DXD Buyback Program [Signal Proposal]

Below is a signal proposal to approve a DXD buyback program that will repurchase up to $1m of DXD on the open market as long as the value of the DXD’s outstanding circulating supply is greater than the book value of the treasury. If the proposal passes, this announcement can be referenced with all relevant details.

Background

REP holders launched DXD last year through a bonding curve smart contract. In this design, only product revenue drives DXD value accrual; DXD holders do not directly benefit from a rise in the value of DXdao’s treasury. This will change in the upcoming Governance 2.0 design, but the recent appreciation of ETH in the treasury has distorted the relationship between the economic value of DXdao and DXD.

Simultaneously, the long-term prospects of DXD and DXdao are strong, with a well-funded treasury and an emerging, diversified product suite. DXdao is set to launch an OMN token with Omen Guild governance capabilities, Swapr is rolling out on multiple chains and Mesa prepares for a v2 relaunch. DXD is positioned to rise in value over the coming years as these products and DXdao’s assets generate cash flow.

The community has debated the prospects of a DXD buyback for several months on calls, Keybase/Discord and in the forum. The community has reached soft consensus to move forward with the buyback program as a way to acquire an undervalued asset and reward DXD holders for the rise in the value of the treasury. This process can be carried out on Mainnet or xDai. In the future, DXdao may use a different relayer and on-chain method to complete the purchase.

Details

The community has been working to enact the buyback program in a decentralized and transparent manner. Voting FOR this proposal signals support for the creation of the DXD buyback program as outlined below and in the supporting documents.

This announcement lays out the conditions of the program. To briefly summarize, DXdao is committed to purchasing up to $1m of DXD on the open market as long as the book value of the ETH and stablecoins in the treasury is larger than DXD’s outstanding circulating supply. These trades will be executed at a price that is 2.5% above DXD/ETH TWAP price at time of execution and will not exceed 25% of average trading volume.

Trades will use a Gnosis Protocol Relayer Contract (“GP Relayer”) deployed by the community to complete the trades. Each trade requires two proposals. One to send the ETH funds to the GP Relayer, and then a second proposal to set the order using the funds in the relayer at the price determined by the specified oracle. This technical explainer goes into greater detail on how the GP Relayer works.

Risks and Other Considerations

This is the first time that DXdao is considering purchasing DXD on the open market. It’s also the first time DXdao has used the GP Relayer on Mainnet. It has been audited and tested on xDai. There are additional risks given that this is a market trade that relies on an on-chain action.

This buyback program represents new ground for DAOs and DXdao intends to be as transparent as possible. The following documents have been created to provide additional information and context:

Disclosure: I (Caney Fork) hold DXD

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[Edit] Updated links in announcement and technical explainer docs with the new relayer addresses

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Signal Proposal has been submitted and boosted on main net

And xDai:

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I’m really in favor of executing a buy back.
DXD holders deserve it given the huge treasury and depressed price of DXD.

I suggest to not specify in the proposal the specific execution solution for the buyback.
Execution on GPv1 might turn out to be suboptimal or unavailable at some point in the future…
And anyway the main signal is whether DXdao should do a DXD buy back or not

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@cmagan I am pretty sure you meant to say execution on GPv1 might become unavailable. And definitely; it is clear that Gnosis is focusing on GPv2 and DXdao needs alternative means of executing the buyback besides GPv1.

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Completely in favor of a buyback as it inherently adds value to DXdao by repurchasing assets for below their book value. This is one of the easiest ways to generate value for everyone and the treasury already possesses enough assets for many years of runway.

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yeah, sure GPv1… fixed the original comment