DAO Sponsored Proposal
If this proposal passes:
- the SPS DAO will reroute all inflation currently being paid (roughly 200,000 SPS per month) for the DEC:USDC pool to the SPS DAO's wallet on the Binance Smart Chain.
- The SPS DAO will also deploy roughly $200k worth of USDC and DEC to the USDC:DEC v3 pool on Pancake Swap with a range between $0.00083 and $0.00104.
- this proposal will greatly enhance liquidity on BSC for DECs while also giving the DAO a source of revenue with very low risk of impermanent loss
Notes: the DAO will also ensure the price of DECs is between $0.00085 to $0.00098 in the v3 pool at the time of adding liquidity. If the price is below, the DAO will buy DECs until $0.00085 is reached, if above the DAO will sell until $0.00098 is reached. This is to ensure the DAO is providing liquidity on both sides, but more so on the DEC side in an effort to conserve stablecoins.
The DAO will be compensated in earned trading fees for providing the liquidity equivalent to 0.77% of the trading fees (0.23% goes to PancakeSwap).
This proposal will significantly deepen liquidity for DECs on BSC as long as the price of DECs are above $0.00083. In the event it falls below $0.00083, there will be very thin liquidity on BSC through whatever user provided liquidity is remaining, but DECs can still be traded efficiently on Hive-Engine.
Benefits
- DAO earns the SPS from renting liquidity for DECs
- Very little risk of impermanent loss for the DAO (we have bigger problems if DECs stays consistently below $0.00083)
- Concentrated liquidity means MUCH less price impact than before
- DAO earns additional income from trading fees (0.77% of volume)
Can not support as:
I like the general idea, would even vote for more than 200k add or option to slowly build up liquidity to larger amount over time.
There will still be heavy liquidity on Hive-Engine for when DEC falls below $0.00093, there will just be inefficient trading on BSC. With the DAO's liquidity, it will also mean it makes it significantly harder to fall below $0.00093 anyway.
However, I could add in a term to include a $10k LP between $0 to $0.00093, this would mean people can still trade, the price impacts would just be much higher than before.
I like the idea of DAO owning its own liquidity. I was thinking of selling Bonds to accomplish this goal. I'm happy with this alternative method. The end goal is having permanent liquidity. Funds in DAO are temporally out of circulation. This could be a positive for SPS price.
So now DEC is below 1000=$0.93 how much Money will the DAO spend buying DEC?
There needs to be a maximum written into the proposal or we authorise the DAO spending all available funds
'the DAO will also ensure the price of DECs is between $0.00096 to $0.00098 in the v3 pool at the time of adding liquidity. If the price is below, the DAO will buy DECs until $0.00096 is reached'
Honestly did not expect DEC to become this much below peg, I am having second thoughts about the price range of this proposal now but also feel like it is very late to make a material change to the proposal. However, I also do not want it to pass in its current form.
Totally agree
Without a limit for the amount the DAO will spend to prop up DEC, this seems like it could be very dangerous. If we get a quick price spike (or one is engineered?), instead of selling, people will just burn the SPS and dump it in this pool knowing they will get 83% of peg as long as the DAO has funds. Someone smarter than me can likely engineer a quick win for themselves at the expense of the DAO. Am I missing something?