I am in big support of this proposal and will be voting FOR.
Unit supply growth for the DPI over the past month has been non-existent.
At least half of the AUM is still concentrated with whales.
In order to combat 0-growth on DPI, we are engaging in protocol integrations [Aave] and direct sales [BD Team: DAOs, Conferences].
For protocol integrations, the existence of on-chain liquidity is incredibly important. Aave keepers need to have deep on-chain pools in order to sell the DPI into in the event of a liquidation. This feeds into the collateral parameters the DPI gets assigned [and, of course, whether it passes].
For direct sales, having accessible purchasing venues for the token is also incredibly important. Tokensets, and its related exchange issuance function, has significantly less distribution and accessibility than Uniswap v2 pools. We’ve seen large holders prefer to do multiple transactions on the Uniswap pool instead of engaging in an exchange issuance.
On July 15, the BD team is holding a large conference to present the Index Coop products to an audience of institutional investors. Presuming a successful event, such investors, who are used to the incredibly deep secondary markets for ETFs, are going to want to look at liquidity and other key metrics to buy the DPI.
What do we want them to see? Is the BD team prepared to explain exchange issuance? Are institutional tools these investors use deeply integrated with Set Protocol to the point where they can easily access exchange issuance? I would guess not.
I am aligned on moving liquidity to the more capital efficient Uniswap v3. However, as of today, we do not have the capacity to incentivize liquidity to come onto v3. Cutting liquidity on v2 with no plan to bring it immediately back onto v3 is a dangerous mistake as we are desperately trying to grow our products. Assuming that liquidity will flow to v3 is a big assumption that I don’t think is driven by data.
Another month of overpaying for liquidity for DPI while we are trying to grow the product and figure out how to integrate v3 is not going to kill us. This is also reflected in the fact that achieving cost-efficient liquidity is NOT a priority for the next quarter: Relentless focus: Q3-2021 Priorities.
Finally, I don’t think the teams recommending a 50-100% cut did enough active alignment well in advance to pursue such a drastic cut. As a leader of the PWG, I was not aware of the 50%-100% and the thinking behind them until very recently. I don’t know if other key stakeholders [DFP, BD, Growth, Set] were made aware of the considerations here for such a drastic measure.
I am happy to proactively help in this process next month to get an aligned proposal out, but trying to push something so drastic at the last minute, especially since other stakeholders will have no choice but to vote “FOR” because the alternative is nothing, is not how we want to run the Coop. That is not how we want to do business.
Finally, I want to push strongly against the idea that such decisions require full community consensus. Fundamentally, some community members have much deeper context than others and as such a vote doesn’t make sense. We should make our priorities clear, empower leaders, and let them execute against it.
I think a 25% cut is still reasonably aggressive, doesn’t torpedo our other initiatives and lets us observe where liquidity actually migrates to.
To reemphasize, I am looking forward to working with the Uniswap v3 team and others to proactively make this a reality come the following month.