DIP-4: Treasury Proposal
In this article we go through the reasoning behind DIP-4 and we explain why this will be beneficial to the growing DEXTF community.
Start date: April 2, 2021, 9:00 AM UTC
End date: April 16, 2021, 2:59 PM UTC
Click here to go to the Snapshot page to vote.
Having conducted a fair launch with no token private sale or presale to investors, the Roman community grew in number and in prosperity.
As of today, $DEXTF can be earned by completing 3 main operations:
- Holding XTF Fund Token
- Providing liquidity to an XTF Fund Token (or DEXTF/ETH pair)
- Minting an XTF Fund Token
In several posts, we’ve mentioned $DEXTF as having the below use cases:
- Governance to change parameters or approve proposals
- Value accrual for protocol/management fees
- Staked to access rewards proportional to rank (approved in DIP-3)
This proposal seeks to leverage the 15% community driven allocation (15M $DEXTF tokens) to create a Protocol Treasury, which will perform a slew of operations to drive additional value to token holders.
https://docs.dextf.com/documentation/introduction/dextf-token
Currently, DEXTF does not have an existing Treasury as tokens were never sold privately. The Treasury will belong to the Protocol and as such, indirectly, owned by all $DEXTF token holders.
A Treasury will, among other important value propositions, provide resources to achieve an exponential growth both in terms of marketing reach and development.
DEXTF Development Proposal (DDP)
These resources are provided by the community through proposals that we call DEXTF Development Proposal (DDP) with very specific mandates that center around protocol development, such as marketing, blockchain development, UX/UI improvements, audits, etc.
A DDP is considered active when it’s approved through a governance vote via Snapshot.
An active status for a DDP means that anyone in the community can submit their best offers.
This is because only the 5 cheapest offers [Num_of_prop = 5] will be submitted for voting, and the winner gets awarded the work described in the DDP.
Each offer has to contain:
- a compensation in $DEXTF: Prop_cost
- a desired lock-up period (in quarters; e.g 1 = 1 quarter, 2 = 2 quarters etc): Prop_lock
There are two ways to submit a competitive offer. Firstly, it is clearly to lower the compensation however, when that option is no longer adjustable, users can decide to increase their lock-up period.
In fact, every quarter of lock-up is equivalent to cheapening (Cost_for_inclusion) the proposal’s cost by a [Cheap_param]*, which is initially set at 10% per quarter.
*[Cheap_param] is a parameter that can be later on changed through a governance vote.
Therefore for a DDP to be included, we shall calculate the Cost_for_inclusion.
Cost_for_inclusion = Prop_cost * (1 — Cheap_param) ^ Prop_lock.
For the avoidance of doubt, there can be as many offers as the market can submit, but only the cheapest 5 (based on Cost_for_inclusion) will be considered in the subsequent community vote.
This is to maintain the process pragmatic and manageable but also to ensure that people interested in improving the protocol who are happy with longer holding periods are prioritised relative to third parties simply interested in getting the job done.
Once the work is completed and the DDP is finalized, the winner of the contract can submit a payment request for the full Prop_cost (not the Cost_for_inclusion), and a blocking vote will be submitted to the community. If no vote to block passes by 14 days [Prop_block = 14 days] then the contract amount gets paid and locked for [Prop_lock] number of quarters.
PROTOCOL LEVEL TOKEN SWAP
To address the idleness of $DEXTF tokens waiting to be distributed, we request the community to authorize the swap of some or all $DEXTF tokens held in the Treasury for ETH and/or major stablecoins with DEXTF Supporters (DS). The swap will be conducted only on an OTC basis to avoid price fluctuations on DEXs.
The DS will also be subjected to a lock-up period for which a discount proportional to how long the lock-up will be, as defined above (i.e. initially set at [10%] per quarter). That means that if a DS swaps OTC ETH for $DEXTF and decides to lock-up $DEXTF for 3 quarters, he or she will obtain a 30% discount.
PURPOSE, USE OF THE ASSETS AND USE OF THE PROCEEDS
The purpose of the Protocol Treasury will be on multiple levels, eventually benefitting the protocol, the users and all token holders:
- To finance the protocol development
- To generate returns and increase Treasury’s size
- To stabilize the $DEXTF Price
- To reward $DEXTF stakers with proceeds
- To implement a $DEXTF buyback policy with proceeds
The Purpose of the Treasury can be expanded or reduced by community Governance.
The Assets owned by the Treasury can be deployed to activities that have a direct positive impact on the protocol, the ecosystem and/or the $DEXTF token holders such as:
- Investing in XTF Fund Tokens (Treasury will not receive $DEXTF rewards, investors hence are not diluted of their existing rewards)
- Providing liquidity on DEXs such as Uniswap or Sushiswap (Treasury will not receive $DEXTF rewards, investors hence are not diluted of their existing rewards)
- Arbitraging XTF Funds Tokens’ price discrepancies
- Mantaining $DEXTF price stability in the open market (similarly to how corporate treasuries buy their stock back when they perceive it has become too cheap)
- Providing liquidity for capital intensive products (Floor Tokens, for example, require Zero Coupon and Options)
- Investing in stablecoins, ETH, WETH or WBTC for yield generation
- Paying for protocol development initiatives through DDPs (DEXTF Development Proposals)
Uses of the Assets can be added, removed or modified by community Governance.
The proceeds of the Treasury’s investment will be used to:
- A portion of the returns, initially set to [Tres_Return_distribution = 0%] will be distributed to $DEXTF stakers (once the staking contract is ready), with an increasing reward being distributed to stakers that lock-up their DEXTF for a longer holding period. DS will be considered as having staked their DEXTF and will receive their fair share of the proceeds when due.
- The Treasury may also buy back $DEXTF tokens on the open market and a portion of these tokens, initially set to [Tres_Burn = 0%], will be burned to create token supply deflation.
Uses of the proceeds can be added, removed or modified by community Governance.
CONCLUSION
We, therefore, ask the community to approve DIP-4 in order to strengthen DEXTF, its community and ecosystem and its token holders.
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