I’m writing to get the community’s feedback on a plan to raise the funding for JPG from Sushi Miso. This would be funding for both the token collateral purchase and LP. Raising from Miso would reduce or eliminate the need for a market maker. I’m grateful to @Mringz and @DocHabanero for their input on this plan.
By way of background, Sushi Miso is a new token launch platform from the makers of Sushiswap …
Miso has an option to raise funding at a fixed token price, in contrast to the variable price auctions used in a Balancer Liquidity Bootstrapping Pool. The fixed pricing option is ideal for our collateralized products because the NAV price is known beforehand and we don’t need price discovery.
We would raise the funding for both the token and the LP as follows. Let’s say we want to raise $3M consisting of $2M worth of ETH to issue JPG and $1M worth of JPG-ETH LP for liquidity. A user who contributes 6 ETH would receive back 4 ETH worth of JPG and 2 ETH worth of JPG-ETH LP. The users might hold on to their LP or dump it immediately, although in principle we could consider a lock-up period. Similar to set token minting, purchasing the token though Miso rather than via swap post-launch would probably only be less expensive for large purchases and this would need to be communicated clearly. The user would claim the token through the Miso interface and the LPs would need to be airdropped to the users. I’ve confirmed with the Sushi team that this is currently possible. We could mint the tokens after receiving the ETH so there’s no initial capital outlay from IC. No KYC would be required because the token would be finalized before the sale and there would be no communication about expected appreciation. I’m aware that Miso recently recovered from a hack. The story is absolutely hysterical.
I see the following pros and cons of getting funding from Miso …
Pros
- Straightforward and fast way to raise funding
- Potentially less expensive and faster than using an off-chain market marker
- Simplifies discussions between methodologists and IC about funding
- Publicity for the launch
- Build partnership with Sushi
- Test an approach that may be useful for other Index Coop products
Cons
- Sale fails to meet minimum fundraise (funds would revert back to users)
- Poor user experience if there’s bad communication, eg, that users are buying at NAV price and buying LP as well as tokens
- Expectation (although not a requirement) that the LP would be on Sushi
- Gas costs of LP airdrop, particularly if there are a lot of small contributors
- Fast sale and gas wars could create a bad user experience
- Probably several other factors we haven’t thought of
That’s the idea. Feel free to post feedback here or send a DM.
Cheers,
Joseph
