As setting rules for the future around redemptions:
If already listed and trading free (such as BSGG), the aim is around the at cost price to be redeemed or the total (whichever is smaller) less what is in any staking rev share farms in the case its the total.
If the cost basis to unvested VC projects (in this case CTA) are less than some % of the treasury this is left behind by redeemers to provide some kicker for those who stay. (Thinking less than 3% for example of Treasury but TBD).
At a point where this needs to re-negotiated, a Proposal-RFC-WIP can go up, but yet hopefully otherwise, default to guidelines.
Redeemers are taking a very large haircut by being paid so far under backing.
Redemption that keeps you redeeming for 6-12 months doesnt feel like redemption and isnt something future investors would want to see.
As an investor i wouldnt want the risk of buying at backing then maybe the treasury goes to a VC deal and if i want to redeem i now have to wait 12 months.
If this happens like this, the reward to redeemers should be bigger than 25% as we share the same price risks as holders
May I make a suggestion here? There needs to be a level of trust but nothing is guaranteed.
The assumption here is:
Redemption will keep the price close to backing year round because any price action below the backing will be bought up by the smart frogs that can redeem it at a later date, you can already see the effects off this?
Is this 100% guarantee that this will work or once we open the flood gate, there is no way of closing it. I donāt want a mass exodus causing a death spiral similar to Luna? From my understanding of Luna post mortem, had UST has a lock-in period of x number of days prior to withdraw then they may have avoided the death spiral.
Here is what I would like to recommend, a maximum withdraw with backing of a maximum of 2.5% per member per month. Say that you have 100 MEMO, it means that you can withdraw 2.5MEMO per month with Treasury backing. There are several benefits to this: 1) more regular feedback loop instead of quarter pump and dump 2) the withdraw is more controlled so that we can close the flood gate to prevent any unforseen issues i.e. death spiral. 3) people know that they can get their fund out with backing 4) this will also satisfy the No redemption voters 5) This should satisfy long term investors since the withdraw will be over a period of 40 months.
Maybe there is something else here that I am missing or donāt understand. Please help me out
@tesla888 Interesting concept but a few issues: why would anyone want to exit at 2.5% when they can just farm at a similar or higher APY and still keep there investment? Also, regarding satisfying long-term holders, the proposal does benefit them as the backing will increase during each redemption period. The returns will be proportional to the % of people exiting given we are essentially allowing redemption below full backing (similar to a buyback below backing).
I believe that there is a misunderstanding. Say that you have 100 MEMO, it means that you can withdraw 2.5MEMO per month with Treasury backing.
We are in uncharted territories and it is important to take baby steps in changing the protocal. We need to minimize risk and to have more regular feedback. Once every three months, will not give us enough data points to refine our process. If any goes wrong or right, we have to wait for another 3 months. Small monthly redemption provide quicker feedback. We need to test our theory here and not to bet the entire farm that redemption will keep the price closer to backing year round. Maybe it will work, there is nothing wrong with increasing it to 3-5% the month after instead of leaving at 2.5%. At least it is well controlled and will not affects the treasury signficantly.
Nothing is guaranteed but, Iām making that assumption looking at other protocols priceās that offer regular redemption or have a inverse bonding which is basically redemption. e.g Sifu vision or olympus dao. Price is above backing in both of those.
Luna is nothing like wMemo we arenāt minting anymore wMemo, Iād suggest you read up on the mechanism of Luna and how it was meant to protect the UST peg. Thereās plenty of articles explaining the whole UST fiasco.
Nothing is guaranteed but, Iām making that assumption looking at other protocols priceās that offer regular redemption or have a inverse bonding which is basically redemption.
This is the problem, you are making the assumption that it will work. I am asking that letās not bet the entire farm on your assumption and take it slow i.e. if an investor has 100 MEMO, it means that he can withdraw 2.5MEMO per month with Treasury backing. Letās be scientific and do a small and control experiment. With small and incremental step, we can guarantee the potential outcome; whereas, there is no guarrantee with your currrent proposal. I am using Luna as a black swan event and to demonstrate the concept of death spiral.
BTW, donāt get me wrong. I love what you are doing and I love your idea. I think that it is import to have regular redemption and to get the price closer to backing. I am trying to build on top of your idea and to protect long term investors just incase that something goes wrong.
The mechanics and tokenomics of UST are much different than WL, so Iām not sure we can use them as a comparison metric. I donāt really see a ādeath spiralā from redemptionsā¦we did a rage quit and did not have any ādeath spiralā, just a reduction in overall treasury size and a higher backing.
Redemption will work, and really sets the real backing-rebase DAOs apart from ones that are rug pulls. Reputation can be paramount at this point as well.
Redemption will work, and really sets the real backing-rebase DAOs apart from ones that are rug pulls. Reputation can be paramount at this point as well.
Are you 100% guarantee that this redemption will work? Will you put money and collateral down to compensate the community if it does not work?
I agree that reputation is extremely important but what is wrong with taking little baby steps and to
control the flood gate.
we did a rage quit and did not have any ādeath spiralā, just a reduction in overall treasury size and a higher backing.
Scientifically, you are talking about one data point. What was the price of Bitcoin then? What was the sentiment of the market? What is the state of our investors now compared to the rage quit event?
More of our investors are currently illiquid compared to before; hence, people will act differently during different cycles of the market.
@tesla888 If your concern is draining the treasury, which is a concern of many holders here perhaps we can come up with an alternative solution. For instance, writing in the proposal to halt redemptions below a certain treasury value (e.g. $50mm). This would help ensure longevity of the project and āfuture proofā the proposal.
Not 400 million, this is straight from announcements.
" During the redemption phase, the Rage Quit contract was topped up with 202,635,546 MIM to allow everyone to leave the ecosystem in accordance with the WIP #5 guidelines.
A total of 59.76% of the whitelist used the RQ contract, leaving 14,177,462.19 MIM to be returned to the treasury. "