Authorize $500k of DXD buybacks with new parameters [Proposal]

[Powers]

Tldr, this proposal would update the parameters of the DXD Buyback program and extend by $500k. There are new parameters that change the definition of NAV that govern purchases.

Background

The DXD token was launched through a novel bonding curve contract, where DXD could be minted or burned in exchange for ETH in the buyback reserve. The bonding curve was later paused and the DXD Buyback Program was launched in May 2021. The initial 3,659 DXD was purchased by DXdao’s general treasury, while almost 11,000 DXD was purchased using funds from the buyback reserve.

Looking ahead, the community is moving to a new DXD token model, but while these discussions are ongoing, DXdao governance is considering more medium term solutions to drive value to DXD. and discussing what to do once the buyback reserve is depleted after DXD Buyback Extension #9 extended it for the last 107 ETH. DXD Buyback Extension #8 passed on mainnet & said:

If and when the DXD Buyback Program depletes the buyback reserve, funds from the DXdao treasury can be used to purchase DXD on the open market at up to 70% of NAV, so long as this calculation accounts for runway and future funding for product development.

Details

This proposal authorizes up to $500,000 of DXD to be purchased from the general treasury as long as the DXD NAV Ratio, which is the DXD Circulating Market Cap divided by DXdao Treasury NAV, is under 70%.

Orders may be no more than 25% of DXD average daily trading volume and can only occur three times over seven days. Buyback order submissions can be above the 25% ADTV amount in the event that the previous week saw buyback orders with a combined purchase size less than 75% of the DXD ADTV.

DXD Circulating Market Cap is calculated by taking the price of DXD on Swapr mainnet and multiplying it by the total amount of DXD that is outside of DXdao’s treasury (mainnet, Gnosis Chain and Arbitrum one), DXdao’s DXD vesting contract and any other DXdao-owned contracts on Ethereum, Gnosis Chain, Arbitrum or any chain with a DXdao-sanctioned base. DXD issued for contributor compensation will contribute to the DXD Circulating Market Cap calculation when the DXD vests.

Treasury NAV is the assets of DXdao minus its liabilities. DXdao’s assets are made up of Core Assets and Auxiliary Assets. Core Assets consists of all ETH, staked ETH, stablecoins and Swapr LP deposits owned by DXdao on Ethereum, Gnosis Chain, Arbitrum or any chain with a DXdao-sanctioned base. Core Assets contribution to Treasury NAV is 100% of its current USD value. Auxiliary assets are all non-core assets in DXdao (excluding DXD & GEN). Auxiliary Assets have an adjustable Treasury NAV Contribution Percentage. Auxiliary Assets’ contribution to Treasury NAV is its current USD value multiplied by its Treasury NAV Contribution Percentage. As part of this proposal, all Auxiliary Assets are assigned a 25% Treasury NAV Contribution Percentage.

For Treasury NAV calculation, DXdao’s liabilities are defined as three years of DXdao’s USD monthly runway, currently estimated at $290k a month, or $8.7m.

For clarity, below is the current DXD NAV Ratio calculation.

• Circulating market cap ($15.6m) - Current price on Swapr mainnet ($430) multiplied by DXD Circulating Supply. Total DXD supply (148,976) minus DXD controlled by DXdao (112,872) is 36,104 DXD, so DXD circulating market cap is $15.6m.
• Treasury NAV ($28m) - Core Assets ($36m) plus, 25% of $$ value of Auxiliary Assets ($722k), minus $8.7m. See breakdown here
• Current DXD NAV Ratio: 55.6%

Risks and Considerations

Buybacks are typically carried out on Gnosis Chain, which is a sidechain with a lower security model. The same risk factors that were laid out in the original DXD Buyback Proposal apply here. There is no guarantee that buyback purchase will sustain the price of DXD and it does decrease the value of the treasury.

[hughesconnor]

Supportive of this proposal. I don’t think vesting DXD should count towards circulating supply in these calculations, but doesn’t affect the actionable outcome at this time (it’s below 70% either way). Thanks for putting this together! If passed, should do a lot to quell any concerns people have/had about the relationship between previous discussions and the DXD/ETH price drop recently.

Also important to emphasize that the subtraction of 2.5yrs runway from the NAV calculation is super super conservative, so while 59% looks close to 70% & might trigger thoughts of overstepping ‘good value for the DAO’, this is using a very conservative method of calculation.

[0xSpicySoup]

Oooff NAV just took a big hit…

Redrawing NAV calculation to carve out runway, and keeping newly bought back tokens in the circ supply; either of these would secure against a scenario where the treasury could be drained.

But if we’re taking both approaches in tandem rather than either/or, it’s much more aggressive. In that case some more concrete commitments need to be afforded DXD holders as a compromise.

1. I’d like to see the proposal size increased to $1m in line with previous buyback proposals under the old format.
2. A commitment to maintain this structure beyond the current proposal. Limiting authorized amount in a given proposal is fine, but should be clear that this will continue beyond the initial $1m/$500k until a DXD working group has arrived at a new and suitable alternative to buybacks.
3. Orders occur 3 times over 7 days. This should be a firm 3 / 7, not max 3 orders or min 3 orders. The last few weeks buybacks have been very sporadic (3 in 2 weeks if I’m not wrong). Watering down NAV and not reducing circ supply both undermine DXD price support; and should be accompanied by a commitment to buyback frequency not just a limit on frequency.
4. Vested DXD not counted in circ supply as Conor mentioned already.

[JohnKelleher]

@Powers

• Circulating market cap - DXdao’s DXD purchases take DXD off of the market, decreasing the circulating supply of DXD for buyback calculations. Going forward, DXD purchased by DXdao will not affect the circulating supply calculations as this DXD will not be burned by stay in the general treasury [NOTE: technically, this could apply to the 3,659 DXD purchased in the initial buyback, which would increase circulating market cap by a lot].

There is a lot of DXD (and increasing via unlock) in the general treasury which is not currently considered circulating supply. This approach seems to contradict that. I don’t think DXD in the treasury should be considered circulating.

@Powers

• The total $$ value of the treasury (excluding DXD) MINUS 2.5 years of $$ runway (using current burn of $290k)

I think it makes more sense to define which assets are liquid enough to be considered. I don’t think SWPR should be included as 77% of total supply is in DXdao’s mainnet treasury and calculating the value of that on the rather low existing liquidity is essentially meaningless. You could also question whether it makes sense to include the value of ENS, because DXdao has never addressed the question of under what conditions this ENS would be sold.

@hughesconnor

Also important to emphasize that the subtraction of 2.5yrs runway from the NAV calculation is super super conservative, so while 59% looks close to 70% & might trigger thoughts of overstepping ‘good value for the DAO’, this is using a very conservative method of calculation.

I don’t think 2.5 years is conservative if as a long term holder you want to see DXdao emerge from a potentially protracted bear market. I think 4-5 years would be conservative. Also, I think the $290K per month is an underestimate of future spend given the current trajectory of the budget. Who should be the focus of DXdao? Long term DXD holders who want to see successful products, or DXD holders looking to maximize buy pressure from the treasury?

Finally, I’ll reiterate that using NAV targets are a fundamentally flawed approach. Something like @hughesconnor’s proposal would be more predictable. Not to mention that “aiming” for 70% NAV is practically an admission of defeat when it comes to DXdao’s operations and products being valued positively by the market.

[hughesconnor]

@JohnKelleher

I don’t think 2.5 years is conservative if as a long term holder you want to see DXdao emerge from a potentially protracted bear market. I think 4-5 years would be conservative. Also, I think the $290K per month is an underestimate of future spend given the current trajectory of the budget. Who should be the focus of DXdao? Long term DXD holders who want to see successful products, or DXD holders looking to maximize buy pressure from the treasury?

I meant only that separating out anything significant in terms of runway from the NAV calculation is a conservative approach, as it essentially accounts for a base case of 2.5 years of runway being spent with 0 return. Not implying that 2.5 years of runway is ‘enough’ operationally, but that even if you assume that 2.5 years of runway will provide 0 return, then we are still trading below this 70% figure. Of course, anything we spend, I assume is expecting a return of at least 1x, so I only meant that it’s conservative in that sense.

I’m fairly open minded at this stage around the forward looking approach towards DXD token accrual, so it’s by no means an endorsement of the buyback model over the APY model discussed elsewhere, just generally commenting on this NAV calculation being much more conservative than a more simple one that just takes Total Liquid Assets / circulating supply. Very much agree that the long term model should heavily discriminate in favour of long term holders over shorter term holders, whatever model that ends up being.

[Arhat]

I see ether as gold, the community’s fuel for development. It is the means supporting the end goal of figuring out a path of sutainability for the DAO. And while it makes perfect sense using product revenue to support the DAO’s token, it isn’t ideal to rush spending the community’s fuel while ether is undervalued, to what end? The push for the buyback does not help product development and that’s concerning. While the buyback is undoubtedly a priority, it should not turn into a distraction.

Hasu is active on social media. He is active in MakerDAO. If the community is off course, we need community members helping the DAO figure out how to best move forward with its product roadmap and not lose focus. The buyback cannot be the only focus and turn into a distraction.

The reason I am sharing this is not to thwart currenly undertaken initiatives, just add color to why it makes sense for the community to be careful, to be conservative.

[hughesconnor]

@Arhat

it isn’t ideal to rush spending the community’s fuel while ether is undervalued, to what end? The push for the buyback does not help product development and that’s concerning. While the buyback is undoubtedly a priority, it should not turn into a distraction.

I agree with parts of what you say here, but I want to be careful about the line this goes down; not necessarily purely due to your post, but maybe in conjunction with some of the chatter on the most recent community call. To be totally fair and frank, I think the DAO has had 3 years to produce meaningful product development for the purposes of revenue generation, so the word rush is a little much - we didn’t conduct the raise last week. I’m all for a sustainable method of driving value to DXD holders, but what I am against is conservatism to the nth degree to the detriment of DXD, when the treasury is only there as a result of bonding curve participants and the secondary market buyers that gave liquidity to those entrants.

Product development is great, it has the potential to produce tenfold the value of cash spent on it, but I think in order to satisfy DXD holders that product development is a good endeavour, much more should be done to meaningfully show that there will be a realistic return of at least 1x cash spent, before spending it. If we cannot show, with confidence and intellectual honesty, that a product is going to realistically return 1x cash spent on it from today onward, then development above what we are obliged to undertake should cease - today - and resume only if and when this can be shown.

In the past, I have been told that it ‘isn’t DXD holders’ treasury’. Sure, that is true. But equally, it’s not the contributors’ treasury either, and the funds were not raised via a Gitcoin grant. There is an implicit responsibility to return value to DXD holders (surely at at least 1x cash can be expected? If not, why not?), and I don’t think there has been enough to show for current spend to date in the form of revenues, nor enough on the expected return of budgeted spend. That’s not to say this can’t change, but I think it needs to be acknowledged.

If it cannot be shown that spend is likely to produce 1x cash in future value, then we should not be spending it. I have only recently seen conversations related to this topic in the forum, which is a step in the right direction, but I have not seen anywhere any projected future revenue analysis for any of DXdao’s products. I would think that this would be crucial before deciding to proceed with development.

@Arhat

And while it makes perfect sense using product revenue to support the DAO’s token

I think this is part of the problem here - many point to using the treasury to build products, and then product revenues to support the DXD token, but what is the current state of, and focus on, product revenues?

Swapr is bringing in 1-5% of its yearly development spend, with the DEX market is becoming harder and harder to bite into (and I applaud those taking this up as a sustainability issue in the recent forum posts), while other products have no product revenues at all at this stage. I think it’s more than reasonable for DXD holders to take issue with this rhetoric of ‘just have more patience’ given that in the last 3 years, product revenues have not been at the forefront of DXdao’s output, and as mentioned above, I haven’t seen any real focus on potential product revenues for current and future spend either to show that it’s even been at the forefront of DXdao’s thinking. I don’t think it’s fair to maintain that it’s still too early to expect these things, and that patience and conservatism are vital, at the 3 year mark.

I hope that this period of transition can serve as a productive one, I have plenty at stake to hope that it does from DXD holders’ side, but I cannot beat around the bush about this stuff anymore. DXdao is no longer in its infancy stage relative to other projects in the space that produce plenty of revenue. There needs to be compromise here, and I don’t want anyone to mistake this for an attempt to liquidate the treasury - I have been around for most of DXdao’s lifetime as a token holder and keen community member. I am just looking for acknowledgement that the current path is not doing DXD holders any favours, and a commitment to change from here. When I see things going back towards the lines of ‘We need to keep building stuff, and then product revenues will support DXD in the future’ as standalone comments with no further thought or evidence of implementation, I don’t feel that commitment and acknowledgement.

To hit home a little more, if DXdao were to continue its current burn rate, and at a fixed treasury value (i.e., if we sold everything to stables), then we’re about half way through the DAO’s lifetime. We’re essentially at half-time, and if the second half’s product revenues are like the first’s, then DXD holders will end up with a return of $0 on one of the largest treasuries in DeFi history.

Please, let’s not continue with the same rhetoric that has turned many off investing in the DAO in the past, and a large reason for why the NAV discussion has been so prevalent for so much of DXdao’s history.

Cheers

[Arhat]

DAOtalk falls short, because I wish I could post without replying to someone, it’s not necessarily a retort to a particular person, this is a wide encompasing topic and it concerns everyone.

Which DeFi Protocols Are Profitable?

CRV is down 97.70%
AAVE is down 84.97%
…

To me oftentimes, a lot of the convo feels like: let’s close shop and liquidate, cash out. Is there a buyback - there is. Let’s just not obsess with it. If anything, the community needs advice and support on the roadmap. 3 years of runway in this bear is an amazing feat accomplished by exemplary conservative actions in the past. Neglecting it and neglecting the future, and focusing on the buyback is weird. There is potential for so much more, but there is this looming distraction with how many buyback orders we did this week, 'rapido, rapido!..". No one is against it, it’s happening, but I wish to see forum posts with product ideas and improvement proposals. People may not be satisfied, but even the current stack is impressive. The gov system that’s built is unparalleled. It can be monetized.
The DEX is literally the only one in the entire DeFi giving traders the peace of mind with regards to frontend attacks, now offering MEV protection as well. There are ways to tap into it. Carrot is a true gem, v1 will rock. We’re developing Jolt. There’s Nimi. The community has achievements to be proud of and its portrayed as a total failure, with even worse expectations for the future.

The buyback is happening.

[hughesconnor]

@Arhat

To me oftentimes, a lot of the convo feels like: let’s close shop and liquidate, cash out.

I haven’t heard anyone call for that resolution for years, and I specifically said this isn’t the case above if you take a look. Please, don’t misrepresent me or DXD holders in general. I appreciate that comms over text can be tough to interpret, but it’s a recurrent theme in your posts, and I think it’s an easy but inaccurate way to paint DXD holders in a bad light.

@Arhat

Let’s just not obsess with it.

I’ve made it plainly clear that I’m open minded to the future mechanism to deliver value. I just take issue with the move back in comms towards a rhetoric of ‘Let’s just keep going as we are, and product revenues will support DXD in the future’. That is not a comforting value accrual mechanism for DXD holders given product revenues are nowhere close to sustaining the DAO’s expenses after 3 years, let alone anything for DXD holders - it’s just a fact, I mean no offence by it, so please don’t take it personally.

What I am obsessing over, however, and think there isn’t enough obsession over, is that money is being spent without pre-emptive analysis, and seemingly no serious pause, over whether it will return at least 1x said spend. This money could be spent on a buyback (returns >1x spend to remaining DXD holders), a dividend (returns 1x spend to current DXD holders), other products that are likely to return 1x spend. I don’t really care what - the important thing is that spend is likely to return >1x. This is just rudimentary logic - would you spend $1 if your expected return in future on that $1 is less than $1?

@Arhat

Neglecting it and neglecting the future, and focusing on the buyback is weird.

I think you’ve missed the point of the post entirely. It was as far removed from the buyback as possible. It focused more on your previous post implying that we are back to a world where DXD holders are reliant on product revenues to be the main value accrual mechanism we can count on. If this is the case as you imply, then we have to look at current and future product revenues; neither of which provide much comfort to DXD holders, and render this of extremely limited value. The point is to change this fact.

@Arhat

The DEX is literally the only one in the entire DeFi giving traders the peace of mind with regards to frontend attacks

I commend that, sincerely, but it’s not translating to anywhere close to what’s spent on it in fees, and that is the bottom line. The PMF isn’t there, and the revenues vs. the spend show that quite clearly. I appreciate that it’s not nice to hear, but I’m not sure how one can make a case against the numbers, and if the likelihood of recouping future spend on it is low (let alone turn a profit on future spend), then why continue to pour resources into it, rather than pour the cash, and more importantly contributor talent, into something which is likely to do so, based on pre-spend analysis?

So that I’m not misrepresented further, to be clear: I’m all for building products where it makes sense. I think DXgov, for example, is a key piece of infrastructure that could be widely used and adopted across the DeFi landscape. However, I think it’s negligent towards the DAO’s longevity and existence, as you put it, to continue to build products that are unlikely to produce a return on spend, so that the DAO can continue past the next 3 years. Otherwise, DXdao ceases to exist past 2025/2026 at the current burn rate. This should be concerning to everyone involved with the DAO, but especially DXD holders who haven’t received a dividend in 3 years, and essentially lose everything invested if no product revenues are produced in the next 3 years either.

If Swapr, or any other product, is going to produce a positive return on spend, great, but we should be showing an analysis of what the expected revenues are, when they are likely to begin, why we expect that (what’s going to change between now and then, with data to support), etc. before the spend occurs. I’m afraid, in my opinion, ‘Carrot is a true gem, v1 will rock’ is a prime example of a lack of rigorous analysis prior to spend on future expected return.

@Arhat

The community has achievements to be proud of and its portrayed as a total failure, with even worse expectations for the future.

Please, don’t gaslight me. My post merely highlights that money should only be spent when the future expectation for return is positive, and that I don’t think that analysis is currently happening. It’s a call for change, and improvement. If it’s not possible for people, namely DXD holders, to provide this kind of feedback without this kind of response, then DXdao will just continue to be an echo chamber for contributors. Further, the post was in direct response to your comments that lead me to believe that we are heading back to ‘DXD holders just need to wait for product revenues, be patient’, without any indication of what those expected revenues are expected to be, nor a track record of any product revenues to date. If you are calling for DXD product revenues to become a larger proportion of the value accrual mechanism than at present, then it’s obvious that those DXD product revenues are going to face greater scrutiny and focus in the conversation. You may think this analysis is quite frank, but you cannot argue with its grounding in reality.

tl;dr: Should we be spending money where expected future return is <1x? My post says nothing more than the answer to this question should be a resounding no.

@Arhat

The buyback is happening.

I’m not sure if something got lost in conversation with your insistence to bring your response back to the buyback; that was not the focus of the post - in fact, the word buyback does not appear once in its entirety.

[hughesconnor]

also, your data for Curve (and potentially other protocols, but I spotted Curve immediately) is wildly incorrect - see Dune for correct base yield on veCRV; but you also have to account for bribe yields, which are significant. I wasn’t sure what the point of highlighting those protocols was to answering the key question of whether spending for <1x ROC was ever sensible, but I thought it was important to correct the data regardless.

[Arhat]

It’s worth noting the runway isn’t only 3y, that’s the runway when ether is hodled. If the community doesn’t work to improve fundamentals, their vested tokens won’t be worth much. There is an incentive to improve roadmap and create revenue streams. If the goal is to buyback and cash out unvested dxd to usdc, then that’s different from running a business. I happen to see people dedicated to doing the right thing, and don’t want to share the negativity. Whether the community believes it will succeed or not, either way it’s right. When someone shares their honest opinion it should not be attacked. Stressed out people don’t work well.

[hughesconnor]

3y vs. 3y6mo based on if/when we sell ether, the point is the same. It runs out sooner rather than later if product revenues over the next 3y match the previous 3y. Hence the desire to change that outcome.

So, rather than addressing the issue and looking to change course, we’ll continue down the path of spending huge amounts on very little sustainable revenue, rather than assessing whether the current spend, and talent, is better spent/used elsewhere.

For a fear of stress.

Not to mention that you continue to pretend that this is about me wanting the treasury liquidated:

@Arhat

If the goal is to buyback and cash out unvested dxd to usdc

No, it’s not the goal, as I have repeatedly told you over many months, Nathan. Your persistent implication that it is is insulting, and part of the reason you may feel that my responses are negative - I have to put you right on this point very firmly.

I always go to great lengths, for your benefit, to repeat that spending the cash elsewhere, on products and activities that are >1x ROC, is what matters. This ‘liquidate the treasury’ strawman argument is only ever brought to the conversation by yourself.

Have a good night. Hopefully I can relieve the stress I’m feeling about my DXD trending to $0 over 3 (or 3.5) years if things continue on this path of refusing to tackle difficult issues until it’s too late, just because we don’t need to yet with a treasury flush with cash. Fingers crossed!

[0xSpicySoup]

Say whatever about text not being the perfect medium, but I think that the conversation has veered off course and isn’t productive.

@Arhat , Conor has himself been pushing to move away from the buyback to a mechanic that is more long term.

That discussion will take place in the DXD working group to brainstorm and hopefully produce a suitable long term mechanic.

The above proposal for a buyback is to cover the short to medium term until the outcome of the working group is implemented. Buybacks in this context are not a distraction but the actual topic at hand.

Why not constrain the discussion here to the structure and format of the short to medium term buyback; so that we can move it forward. And if you feel a revenue-only driven model is the best option for DXD you can outline your idea in the DXD working group?

That way the conversation at hand here isn’t railroaded.

[hughesconnor]

Fair comments. Last I’ll say on it, then: I am just not going to be made out to be some vulture looking to liquidate the DAO treasury when I have been continuously adding to my DXD position for 694 days now, with my first large buys bought at a price of over 0.7E, as well as engaging in discussions on how to best proceed for the benefit of the DAO and DXD holders throughout that time. The insistence to perpetually paint me out to be someone that’s seen a large treasury, bought the bottom, and now gunning for liquidation, is insulting, untrue, and breaks down any attempt at productivity - yet, it’s every single time any comment is made that tries to give DXD holders a fair shot at realising some value. This is repeatedly pointed out, but never taken on board by the indiviual, and gaslighting continues.

Said my piece, hopefully this time it gets through. Signing off & won’t be posting again on the matter until the DXD working group. Cheers

[JohnKelleher]

First, agree with @0xSpicySoup that makes sense to keep this thread scoped to its topic, and take other discussions to other threads.

But just wanted to say that as a long time Contibutor, REP holder, and DXD holder, I deeply appreciate @hughesconnor’s view points here, skin in the game, and desire to see DXdao have some honest self assessment, which I share.

I also appreciate @Arhat’s commitment and ever present optimism. He plays an important role in the community by always being ready to engage with DXdao community members across all DXdao communication channels. I also share his skepticism of the type of DXD holder the buyback might attract. That’s clearly not Connor though. See his post here.

Also for the record, there are roughly 3 years of runway at current burn rates when looking at stablecoins in the treasury (~$12M), but there is also over 12K ETH, which at current prices would well over double this runway.

[Powers]

I wanted to circle back here and drive towards consensus.

To recap, there is 51 WETH in the GP Relayer with two buyback proposals currently in boosted or pending boosted. The DXD Buyback Extension #9 proposal, which would extend for the last 107 ETH in the buyback reserve, is live on mainnet and Gnosis Chain. Depending on the price of ETH & DXD volume, that could take around 20 orders to get through, so I think it’s important to try and reach consensus and submit a proposal before the end of next week.

The proposal uses two different levers to try and get to a consensus solution. These are:

• Circulating supply - this is the numerator for a DXD/NAV calculation.
• Treasury NAV - the value of the treasury used for DXD/NAV calculations. Previously, this was ETH, staked ETH, Swapr LPs and Stablecoins.

For circulating supply there are a couple considerations & suggestions. @hughesconnor suggested that re-purchased DXD not count towards circulating supply, while @JohnKelleher points out that this DXD would be in the general treasury, where other DXD is not counted as circulating supply. Additionally, @0xSpicySoup & @hughesconnor suggest not counting the DXD that is vesting, which is around 2500 DXD that currently counts as circulating that would not.

For treasury NAV calculation, there are two new elements, 1. A total treasury calculation 2. Runway to be subtracted from NAV.

1. For the total treasury calculation, I agree with John that there isn’t much of a market price for SWPR, but in the event that SWPR token did 2x or 3x, I think it’s reasonable to expect DXD holders to partake in some of that upside. And if SWPR price did increase a bunch, that would presumably mean good things for runway. I don’t think this affects the treasury calculation that much (it increases it by $2m), but I think it’s important that DXD holders have an upside in Swapr’s success, especially considering it’s the only revenue source for DXdao at the moment. This also applies to DXventures investments, where there is not a clear value translated back to DXD holders.

2. Runway calculations. There is the runway number that can be adjusted ($290k) as well as the years to be subtracted (2.5 years, which would be $8.7m). Both of these are adjustable and curious to hear others thoughts

Also up for discussion - but seems like there’s agreement - is using 70% figure for circulating marketcap/ treasury NAV.

And then there are smaller things that can be adjusted.

The $500k authorization amount, for instance, should alleviate any concerns of a death spiral. This is not a blank check from the treasury, but a short-term fix to signal alignment and drive value to DXD. The proposal has $500k because the ADTV has dropped precipitously (fallen by almost 70% over the last six months), so the size was reduced to fall in line with that. There’s also a benefit to governance re-authorizing because it forces a conversation on the program. And the 3 orders over 7 days was a way to spread the orders out, given this program occurs in a different market environment than in 2021.

Given the new structure of this, I’m not sure it makes sense to commit to a long-term program @0xSpicySoup (the first buyback program was also just a one-off). But the proposal will surely set a precedent should this continue in the future, hence why it’s important to discuss the treasury/runway because it will form the foundation for future conversations. There is also an opportunity to include future commitments of DXdao, like the DXD Token Working Group. I will work on inserting some language that captures the current thoughts.

Discussing on Governance Discussion today!

[nylon]

Gonna be a bit controversial.

I’ve mentioned this in the latest community call – I don’t think DXdao should continue doing buybacks. DXD is undervalued and I think the market needs to realize this, trying to “interrupt with the free market” is in general a futile effort.

DXdao efforts should be focused on creating more value for DXD through usage and utility like DXD in holographic consensus, DXD staking schemes, value accrual methods and more.

As a long term DXD holder I think these buybacks are beneficial for short term speculators of DXD, and do not serve the long term interest of the DAO.

People who bought DXD have invested in the long term vision of this DAO, we are in the early-middle stages of building this vision. Those who are not interested in it and go ahead and sell their DXD. We should be confident in our ability to drive value to DXD in the mid/long terms, short terms don’t matter, especially during a bear market.

I just want to put this opinion out there, not trying to put any wrench in the works, but I think we should seriously consider additional buybacks.

[sky]

@nylon

“interrupt with the free market”

I am thinking that the goal here is not to “interrupt free markets”.

But if DXD is massively undervalued, why wouldn’t the DAO want to buy DXD at a very cheap price?

Is it undervalued? Is it a cheap price?

If it’s buying DXD from short term holders, is that ok? Then the short term holders leave, and only longer term holders have DXD.

Like I said on the today’s call, DXdao is trading ETH for DXD. Both are assets, both are likely undervalued. DXdao already has both.

So, I think a more important question is “what is more undervalued - DXD or ETH?”

Answering that can help drive decision making and paths forward.

[hughesconnor]

@nylon

We should be confident in our ability to drive value to DXD in the mid/long terms, short terms don’t matter, especially during a bear market.

Okay, me keeping my mouth shut was never realistic . But while I also agree that the buyback is not the most efficient method to capitalize on the current situation for the DAO, this is the angle I take issue with and feel strongly that I have to push back on before it grows - I think we’ve been saying this for 3 years now and I tend to feel like it’s quite a vague, wishy washy statement that allows for a lot of unintentional procrastination wrt delivering value back to DXD holders, especially given the current conversations in the forums surrounding sustainability, product revenues, etc. ‘We should be confident in the long term’ doesn’t really give much confidence to DXD holders, as it’s neither a plan or laying out measurable goals that can be retrospectively analysed, and unfortunately there has been little in the way of value creation for DXD holders since DXdao’s inception, other than the buyback - so taking it away without another concrete plan is unlikely to go down well. If we first lay out alternative methods to do this, then I think it is more palatable to DXD holders than stopping the buyback in the short term with an ‘in the long run we’ll deliver value’ message at a kind of take-our-word-for-it level, without a track record for doing so. Once an alternative proposition is in place, then I think your post makes much more sense. Otherwise, it kind of feels like 2020 again where a lot of DXD holders felt a little left hung out to dry with no give and take. Again, I’m not against stopping the buyback at all, but only once something else either complements it, or replaces it, that gives DXD holders a reason to hold/stake DXD. I think having the conversation to stop them first is the wrong way to think about things, just my opinion.

I also don’t think the bear market argument is really too strong, seeing as we weren’t doing the opposite of pushing super hard to deliver excessive value to DXD holders during the bull market. Again, I think compromise and give-and-take are important; being consistent with the arguments and narratives we make.

[0xSpicySoup]

On this point I’ve no objection to spreading orders and doing 3 over 7 days. I just want to make sure this commits to 3 buybacks a week. The way the OP was worded to just capped at max 3 orders in 7 days, but obviously could have been less. I’d like to have this clarified to no more and no less. So long as it’s reasonably possible to execute 3 orders, which in most cases it should be.

@Powers

And the 3 orders over 7 days was a way to spread the orders out, given this program occurs in a different market environment than in 2021.

Not to push back too hard but this but this bit seems a bit contradictory. We’re discussing making changes to the buyback format so as to avoid a death spiral where the treasury is drained by buybacks. But at the same time the value of buybacks are dropping considerably lower due to falling ADTV.

@Powers

The $500k authorization amount, for instance, should alleviate any concerns of a death spiral. This is not a blank check from the treasury, but a short-term fix to signal alignment and drive value to DXD. The proposal has $500k because the ADTV has dropped precipitously (fallen by almost 70% over the last six months), so the size was reduced to fall in line with that.

Wouldn’t that negate a lot of the rationale for changing the buyback format in the short term?

If the buyback size is currently low, dropping lower and unlikely to increase dramatically in the short term (and the buyback program is a short term one only); then there’s no need to amend to add a carve out for runway and revising the way circulating supply is counted.

If increasing ADTV in the medium term means there’s a potential threat of death spiral, then that suggests an intention to continue in the medium term (at least until a new long-term program is implemented by a DXD working group). In which case the changes to format are warranted but let’s confirm that short-to-medium term commitment to continue buybacks until an alternative is implemented.

I’d suggest the following points which to me seem like a moderate approach and compromise between DXD support and securing DAO needs:

1. Not counting DXD repurchased (after reserve is depleted) as having been removed from the circulating supply means a death spiral is no longer an issue (as buybacks wont drive NAV increasingly higher). Also not counting vested DXD.
2. Make a very conservative carve out for runway. Given the figure is adjustable (as runway can and likely will increase) and since it isn’t being suggested that assets outside of the carve out are out of reach of the contributor budget, the carve out should be for core operational costs only. i.e. Discretionary spending like travel stipends, e-sports sponsorships, grants etc. shouldn’t be included here, only operating expense for core teams.
3. Commitment to continue the buyback, in this format, until the working group implements an alternative. 500k or 1m for this proposal, either is fine, provided there’s a clear commitment that absent an alternative from the working group a new proposal will be supported.

We need to be clear that DXD holders aren’t going to be left to hang once a proposal expires, or that the levers @Powers highlighted aren’t going to watered down with each subsequent proposal. That just undermines confidence among holders and cuts the legs out from under the market.