DXD OTC Offer to DXdao

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There was a large limit order to sell DXD at 0.275E from a wallet that has been continuously selling DXD over the last few weeks and is now out of ammo. I have bought this DXD for the purposes of making this proposal.

This is a price I feel comfortable adding more DXD at, but also am conscious that one of the DAO’s goals is to maximize value accrual for DXD and holder decentralization.

I would like to offer this tranche of DXD that I have just bought to the DAO, for the price I bought it at. If the offer is not taken within a 1 week discussion period + time taken for a proposal to pass, then as above I’m more than happy to add it to my DXD holdings for long term value accrual. For the avoidance of doubt, this is an offer to help the DAO out in its efforts to buy back DXD at as low of a price as possible, minimizing value leakage. In the past, large limit sell orders have been swept up, retracted, or moved higher once it’s clear that the DAO is eating chunks out of them and no other persistent sellers are present in the market, hence my action of buying the DXD before creating this discussion. Further, @dlabs posted the first GPv2 (Cowswap) order today (exciting stuff!), and it had an execution price of 0.29E. A third party arbitrageur then bought DXD from mainnet for 0.275E, and sold it on Gnosis Chain for ~0.29E, resulting in value leakage. Buying at a flat rate of 0.275E is almost certainly going to result in a better execution price for the DAO.

With the recent positive developments surrounding the DXD Working Group over the last few weeks, I imagine this will be seen as a favourable price for such a large volume of DXD.

The exact numbers are as follows:

280 DXD bought for 77 WETH, transaction visible here.

Pending feedback and discussions here, I’ll send the DXD to the treasury on Gnosis Chain and submit a member balancer proposal to claim the WETH (also on Gnosis Chain). If the member balancer proposal for the WETH failed (signalling the DAO would rather not engage in the OTC deal), I’d then submit a follow-up member balancer proposal to reclaim the DXD. If anyone has any alternative recommendations on how to execute, would be welcome.

(Note: If ETH drops below $1275 before this is sent to proposal, then I’m just going to keep the DXD. :stuck_out_tongue: )

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From a value and ease-of-use perspective, this makes a lot of sense to me. For the last six months, buyback orders have averaged 0.301 ETH/DXD. And then to acquire 280 DXD through proposals through cowswap would take ~12-15 proposals. So this would speed things up, which could help make up for some of the missed time in switching to Cow Protocol.

In terms of accounting, these purchases could fall under the already passed $500k of buybacks from the general treasury as this DXD price is significantly below the 70% Treasury NAV Ratio threshold laid out in that proposal.

Member balancer seems easiest, although i guess you could put it all as a limit order on cowswap on gnosis chain and then there could buy a buy order proposal. Regardless, i think the proposal needs to link to the on-chain transactions and the Buyback proposal that authorized it.

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Update: There were a few lingering GPv1 orders on Gnosis Chain from the old buyback method; I’ve cleared them with help from Adam and Dave to get the solver firing again, so the DAO has bought a chunk of this already, rather than having to wait for those orders to expire to recover the ETH.

Updated position is:

52.47 ETH, 190.8 DXD, 0.275E/DXD

I’ll give it a full week for feedback, so 3 more days, before sending the DXD to the treasury and submitting a member balancer proposal for the ETH.

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Close enough; I’ve bought the borrowed ETH required to pay my loan and will keep the remainder of the DXD for my personal holdings as ETH has dropped since making the post.

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