Replenishing GEN in DXdao

DXdao governance relies on holographic consensus that uses DAOstack’s native token GEN as a form of quorum management. Its designed to incentivize users to stake on proposals that they think should be fast-tracked and voted on by REP holders. Once a proposal has a GEN stake above a minimum threshold for 24 hours, it becomes ‘boosted’ and can pass with a simple majority. This is used by DXdao on mainnet as well as xDXdao on xDai (using xGEN).

The system relies on a downstake bounty of GEN (or xGEN) supplied by DXdao to incentivize stakers in the system. If a proposal passes that a staker boosted, they receive their initial stake as well as a the downstake from DXdao. This GEN came from DXdao’s launch, when some REP was auctioned off for GEN.

This initial supply is running low. On mainnet, there is only 39,000 GEN in the treasury but 10k of that is set to be sent to Sky for a member balancer. On xDai there is only 5k xGEN and that doesn’t account for the ~25k of GEN that DXdao is “in debt” to community stakeholders who have deposited xGEN (disclosure: Caney Fork is one of them).

The long-term plan is to move towards DXD for staking, but that seems several months off, at least for mainnet and xDai, so the question is what to do about the low GEN balance and the DAO debt?

The answer is for DXdao to acquire more GEN (and xGEN), likely at least 50k additional in each mainnet and xDai base. There are two ways to do this:

  1. Using the GP Relayer or the multi-sig to purchase GEN - the relayer would be very difficult bc there’s no GEN in GP Relayer v1 on mainnet or xDai. We would need to set a high premium to ensure GEN on the order books. The multisig would not be able to purchase that much GEN without high slippage.

  2. Member balancer where stakeholders can deposit GEN or xGEN and request WETH or Dai in return

#2 seems to be the most logical and easiest to enact. We’d need to come up with a price conversion for the member balancer requests. Would a 1% premium be enough?

Anyone in the community could participate but it would be great if some DXdao community members that have large stacks of GEN participated so that DXdao and xDXdao could easily reach the 50k in GEN deposits?

I think a signal proposal would need:

  • Who can participate, presumably everyone, maybe just REP holders?
  • The price premium for GEN and price source (1% seems fine)
  • A maximum amount of GEN that can be deposited with a WETH/Dai return. (50k GEN seems fine)

Thoughts?

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A member balancer sounds better as a first try. 50k on each network seems fine. 1% premium is kind of low. We could use 1inch for price. We could propose a signal to approve both anyone and rep holders, with agreement to do a first round with rep holders only and then open to anyone if needed.

This should be a pretty simple issue to solve and Member Balancer was created for this.

Actually the whole point of Member Balancer (and why it’s called that) is to keep an identified balance of some asset equal to an identified target amount.

See post from December 2020 DXdao Treasury Management Tool - “Member Balancer”

In this case, we would identify via Signal Proposal that xDXdao always wants to maintain a Target of 30k xGEN in xDXdao. Anytime the amount drops below that target, Member Balancer kicks in and there is a sliding incentive to provide xGEN to xDXdao and receive back ETH.

The smaller the deficit, the smaller the incentive. The larger the deficit, the larger the incentive.

This creates a natural Balance that allows for harmony, and outstanding economic incentives to automatically fill a need for DXdao.

If the community is interested, I/we can design the exact specs for achieving this harmony with xGEN in DXdao.

This would be a great first use case in action of the true Member Balancer, that would then provide a model for how to replicate the mechanism.

Definitely agree that this fits the model for Member Balancer. We may change the GEN targets though, because I think xDXdao would need to maintain less because the original 50k xGEN target was assuming that it would be used over the coming months, but member balancer would make it stay at the level for the foreseeable future.

It’d be great to push this through @sky . I guess the things we need to identify are:

  • Target amount for xGEN in DXdao and GEN in DXdao. I’m thinking 20k for xDXdao and 30k for DXdao?
  • A ‘premium’ price and price source. I like the idea of a ‘sliding incentive’ - how do we implement that?

We could get this started on xDXdao relatively soon (where the need is more dire).

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