My understanding of how this works is the sale terms will be offered to investors based on 1) comparable sales by other protocols (Badger, etc) and 2) negotiations by the BD team. The sale terms will then be extended to all Gold, Silver and Bronze owls which is basically everyone in the community who has contributed to building Index Coop. How would you make this more egalitarian? Literally every contributor has an opportunity to participate on the same or better terms.
Concerns over centralisation come from community not owning much of the voting power. This sale would actually partially address this. Bringing in other token holders, that are not currently involved, will also diversify the token holder structure.
I would argue that the goal of Treasury management is not timing the market. We all know that crypto markets are often irrational. We can bring as many awesome products to market as we want, but if the broader market sells off, INDEX will sell-off with it. We should proceed with diversifying the Treasury as planned, with INDEX price being a secondary consideration.
In terms of waiting for a higher price - I think trying to time the market is really hard. I am also long $INDEX but have no illusions that we can time the market. Right now the treasury is ~99% INDEX which is very risky.
I’ve talked to a bunch of community members about ways to make this fair, and I think this is the best mechanic. It’s not perfect, and it’s somewhat opaque - but ultimately almost the entire community will get the same terms as investors.
I think this is a good idea. This (1) builds strategic partnerships with the institutions BD is able to connect with and (2) further allows contributors to build skin in the game w/r/t Index Coop’s growth, all while (3) diversifying our treasury.
This last part is key to ensure that Index Coop can survive another crypto winter and retain top talent.
On timing, I don’t think an existential point like diversifying our treasury is worth trying to time a slightly higher INDEX price.
I guess my main qualm is that we would be doing otc sales to insiders while the liquidity for Index is essentially nil.
Generally the private sales of ‘decentralized’ protocols makes me uneasy even if im included in them. It all feels very walled off from the public. Im all for the private sales w strategic partners yada yada but I think we would be well served to first have a publicly accessible road map showing the vision of the coop and how Index fits into that plan, and then if need be incentivize an index LP so that anyone can get exposure to index, not just twitter personalities, advisors and discord members.
(full disclosure: I am eligible for the Index Coop contributor sale as I was Gold/Silver Owl during January/Feburary 2021)
I am in 100% in support of the spirit of both the Strategic Partner Sale and Index Coop Contributor Sale as I strongly support Treasury diversification, but do have some detail questions:
Can you clarify when BD partners / Index contributors would have full ownership rights to all of their INDEX tokens? Would it be 6 months after the sale?
What discount to the market price is the Business Development (BD) team planning to offer to Strategic Partners and Index Contributors? How will this be determined? Will it vary based on negotiations with potential partners?
What kinds of strategic partners in the BD team targeting? What makes a Strategic Partner eligible for the sale?
Community members will have full access to their Index tokens at the expiry of the vesting period. We are discussion a range of vesting periods (6-18 months) with BD partners.
We are looking closely at comparable raises done by other Tier-1 protocols and the discounts that were offered. These range from 15%-40% off spot. This will vary based on negations with potential partners. Our intent is to a) get the best possible deal for the Index Community b) bring on value add partners.
We are targeting top tier VC funds based on three criteria - 1) Brand name (for institutional credibility) 2) Have large Tradfi LPs 3) Funds that will be a value add and productive for our community to work with
@Matthew_Graham thanks for highlighting this. We plan to officially announce the deal on official channels on Tuesday (6/29). For community context:
Sale price: $24.26 ( all investors received the same terms)
Terms: 18-month total lock-up. 12-month lock, 6-month linear vest.
I will do a longer write-up early next week to detail the full deal time-line and highlight lessons learned. One thing to note was the significant volatility throughout the course of the raise. @reganbozman and myself made the call in late May to add 10% additional Index (effectively lowering the price from $26.68 to $24.26) for each investor. This was an extremely stressful time during the deal and without this tactical call it is likely we would not have completed the full raise. This accounts for us going slightly over the total Index allocation ( highlighting for community vis/ some background)
Is there an analysis that takes into account the potential ETH raise via Balancer LP? Also, given that spot is below the sale price is there any updated plan for the contributor sale (seems to be a moot effort, so just curious)? What I’m getting at - there seem to be parallel efforts to diversify the treasury, so looking for a resource that pulls those all together and shows where we’re at vs where we’re trying to go.
Very unfortunate timing with this contributor raise. It was hard to gauge what level of community involvement there would be with this proposal and to date, no one has been in touch about the offer. From a treasury diversification perspective, this proposal was always upside.
The Balancer Private Pool was envisage to raise $5M of ETH by selling INDEX. We were open to executing the Balancer Private Pool twice over a 6 month period which would have been $10M. It would have been nice to have somewhere between $15M-$20M in non INDEX assets around years end. This was never a firm target or committed to goal, it still feels like a really safe amount to have. We mention the ability to sustain Index Coop entire from income generated by the treasury in the our treasury diversification post here.
As a community, our forecasting and forward planning is not yet at a point where we can say exactly what we need. Our cost base is heavily influence by Liquidity Mining and to a lesser extent rebalancing costs which Set Labs is currently paying on Index Coop’s behalf.
At this point in time, it feels like a stretch to attaint $15M-$20M, but if market conditions change, then we will revisit the Balancer option. When the market is buoyant, daily trading volume appears to be a lot higher.
Tough environment but seems to have been handled well. Thanks for closing the loop on this thread.
Is the anything the community can learn from this process?
The suggestion for the raise/diversification of the treasury +- three months ago was aptly timed given rally. Were there bottlenecks in the process or the community decision that could have moved faster? (potentially avoiding the market vol)