BizDev Meeting - 26 October, 2020

Meeting date: MONDAY, 26 October 2020
CEST (Berlin): 4:00pm
Buenos Aires: 12:00pm
New York: 11:00am
Houston: 10:00am
Denver: 9:00am
San Francisco: 8:00am
Meeting link:

  1. xDAI DAO “Lower the parameters” proposals w/ Nylon
  2. @pulpmachina’s critique of DXswap

Feel free to suggest agenda bullet points

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Listened to today’s call. Great discussion.

There’s a few topics going on, I’d like to offer my take since you were asking for feedback. I am a pretty big DXD holder and pool LP, but not a rep holder. I try to take the perspective that what is good for DXD holders is good for REP holders and reverse.

Project feedback and process around DxSwap launch
i) Information is definitely a bit scattered between keybase, forum, telegram etc. (insiders/outsiders)
ii) Despite it feeling a bit harsh, the overall post was of very high quality and raised the discussion to a new level. You are very right to welcome quality critique into the fold. Some of the language in the thread was silly though, and you are also right to ignore that as noise.
iii) Well done on navigating the discussion overall, this is exactly the moments I know why I invested in this project, after my research. Governance proposals etc. is all progressing too, to help this further.

Using DXD from the treasury
i) I appreciate that worker proposals anchor the price at bonding curve, but I am not vested to that price in terms of what DxDAO can do with the DXD in the treasury.
ii) I am also not against using DXD from the treasury for partnerships, launches etc. It is there to be used. But I’d like us to be strategic and consider DXD a scarce resource we have in the treasury.
iii) I personally consider DXD to potentially be worth much more than 1 ETH one day, so I am not keen on us releasing 500-1000 DXD at 0.34 ETH to a pool direct to market. It won’t provide downwards pressure, but much more DXD will need to be traded in the secondary market before the bonding curve comes into play again. And as DxDAO I want new DXD to predominately be minted via the curve and hence support DXD with funding at +1 ETH per DXD, so this feels counter to our interest.
ii) Practically I would suggest a buying order at a competitive price to accumulate DXD from the market at lower than book value, supplemented by DXD from the treasury if need be. We are simply accumulating DXD at an amazing price for future use at a higher price. And yes, social signal matters!

Getting liquidity into DxSwap.
i) What we are really trying to prove here, is that DxSwap can be competitive. What I am not 100% clear on based on the current state of the strategy document etc. is exactly where we want to be competitive on day one, day 90 and day 365. Consumers or LP holders first? If we e.g. cater for consumers via better rates, we “hurt” LPs by reducing fees paid. This for me comes to the heart of the DxSwap launch discussion “Liquidity Pool Governance - Optimizing Capital Efficiency” (


Hey guys,

Had a busy past few days and was not able to participate in the 10/26 call. Is there a recording or notes available?

Also, has there been any attempt to organize in writing where we are with proposed solutions to the liquidity incentive for DXswap? Maybe during the call? If not, I’m currently putting together a list of proposed solutions that folks have made and my responses. I can post that doc and hope to get everyone else’s responses. At that point, maybe we can come to a consensus on solutions and draft a proposal for a vote.

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It was discussed in the meeting, the YT video is still available here @pulpmachina

I wanted to write a bit more today about the buyback idea, the more I think about it the more sense it makes to me from a DXDao perspective. Agreed it would be good to then collate and propose.


Following from my previous post, I wanted to elaborate a bit more on the way I see the relationship between the DxSwap launch, the approved proposal to release DXD from the treasury to support liquidity and @pulpmachina’s work.

I still agree with his original notion that releasing DXD from the treasury in the current situation is not a economically rational decision by the DAO, and I want to build on that. However, good philosophical points were raised too that I’d like to at least comment on too.

The following arguments where raised in the meeting:

  1. The DXD was minted for the treasury to use.
    While that is very true, the perceived utility is still open for wide interpretation. Say we start generating revenue for DXD holders (which is still the plan, last time I checked), that would also mean that the Treasury can increasingly fund its own operations and thereby giving the DAO a secondary revenue stream beyond the bond curve in times where the price is below the curve. Diminishing our DXD holdings significantly at this early stage may cost millions in revenue later, so the rational argument for releasing DXD from the treasury at 30% of the bonding curve price has to be that it drives MORE utility for that DXD than other alternatives (such as reserving it in the treasury for a time when it is more valuable to us, either in the form of price or dividends). This is also somewhat a counterargument to the idea of DXD “investors” thinking short term. I personally try to think value, price will follow. Releasing it “because we have the right to do” so is a poor argument to win me over here, and I’d further argue that DXD investors are rightly worried if that is the attitude to strategic treasury funds.

  2. If the price of DXD hadn’t tanked, this would be seen as less of a problem or issue.
    While I agree that short term price considerations shouldn’t stop us from putting DXD to use or into circulation, I prefer to use the Tesla analogy here. Tesla recently issued 5bn in new shares and diluted circulating supply when the price was record high, not record low. That’s why the bonding curve is so great, although I’ll get to how failing to do something a few months back during the boom to “fix” the curve likely has caused, or at least contributed to, the current situation. We should take responsibility.

Overall my thought is outlined below (not a formal proposal, so feedback and critique of this piece is very welcome) and it can then hopefully feed into @pulpmachina’s process outlined above.

DXDao should conduct a DXD buyback scheme. In part driven by the need to supply liquidity for the DxSwap launch, in part from a desire to do so without increasing circulating supply.

Why would we do such a thing?

  1. As a starting point, because DXD is severely undervalued. Currently it is trading at 0.31 ETH, a full 67% below the curve issuance price. Book value is considerably below 1 too, so we buy value.
  2. If we had a functioning bond curve, DXD price wouldn’t be where it is, as people would have been able to sell into the curve and burn tokens. However, this would have reduced the treasury holdings way below the current 21.74k ETH with it too. Instead the secondary market had to absorb all that excess liquidity. Philosophically a one-way bond curve is also not really a bond curve at all, as the price elasticity clearly goes away. We implemented half of it, the fundraise part, but now that supply has been overextended, we currently have no new fundraising in sight until DXD price does a 3x again. While there are “tons” of funds for now, I’ve seen startups only realise later what “no new fundraising option” really means. Complacency on this point, kills.
  3. Due to our bond-curve design, we now have a ton of excess liquidity, and a golden opportunity to acquire DXD at much lower price than the curve and take it out of circulation, just like a functioning bond curve would have done. Except we’d own it, alongside its future dividends and value appreciation.
  4. Social signal. We believe in the future of our products and of DXD to drive revenue. We’re putting our money where our mouth is. Simple, but effective. Price matters for participation too. We lost 15% of DXD holders last 2 months (from app. 1900 in early September to less than 1700 now). This hurts reputation, which hurts growth potential. Something like this would help rekindle the narrative I feel.
  5. As mentioned earlier, but worth repeating, we’d directly reduce circulating supply, thereby making it easier for demand to meet the curve again in the future. Future fundraising starts now…
  6. This should align all stakeholders. As I’ve argued before too, the treasury is the largest holder of DXD, we have a distinct interest in protecting the value of our currency.

How would we deduct a DXD buy?

  1. We’d want to buy DXD as cheap as possible, so in effect the best way to me is to mimic the bond curve effect, allowing people to sell into it. So we could announce a floor price (rationally determined based on book value etc. and passed as a proposal) under which we’ll purchase circulating supply.
  2. We set a floor price, a total ETH amount we’re willing to spend, and a time period for active buying.
  3. Others will probably have better ideas for how we could execute the buy technically, but most efficient in my mind would be a simple buying bot, so anytime price hit lower than x ETH / DXD we auto-buy in market, thereby allowing people to exit their DXD position to us, if they so wish.
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