In the initial Range token proposal(Proposal to use Range Tokens to raise capital against $POOL) we focused on what borrowing against treasury using Range tokens would look like. In the second part of the proposal I’d like to focus on what we can do with the borrowed funds.
Instead of doing a buyback with the borrowed funds we can replace a portion of the drip
Based on today’s POOL price of $10.43, we are currently dripping $8,946,332 USD per year (857,750 POOL). Doing a buyback with that amount of money would be difficult to pull off as any big buys would drive up the price significantly meaning we could overpay and the end result could be a big dump by users right after a big buyback. Replacing a portion of the drip can give us the same result as a buyback but avoids these issues. If we use Range tokens to raise $5,810,000 USDC and change the POOL distribution to be 50% POOL and 50% USDC we have just bought time with a substantially reduced distribution and likely huge savings at the end of the term. If we get a best case scenario result with POOL being $25.00+ at the end of the year then instead of paying out 857,750 POOL we would have paid out 706,375 POOL(426,375 + 280,000). We would have saved more than 150,000 POOL and will have spent the year POOL having been dripped at 50% of what it would have otherwise been. This document from Part one of the proposal illustrates the use of Range tokens POOL Range Token Proposal - Google Docs
The numbers above were based on this document and can/will be tweaked to align with today’s numbers(Document was produced in July).
This plan should drive the price up and help guarantee a minimum payout to the Range token investors due to the following:
- Reduced POOL distribution should help make demand higher than supply.
- Users who love POOL are likely to convert their USDC portion to POOL, thus creating further buyback.
- We can continue regular buybacks using a portion of the 50% reserve coming in from the pools.
I think it’s very important that a portion of the distribution will always remain as POOL since we are distributing governance and also distributing POOL means our APR can continue to grow as our community grows.
I was very happy to read through the Llama DAO report and see their detailed breakdowns on Range tokens and KPI options. I believe UMA to be one of the best teams and communities around and want to see Pooltogether use these products to our advantage. I would love to see Llama DAO be involved in these next steps if we are to go ahead with a Range Token integration. Maybe we could even pay them in KPI options in order to keep them around and help us see this through.
Thank you! @BraveNewDeFi @yuan-han-li @AcceleratedCapital @jackiepoo
- Still unsure.