Thanks for all the feedback on this! Iām super happy to see so many strong views on this proposal. I wanted to provide some high level responses to topics Iāve seen and also propose a concrete next step.
Treasury Diversification
To start, Iām just noting that it seems everyone is generally aligned with the idea of diversifying the treasure. The comments mostly were suggesting alternative ways to do so. Itās a major win the community is fully aligned on benefits of diversification.
Who are these investors?
For those of you who were not on the community call Friday I wanted to give a bit more background on who these investors are. I saw a few comments that questioned whether these investors truly had the long term interest of the protocol in mind.
The majority of this sale ($4 of the $7 million) would go to ParaFi and Nacent. Dan at Nascent has been very active in this forums for awhile. When Dan was at IDEO he led the seed round for PoolTogether Inc and at Variant he participated in the Seed Extension round. ParaFi led the seed extension round. In short, these investors are already large POOL holders who are active in the community and clearly have incentive alignment.
Galaxy Digital and Dragonfly would be new investors. Galaxy Digital has been investing in the space for a long time and brings deep institutional ties. Dragonfly Capital has a strong Asia focus and will help the protocol grow there (currently China is #2 for web traffic to PoolTogether.com)
Discount
I actually didnāt see too much pushback on the discount. I think people were mostly concerned with the price the discount was anchored against. My only note on the discount of 35% is that this is very standard for āover the counterā direct purchase transactions.
Some people noted that if they attempted to buy this amount of tokens on the open market it would dramatically impact the price. This is true and the converse is also true. If the protocol tried to sell this amount of tokens on the open market it would dramatically impact the price. The purpose of direct treasury purchase is to be able to make the transaction without significantly impacting market price either direction. Iām not aware of an OTC transaction that has occurred at or above spot prices, itās always at a discount to spot.
Price & Timing
I believe most of the critiques centered on this point. The price of POOL is far too low and that is primarily because 1) it comes at the end of the initial liquidity mining period and airdrop and 2) liquidity on AMMās has been too low to facilitate true price discovery. I think both these points are accurate but I would also add a couple other points to price and timing.
The timing also comes right before we plan to reduce POOL emissions there is a good chance this could lead to a short term decrease in AUM, having the money in the treasury before this happens will help ensure we can maintain larger prizes and higher expected APRs. We are also clearly in a bullish macro environment and we have no idea when that might end. Right now our treasury is 100% concentrated so this first diversification is extra important. Having this initial diversification done puts us in a stronger position to negotiate any future treasury swaps, diversifications, and also protects us if the macro environment does change.
When evaluating the price, we also HAVE to consider the lock-up. The price of POOL has been hovering around $18 for the last 12 days. Liquidity is limited but it means smaller players have had the chance to buy POOL at this rate for a while without any lockup. $13 is a ~28% discount from $18 I believe this is quite a reasonable discount giving the lock up requirements. (for more numbers $13 is 35% discount from 14 day average spot price and 40% discount from 30 day average spot price).
Closed Nature / Unfair
I resonate with this critique. Ethereum exists to redefine financial institutions, not recreate them. There are other mechanisms we could attempt to use that are more openly and widely accessible. That might be where we end up landing. However, I wanted to bring this to the governance because this proposal enables us to diversify to 1) know parties, 2) with lockups, in 3) an expedient way. Additional to this, these parties bring unique and proven expertise that I believe will accelerate protocol growth. More open methods (like a dutch auction) donāt offer us these advantages.
Summary
Personally, Iām still supportive of this proposal. I understand it is not maximally price optimized but I think taking into account all variables it is net positive for POOL holders. Crypto moves fast and opportunity costs are extremely high. I would rather get this done quickly and immediately start leveraging a diversified treasury than delay in hopes of negotiating a better deal down the road.
With that said, itās not worth fragmenting the community to make this happen. The community is more important to me than this deal. I understand 100% consensus is not realistic but I would like to see a solid majority aligned to move forward. If we canāt get there, Iām happy to walk away from this as Iād rather bet on building a strong community than building a large stablecoin treasury.
Next Steps
Iāve created a signaling snapshot vote. You can vote whether you hold POOL in your wallet or deposited into the POOL pool. I think this should give us a more accurate picture of where the community is at.
Please vote here in the non-binding poll here
And letās continue the discussion!