SDT tokens from the treasury for market-making purposes as a loan to GSR. After the market making engagement GSR will either return the full token loan amount or the USDT amount determined on the basis of (i) the USDT price of SDT or or around the date of the market-making agreement (the “Agreement”) plus (ii) a premium. The token loan will be executed in tranches of 250,000 SDT tokens per month over 6 months.
  • Subject to the terms of the Agreement, GSR will agree to maintain inventory and liquidity in SDT tokens across major exchanges to provide liquidity to SDT.

GSR basic background

GSR is a market maker founded in 2013, and has since built a proprietary trading system, often trading $3 - $5bn a day across the cryptocurrency ecosystem. GSR’s trading platform is connected to over 60 cryptocurrency exchanges and is integrated with major DEXs and lending protocols. GSR employs over 280 people, predominantly engineers and traders, and has collected nine years of market data that it has used to continuously develop and refine its trading engines and programmatic execution capabilities.

GSR Defi and Stake DAO specific background

GSR has become a core provider of liquidity to DeFi projects and decentralized exchanges in the last 24 months. As a prominent actor in this ecosystem, GSR has focused its considerable expertise on growing its capabilities in this area. GSR has provided, at times, over US$1bn of liquidity a day to DeFi markets. By the end of 2022, GSR expects to have invested in excess of US$120 million in crypto projects, the majority being within the DeFi sector, as well as having $1bn in TVL across a wide range of protocols, platforms and projects. GSR has built well-established trading relationships in the DeFi ecosystem with top-tier partners across various verticals.

Specifically, with respect to SDT, GSR GSR will, subject to the finalization of applicable agreements:

  • Provide liquid markets for SDT across centralized exchanges*
  • Actively support SDT trading on exchanges for over one year
  • Fund the other side of each cross with its own capital. If an exchange requires GBP, Euro, BTC, USDC, etc. to settle a trade, GSR will be able to provide it.
  • Provide OTC services for large SDT trades offering best execution

*comprising of: Bittrex, Coinbase, KuCoin and any additional exchange listings

5 Likes
#3

Great proposal!
Thanks a lot for the work done so far. Looking forward to get this started!

1 Like
#4

this would be a huge benefit for the DAO and for our token holders, I strongly support the proposal

1 Like
#5

Appreciate the proposal @GSR: Can you please clarify how much will be the premium that GSR have an option to pay back after the market making engagement?

Also, isn’t 3% of total supply of SDT tokens too much as loan amount? @GSR: Are these the standard terms on which you operate? Can you share some links to other such proposals you have had in the past? I remember Wintermute takes some 1.5% of total supply for similar services. Shouldn’t we be taking their proposal too?

3 Likes
#6

thanks for asking @Richard; looking forward to these details as well

1 Like
#7

this seems like a promising proposal; liquid markets for SDT is a worthwhile problem to tackle

1 Like
#8

Thanks for your question, Richard. The terms are based on what’s needed to facilitate an orderly market in SDT by considering the given crypto market structure in the whole and considering the project’s own tokenomics, and are always determined based upon changes in the market and its structure. The repayment prices will be fixed at the start of the agreement and at months 1, 2, 3 and 6 leading to 5 different prices determined on the basis of market levels of SDT plus a premium.

The percentage of total supply taken as loan amount depends on several parameters including market cap, fully diluted valuation, amount of total tokens in circulation, number of trading pairs to be supported as well as the project’s aspiration for the future. While GSR is providing the other side of the cross from its own balance sheet, we want to ensure that sufficient inventory is available to make markets and thus provide liquidity for SDT in bull as well as bear markets - where balance sheet matters.

1 Like
#9

Gm Stake DAO community,

Thanks for all your trust and confidence. We are looking forward to working together and providing liquidity for. StakeDAO is a leading and innovative player in the DeFi space, and we are excited to be part of this journey.

3 Likes
#10

@GSR Any known reason for the SDT trading volume fluctuating so heavily over the days/weeks/m? I would assume GSR creating the market would smooth this out if im not mistaken? example: june 18th its 32k volume vs 28th april its 1.69 M?

#11

Hey @relativebilanz GSR has not yet started market making for SDT

2 Likes