Loan out 500 DPI from the Community Treasury to market makers for the Kucoin exchange listing.
Abstract
Withdraw 500 DPI from the Index Coop Community Treasury Wallet to the Exchange Listing Wallet.
This is approximately 200k USD worth of DPI @399.91 USD per DPI.
Lend the withdrawn DPI to market makers for the KuCoin listing.
Half of the lent DPI is to be returned after 6 months. The remaining lent DPI is to be returned after 12 months.
Once returned to the Exchange Listing Wallet, the DPI is to be returned to the Community Treasury Wallet.
Motivation
The DeFi Pulse Index has been green lit for listing on KuCoin, a top 10 cryptocurrency exchange according to Coin Marketcap. As part of the exchange listing process, KuCoin requires a quantity of DPI to create a liquid market for exchanging DPI. The Index Coop has accrued approx 370k worth of DPI from the Coop’s share of the DPI streaming Fee. This IIP proposes loaning a portion of the DPI in the community treasury to facilitate the KuCoin listing.
Overview
500 DPI will be transferred from the Community Treasury Wallet (0x9467cfADC9DE245010dF95Ec6a585A506A8ad5FC) and sent to the Exchange Listing Wallet (0x154C154c589b4aEcCBF186FB8BC668cD7C213762). The Exchange Listing Wallet is controlled by a 3 of 3 multisig with @reganbozman, @bigsky, and @darkforestcapital as key holders.
The 500 DPI will be lent to KuCoin market makers for a period of 6 months and 12 months. The market makers may or may not utilize the full 500 DPI to create the Kucoin DPI market. From the quantity that is used to make the market, half will be returned after 6 months, and the remaining half will be returned after 12 months. At 6 and 12 months, DPI that has not been used or has been returned to the Exchange Listing Wallet will be returned to the Community Treasury.
The quantity of 500 DPI is calculated by using the following formula:
The KuCoin market makers require 150k USD in DPI to make the market. In anticipation of potential price fluctuations in DPI price from now until the time of exchange listing, we are loaning 200k USD worth of DPI at today’s prices.
According to Coingecko, as of March 31st 2021, the average price of DPI over the past 7 days is 399.91 USD per DPI.
200,000 USD / 399.91 USD per DPI is approximately 500 DPI.
FOR
Loan 500 DPI from the Community Treasury Wallet to KuCoin market makers to create a market for DPI exchange listing according to the parameters above.
AGAINST
Do not loan DPI to KuCoin market makers.
IIP-27 DPI Market Making Loan
FOR Loan DPI to KuCoin market makers according to parameters above
AGAINST Do not loan DPI to KuCoin market makers according to parameters above
This is a lot of money but will be a huge step forward in terms of making $DPI easy to purchase and will bring a lot more liquidity to our markets. I also think this can help us ween off liquidity mining and so will eventually pay for itself
Definately For. Very exciting news. A huge indicator of how well we have progressed as a community. Big congratulations @reganbozman & @BigSky7 for setting this opportunity up.
Just a couple of additional insights:
This is a great example of making our treasury assets productive
We can generate value in two ways by creating a liquid market on a CEX which is good for brand awareness & creating demand for more listings.
Additional questions:
If demand is surpasses 500 DPI will we have to mint more DPI or provide from the treasury again. How will we facilitate the minting process?
Do we receive the token units back or the USD value of the tokens back? I’m just concerned because we stand to lose out if DPI’s value increases and Kucoin has to essentially pay less back.
I like this idea. Getting more CEX liquidity has got to be good for DPI and the coop.
A couple of things that have passed my mind when I read the proposal:
Reputational risk of being involved with a CEX - None
Risk of not getting the fund back - very minimal.
Impact of taking DPI from the treasury - This is probably the only aspect that needs thought.
The loan is effectively forcing use to Hodl DPI for at least 12 months. There is an effort to diversify the treasury. However, I think the main need is to diversify from INDEX, so holding DPI unlikely to be a problem.
The Smart treasury proposal was built around selling $100 K DPI to allow a 80:20 INDEX:ETH pool to be created. Assuming that all the DPI collected to date remains as DPI we have sufficient to fund both activities. (and we now have a growing income stream fro ETH2-FLI) Dune Analytics
@Matthew_Graham can you confirm that the treasury WG didn’t have other plans for the $200 K of DPI for the immediate future?
Also FOR, awesome to see $DPI getting listed on larger exchanges!
One question that crossed my mind is that, usually there are costs associated with a loan, but this is not mentioned above, I guess we lend the 200k for free? Or in other words, in return for market making.