Caney Fork downstaked all four of these proposals. The first two because they would send funds to the avatar. The other two were downstaked because they fall out of the scope from the recently passed Approve New DXD Token Model proposal and set a bad precedent for DXD monetary policy.
In the proposal approving the new token model that passed last month, the DXD Monetary Policy Framework’s first bullet point was:
DXD Floor Price Guarantee - DXdao commits to buying any amount of DXD on the open market
This precludes OTC trades in the new token model.
While this trade might be “good” for DXdao from a financial perspective, it sets a bad precedent because the OTC trade system is not a scalable model. Soon after this proposal was pushed on-chain, DXD holders contacted me about how they could submit their own OTC trade and what are the requirements. When using funds to purchase DXD, DXdao should have clear standards that govern the trades, and most importantly, allow any and all DXD holders to participate without favor. Using open market operations ensures that there is no Cantillon effect on DXD purchases.
Additionally, this puts a lot of discretion on the multi-sig signers and out of the hands of DXdao governance. There is an extra 5% included in case of price fluctuations and NAV will need to be recalculated by the multisig. This would mean the trade could be placed at a different price than what’s listed in the proposal. For a proposal with such a large size of funds, there shouldn’t be any changes to the NAV calculation post-passage. As a multi-sig signer, I do not want to be tasked with this burden (operational or legal). In addition to these decisions being made outside of the expected governance processes, this proposal does not clearly state how the signers will calculate NAV, and more importantly; when? At proposal passing or when 3 signers are present and ready to execute? Looking at the current proposals, there is $75k in payments to pass in the next four days, plus the beginning of the 1H2023 budgets disbursement. Presumably this would be reflected in the OTC order placed by the multisig, but that discussion and execution would occur outside of DXdao governance.
These issues arise from the fact that it takes time for proposals to go through DXdao governance. This isn’t solved by using a multisig. It only obfuscates the execution. With past buyback orders, these issues weren’t solved, but they were addressed and transparent for everyone to see, because it relies on a smart contract to execute.
Lastly, Caney Fork is downstaking this proposal because of the significant change in the treasury makeup. This proposal is suggesting using $3.5m stablecoins. Currently DXdao has $10.1m in stablecoins and $18m in ETH. As discussed before the proposal passed, the new model will likely lead to a contraction of the overall treasury size. DXdao and DXD holders are willing to make this trade off because it returns value to existing DXD holders, but whether these purchases are funded through selling ETH for DXD or stablecoins has not been decided. So, these proposals would lead to a significant change in the makeup of DXdao’s treasury that I think should be discussed more, hence the downstake.
Caney Fork voted for the New DXD Token Model and is committed to implementing it. The approval proposal passed exactly one month ago today. And since then, DXdao has purchased ~250 DXD for about $144k. And right now, there are nine proposals live with almost $600k in DXD buy orders. Additionally, two proposals are live to increase DXD liquidity on Swapr mainnet by $200k. These are just the initial steps, and all of these numbers should continue to increase over the next week. There is a $500k “liquidity order”, which is basically a limit order, that will pass in 12 days, and the current plan is to do one of these every seven days (in addition to smaller, fill or kill orders). These are not new smart contracts, and I’m confident this can scale, while maintaining the trustless and permissionless ethos of DXdao.
Outside of these efforts, there are other options that would be better.
First, member balancer has been used for a number of times over the last two years, and is permissionless and trustless for DXdao governance. Any DXD holder can do this and REP holders serve as the price oracle.
Second, Mesa works completely fine. There is a trustless relayer (GP Relayer) that can be used for an oracle. I wish more time went into implementing these trades through Mesa than into the redemptor contract. If this is the preferred option and if DXgov/3ac cannot, I can investigate a solution.
Lastly, if none of these options are preferable, and if a multi-sig facilitation is the only way, I would suggest a proposal where the multisig would set a limit order for any DXD holder to be able to sell into. This means it needs to be clear in the proposal when, where and at what price the DXD buy order will be placed.
