[DAO Discussion] Amendment & Clarification of Quarterly Redemption

Governance DAO Discussion
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Amendment & Clarification of Quarterly Redemption


Our first quarterly redemption has recently came to an end. While it went smoothly for the most part, I believe it also showed some flaws of the current WIP.

Let me preface by saying that while issue #1 was already possible under the TM’s authority, it would be a change to the original proposal by making the option explicit. Issue #2 is simply providing clarification on the intent behind the original proposal to ensure future redemption are done as expected and without confusion.

Betswapp & BSGG will be used as an example, but this could apply to other future VC assets like CTA.

TL;DR

VC assets should be handled differently when possible to avoid dumping on everyone and they should be divided by the circulating supply not the whitelisted supply.

For reference: [WIP #9] - Quarterly Redemption Option for Holders

Issue #1: The dump

Many holders had concerns around including assets like BSGG based on the fact that they are potentially meant for the long term (e.g. seed investments) and including them would mean dumping on holders, the treasury, and limit the upside of the investment.

Unfortunately, this redemption did just that (other than for those who sold before the price crashed). In this situation, it was a loss for mainly everyone. The redeemers, the holders and Betswap.

However, given it was voted that people who redeem should still have access to the allocated portion of these assets, there should be away for this to be a win-win-win.

That being said, in order to prevent another situation like this once here are options being proposed:

  • The affected company (e.g. Betswap) will be offered the opportunity to buy the asset (e,g, BSGG) eligible for redemption through an OTC trade at market price (with the possibility of negotiating a lower price) prior to the redemption period.
    • If a deal cannot be reached the assets can be sold OTC to someone else or redeemed.
  • Vesting the redeemable assets to limit a big sell off

Please feel free to propose any options you feel may help the process.

Issue #2: Redemption price and asset allocation

Background
As per WIP #9, the redemption price and a full breakdown is to be announced prior to the whitelist period.

This was to ensure that everybody had a clear understanding of what they would receive if they were to exchange their wMEMO. While the liquid backing in USDC was pretty clear, there was confusion around the amount of BSGG.

The initial amount of BSGG per wMEMO was around 57k. This was the amount announced prior to the whitelist and the amount that was promoted through the forum and Discord.

However, when redemption came, the amount of BSGG per wMEMO was closer to 229k.

This is mainly due to the clause of WIP #9 that says:

**Up to 25% of any VC assets that are considered liquid will be redeemable. The final percentage allocated will be determined by the Treasury Manager and announced as part of the redemption price prior to the redemption period.

Issues
The intention behind this clause was for the protocol and holders to benefit from these longer-term investments as well as serve as an incentive to remain in the protocol. Backing per wMEMO will increase due to the redeemers leaving a portion of the assets backing their wMEMO behind.

Unfortunately, this was interpreted as the whole allocation should be distributed to those who redeem. While in this situation redeemers received close to full backing (pre-dump), this interpretation comes with a few issues.

  • Increasing the amount of VC assets being released/dumped hurting price action even more.
  • Unclear redemption price/assets beforehand.
  • The less redeemers the more they get.
    • Last redemption, if only one person would have redeemed, they would have been eligible for 329m BSGG tokens (worth about 6.6 million USD at the beginning of redemption).
  • Goes against the narrative that 1 wMEMO is worth a certain amount/percentage of treasury assets.

To help with these issues, it is being proposed to clarify that the amount of VC assets (0 to 25%) distributed per wMEMO should be based on the circulating supply, just like the USDC portion, and not based on the amount of wMEMO being whitelisted.

In the case of the last redemption, 57k BSGG per wMEMO would have been used and not 229k. This would have resulted in around 77 170 020 BSGG being released instead of 310 145 224 BSGG.

17 Likes
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On Issue 1 do we need to set a limit on OTC discount percentage to ensure someone isn’t given a deal which isn’t in the Daos best interests? That way there is checks n balances and helps community sentiment to any deal details. Maybe if OTC variance more than X it must have some further approval.i hate to say vote but maybe majority vote of signers or something. Just throwing out ideas.

4 Likes
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In respect of BSGG;

We gave out an Illiquid token and it dumped.
We should not have been providing the liquidity for it in the first place it in the first place.
I don’t see it as the DAO’s problem personally.
If BSGG didn’t want their token to be dumped into no liquidity they should have negotiated better vesting for the token I guess?

In respect of issue#2

It should be made more clear of the range of tokens that could be received.
I feel every wMEMO should get what tokens they are entitled to as close as they can excluding the vesting tokens - they should not miss out because redeeming.

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This doesn’t just apply to BSGG. IF anything, BSGG is the last of my concerns, it more about the TM implementing something to prevent holders and redeemers to be dumped on.

As per the WIP they are entitled from 0 to 25% of the VC assets of their wMEMO as per TM discretion.

Not really looking at reopening the conversation on the percentage allocated, but rather clarify the intention of the WIP to ensure everyone is on the same page and their is less confusion around the future redemptions periods.

3 Likes
5

I don’t think you will be able to prevent something like this when you’re giving out tokens that are illiquid, no launched product, only WL and MEXC (idk how much liquidity they had) where Lp’ing it.
Easiest way would’ve to just not had any liquidity for it.

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Agreed, hence why an OTC option to be explored first is being proposed.

3 Likes
7

why should they get to OTC… that wouldn’t be a good use of our investment in them.

8

Because of the issues outlined in the discussions.

2 Likes
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I am advocating for this proposal (currently a discussion) as it was the original intent and design of my proposal. Unfortunately, the end result of the redemption, as written, was that the BSGG was dumped and some of the whales were able to achieve a much higher price for each BSGG token then the rest of us. I get that life isn’t always fair, but if there is a more equitable option that is in everyone’s interests I think we should consider it. If we pass this discussion as a WIP, a larger % can be distributed via the farm. No one will have to worry about racing to the exit to dump BSGG tokens and the protocol can hold on to more tokens for a longer period of time. This will give Betswap a chance to increase the value of these tokens once they launch and become profitable.

3 Likes
10

What downfalls do you envision in terms of selling OTC at market price? If we anticipate market price decreasing post redemption, this seems to me like a good option.

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On behalf BSGG we fully support this proposal and will do our best to help out our investor by utilizing the OTC offer when possible.

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I am all for it. Since dumping redemptions, which I would prefer is not on the table, at least we can minimize the collatoral damage for the tokens we invested in. Seems like common decency imo…

3 Likes
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I guess we see the issues as different peoples problems.

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OTC’ing from the investment WL gave you buying back your own token is very bizarre to me, before a product launch too.

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Selling at market price back to BSGG would be a good thing since our cost basis was 0 so would’ve been profit for WL - seeing as market value was too high imo. but weird on BSGG’s behalf to me.

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Regardless of what our cost basis is, we should still be looking to achieve top dollar (adjusting for time/risk of course). It might be a logical move for them to buy OTC if they see near term profitability from Betswap or they don’t need as much funding as they originally anticipated (use the funds for buybacks instead). It shows confidence in their own project if they buyback tokens and the token price has dropped considerably perhaps making it more logical. Also, they avoid slippage, fees, etc. Whatever their reason is doesn’t really matter IMHO, if it’s a win-win I’m all for it.

3 Likes
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I think BSGG is a unique case:

  1. A significant portion of tokens came to be owned by WL (generally avoided by projects to have a single investor concentration)
    2 WL being basically the sold liquidity provider for BSGG tokens.
  2. General circumstances around WL (which are matters outside of BSGG fundamentals).

I would like to see more specific formulas and rules as much as possible to determine:

  1. Liquid, Semi-Liquid, and Illiquid-Non Transferable Assets for Redemptions.
    For Example
    A. Liquid are listed on a major exchange or has over 100,000 USD average 20 day volume on a Dex otherwise.
    B. Semi-Liquid are those:
    Such as BSGG which trade with low volume or
    Such as Sifu tokens
    Vested CVX tokens.

In the case of vested but liquid for example CVX I’d suggest a TM discretionary cash discount (0 to 25%)
Deemed Illiquid would be given in-kind to redemption amount pro-rata for whole treasury
Those illiquid-vesting and/or non-transferable (saft) would be excluded

4 Likes
18

How is it different peoples problems as tanking the price of an investment that the DAO still has a very large vested interest in?

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Cost for WL was down to 0. Giving the tokens directly to people who own them, idk why you’re inspecting the price to remain high when it’s so illiquid.

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Would it be possible to implement BSGG tokens given out at redemption directly staked into BSGG staking? That way people still get what’s theirs’, the price doesn’t drop so dramatically, people can still hard unstake and still access them if they really want to sell, but the investment wins, Wonderland wins, people win, and we all go on winning together?

Also, for example, if they’re just locked in the 30 day pools then people see the benefit of staking and maybe continue with it, or at least it spreads out the dumping, as people are unlikely to dump all at once 30 days into the future.

2 Likes