After discussing the scope of the previous proposal at length, we would like to break it down into a number of smaller ones. Each proposal will have a clear deliverable, and will represent a pathway towards our DAOs working closer together. Token swaps will be used, small at first, between API3 (the native token of the API3 DAO) and DXD to ensure economic incentives are aligned. This represents the first proposal.
Proposal timeline
3-6 months
Details
This proposal is for a MVP of the technology behind API3’s dAPIs, the Airnode. The aim will be to enable markets to be settled by a single Airnode connected crypto price API. Note that the finished dAPIs will use multiple APIs to settle, rather than having a single point of failure - this is a MVP, designed to allow both parties to make sure further integration work is mutually beneficial.
The ability for users to settle markets using this price data API will be made available on xDai Omen. API3 DAO will provide a bounty of $5k USDC to the markets attracting the highest volume within a defined period ($3k to the market with the highest volume, $1.5k to the second place, and $500 to the third placed market). Traditionally, testing integrations like this would be done on a testnet, but prediction markets need “skin in the game” to work. To recognise this, $20k USDC will be reserved as a compensation fund in the event of problems (this is different from the insurance fund for dAPIs as described in the API3 whitepaper).
To begin aligning financial incentives between the DAOs, a token swap will be made for $5k worth of API3 and DXD tokens to signal the long term intent. The API3 tokens in the swap will vest over three years as per the “Team & Partners” schedule, but are able to be staked to allow governance during this time. API3 is happy to agree to a similar vesting schedule for the DXD provided if necessary.
Deliverables
Provide a single Airnode-enabled API to xDai Omen, to be used as an option to settle markets
Provide prizes to the markets with the highest volume using the Airnode-enabled API as a settlement method over a set competition period
Provide $20k for compensation in the event of problems
Swap $5k API3 with $5k DXD, exact token numbers to be determined at the time of proposal passing.
This would be floating market price, given that the curve is currently paused (or intended to be).
In addition to this, the price is currently (as of today) 0.15ETH at market price, but >1ETH at curve price, and the intention is to swap a fair value of tokens from one DAO to another to equally align incentives for the long term.
DXdao is in a special situation atm.
DXD is trading below its own balance sheet NAV.
So DXD holder might argue that the right option will be for DXdao to use 5k$ worth of ETH to remove DXD from the market and use it for the partnership.
Instead of inflating DXD supply by 5k$ worth.
Yes, we were intending for it to be market price (I think we agree here, so I’m not sure why the follow up - maybe I wasn’t clear), which would benefit DXD holders the most. Paying curve price would not be a fair token exchange, in my opinion. From the API3 side, I would not be voting in favour of a proposal that values DXD tokens at ~6.5x market price (curve price) in an exchange with API3 tokens.
Ultimately - although I have mentioned that this would be a second proposal, I think if the numbers of tokens to be exchanged are not agreed then this second proposal (for the token swap) would simply not pass. I would rather this not affect the idea of making new data sources available to Omen, or delay work on this any further.
Ah, okay - I understand now, sorry. We were intending for it to be market price, for the reasons I’ve stated, but I guess the issue is whether DXdao buys the DXD for the swap using ETH, or transfers DXD from the treasury directly. I think this is probably a decision for DXdao to make, which could be done through a rough consensus of opinions on the pre proposal thread, then the proposal using either ETH + DXD purchase or DXD transfer directly?
The aim for these token swaps is to signal increasing alignment of incentives as the integration progresses, so while this first one is relatively small, this could become more relevant if larger swaps are planned in future - maybe it makes sense to have this discussion on a thread about the token swap proposal, because it could be a template for future ones. API3 have swapped from treasury to treasury before, so I hadn’t considered the buying off the market angle.