The DXD Buyback Program has been in operation for more than 15 months and is approaching an important milestone. Currently, there is 109 WETH in the GP relayer to carry out buybacks as outlined through the Buyback Extension Proposal #7. That proposal also clarified accounting practices between DXD purchased from the general treasury and DXD purchased from the buyback reserve.
The 109 WETH in the GP Relayer will deplete in ~15 days depending on pace of orders & price of ETH. Once that depletes, there will be 107 ETH left in buyback reserve to purchase DXD under previous conditions (assuming it’s extended). After that, the previous proposal committed to continuing “at up to 70% of NAV, so long as this calculation accounts for runway and future funding for product development.”
The buyback program was intended to communicate a commitment to DXD from DXdao governance. Originally, some thought that just putting a couple orders in would convey this message, and then investors would bid DXD to NAV value. Instead, DXdao has purchased 14,000 DXD; REP holders have clearly signaled their commitment, even as the development for Gov 2.0 continues.
Currently, DXD is trading at $542 on Swapr. Accounting for the buybacks, which contract circulating supply, and DXD issuance to contributors or Swapr LPs, which expand circulating supply, DXD has an estimated circulating supply of 38,517 DXD, which gives DXD a circulating market cap of $20.9m. The current value of ETH, staked ETH, stablecoins & Swapr LPs is $32.8m. So, colloquially, DXD is 64% of NAV.
To note: the market has moved considerably over the two months, since the last Buyback Extension was submitted in May, ETH and BTC are down ~40% and projects have begun bracing for “crypto winter”. DXD, meanwhile, outperformed both ETH and BTC and DXdao is well prepared for the bear market with its diversified treasury.
While a long-term value accrual model for DXD is high priority, we should be mindful of competing priorities. Considering where the DXD token is compared with competing projects and with the increasing price of DXD in ETH terms, it is no longer an obvious choice. The Buyback Program also centralizes DXD to an extent. More in the coming days on long-term value accrual.
- Extend for the last 107 ETH to be purchased from the Buyback Reserve. This could come from mainnet, or it could come from WETH on Gnosis chain.
- Burn the DXD acquired from the Buyback Reserve (when finished, should be around 11,500 DXD)
- Provide $1m of DXD/ETH liquidity on mainnet, plus raise the LP fee to 0.4%. Now that DXD/ETH price has recovered, providing liquidity is less risky. It could also allow DXdao to earn fees, while executing the buyback now comes with a ~3% fee for slippage. This could stabilize the market until a suitable mechanism is put in place, such as the 70% NAV from the General treasury as mentioned in the previous extension.
These would be three separate proposals and the DXD burn could only be done after the Buyback Reserve was depleted (to know the amount to burn).
Thoughts? Maybe something to chew on while in Paris?