SWPR token - next steps

0xVenky · February 27, 2023, 1:22pm

As the market begins to stabilize and more people adopt Swapr, it’s time to consider how to best adapt SWPR to this evolving landscape. With an increasing number of new holders and a growing community of Swapr users, we need to explore what the next steps for the SWPR token should be.

SWPR fee collection and ownership transfer.
SWPR fee distribution and buybacks
Seamless bridging
Requesting DXdao to add liquidity
SWPR emissions

Swapr fee collection:
Since the launch of Swapr, we have collected a total of 9.56 WETH and 25,433 XDAI in fees.

On the mainnet, we collected 2.4 WETH from the address 0xa70b1bbf4f162c5e751895e2fb53cad8eccb84d9b7f99b70da85295fa70ac08e. In Arbitrum, we collected 7.16 WETH which is currently in the avatar. And on the Gnosis Chain, we collected 25,433 XDAI, with details of all the transactions that collected the fees available on the chain.

In addition, there are approximately 12.5K uncollected fees in the new Gnosis chain Fee Receiver. We can collect these fees by making a proposal to the DAO.

To achieve this, we can transfer ownership of the takeProtocolFee function to the Swapr MS. This will enable us to initiate buybacks of SWPR in the Gnosis chain using the collected 9.56 WETH and 25,433 XDAI.

Additionally, if we allow transfer ownership of the FeeReceiver to the Swapr safe MS, it will allow us to schedule automated take protocol fees without having to create proposals across different chains.

Transfer ownership of feeReceiver to Swapr Safe MS to make the fee collection faster
Transfer the collected fees to the Swapr Safe MS in gnosis chain.

Swapr buybacks / fee distribution:

During the initial launch of SWPR token, it was suggested that 30% of the tokens be allocated to fee distribution, and 70% to the Swapr treasury. However, the SWPR guilds required to stake and claim fee distribution are not yet available. As an interim solution until governance is established, I propose using the fees to buy SWPR and using them for new emissions. This option is the most straightforward, and will be a temporary measure until we have a proper governance system in place.

Once we have established governance and the necessary guilds to stake SWPR, we can start exploring how to perform fee distribution. To achieve this, we can use the DCA tool to create vaults that regularly purchase SWPR from the market. These purchases will be made every day / hour, with the swaps randomly spread out over a period of 60 days.

In parallel with this, we should start collecting ideas and initiating discussions on how to distribute the 30% fees. One possibility could be to stake SWPR over a vesting period to receive fees in native tokens.

Initiate a buyback strategy on the collected fees and use the DCA tool (stackly) built
Initiate discussions around how the 30% fees should be distributed in the future
Initiate discussions around SWPR governance

Seamless bridging:

To enhance price stability and boost liquidity for SWPR, we could consider partnering with bridge providers to enable seamless bridging between Arbitrum, Mainnet and GnosisChain. Swapr could take a fee of 0.1% to 0.25% on top of the bridge fees LPs whenever SWPR is bridged.

Partnering with bridge providers would help increase price stability across different chains and encourage more holders to move their SWPR tokens to the Gnosis chain, thereby enhancing liquidity to help with the above-mentioned buybacks.

Some potential bridge partners we could consider are Hop, Socket, Li.Fi, LayerZero, and Connext. However, we would need to investigate each one to ensure they align with DXDao’s vision, mission, and long-term goals.

To move forward with this proposal, we could create a SWPR snapshot proposal to gauge the opinion of SWPR holders on the idea. Based on the feedback received, we could then proceed to identify and integrate with a suitable bridge partner.

Create a snapshot proposal to gauge the interest that the SWPR community has.
Work on identifying who we can utilise for bridge integrations. Welcoming the Swapr and DXdao community to provide inputs.

Requesting DXDao to add liquidity:

DXDao currently holds a significant amount of idle SWPR. To further support buybacks, I suggest that DXDao provides additional liquidity to SWPR-XDAI pairs on the Gnosis chain and SWPR-WETH pairs on Arbitrum. As of writing, the total value locked (TVL) is around 13.7K USD, comprising 120K SWPR and 6.6K XDAI in the Gnosis chain.

To increase liquidity, I propose that DXDao adds 200K worth of SWPR-XDAI to the Gnosis chain. The current trading volume on the SWPR-XDAI pair is very low, with only 200 USD of depth at a 2% spread. Increasing liquidity would enable more price discovery and potentially attract more arbitrageurs to take advantage of price disparities across chains.

To achieve this goal, we could create a snapshot proposal with DXD holders to gauge their support for DXDao to add liquidity on both Arbitrum and Gnosis chains. We could offer a range of options and let the community decide. If the snapshot proposal passes, we could then create a proposal to the DAO to add 200K worth of SWPR-XDAI liquidity.

On Arbitrum, the current TVL is 75K (23WETH and about a million SWPR). I would also request DXdao to add 35 WETH and about 1.5 million SWPR into the SWPR-WETH pair in Arbitrum to increase the depth of the pool.

SWPR emissions:

Given the need to provide clarity on SWPR emissions, I suggest that we initiate a new set of emissions at a rate of 40K per week. These new tokens will be distributed to accounts that provide liquidity and trade on Swapr pools. To help us decide on which pairs to incentivize, we invite the community to share their preferences with us.

Specifically, I propose that we allocate 25K SWPR per week for Arbitrum and 15K SWPR per week for the Gnosis chain. These emissions will continue until any new changes are proposed by governance.

I would also like to hear suggestions from the community regarding the possibility of organizing a trading competition for the incentivized pairs. The competition could reward the top 100 traders on Swapr pools with 5K SWPR as a prize.

Next steps:
This post will be open for community feedback, recommendations, changes, and opinions for approximately one week before it moves to a snapshot proposal. The snapshot proposal will be created for the first two sections, which are related to SWPR fee collection and buybacks, to allow the community to vote on them.

Caden · February 27, 2023, 9:41pm

Why not use the fees for LP incentives directly without exchanging tokens?

That would save on slippage costs, but most importantly, save valuable contributor time.

0xVenky · February 28, 2023, 8:06am

Hey Caden, Interesting thought!

I believe that providing incentives through emissions with SWPR is a better way to increase the distribution of SWPR token. Currently, the price of SWPR is too low to effectively govern making it vulnerable to governance attacks. DXDao also has about 85% of the total supply and to decentralize the token and expand its reach to new communities, emissions with SWPR is the right way to do this.

This would require less effort from contributors compared to using multiple tokens for emission planning, calculating fees received, taking them out and then using them for new emissions.

rossgalloway · March 1, 2023, 5:35pm

Intro

I appreciate that the discussion around Swapr and the SWPR token is restarting and this it is one of the more important conversations that DXdao can be having. But, I am of the opinion that there are a lot of un-considered assumptions that are not being explored to the extent that they should be. Below I am going to broach them.

The Elephant in the Room

The biggest unquestioned assumption is that the DAO benefits from having a SWPR token at all. DXdao is actively trying to figure out the future of Swapr, how it will tie into the larger goals of the DAO, and how to achieve that. In many ways, the token is a distraction and burden on that work.

It is often considered “common wisdom” in the space that if a project launches then it needs a token for incentivizing use, to fund itself, and to allow it to be governed in a decentralized way. While this may be true for many projects, I question whether it makes sense for Swapr and what the value of having a SWPR token is to DXdao. Swapr does not actively use the SWPR token for any of these use cases and therefore has a weak reason to exist.

Incentives

The SWPR token has been used for incentives over the last year, with varying results. Swapr attracted a fair amount of liquidity when it was providing incentives, but how much of that has stuck around after the incentives dried up? How much value in SWPR tokens was distributed and how much was earned (~$40,000). Token incentives are very powerful tools and they can drive a lot of eye balls and users to products, but they are expensive. Given that the broad strategy for what Swapr is trying to achieve is still being worked out, we should ask ourselves whether spending money to incentivize use without knowing what use is valuable going forward.

The other consideration is that DXdao already has a token that it can use to incentivize use: DXD. There has been a fair amount of work in the last year to craft a sustainable, effective token model for DXD. While there would be pros and cons of using DXD as an incentive token for Swapr, it is undeniably a viable option.

Funding

Most projects that distribute tokens also use them to fund development on the project. As far as I know, no development or other work has been funded using the SWPR token. This work has instead been funded directly by DXdao with it’s treasury funds and DXD tokens. While there is an argument that this funding is in service of the SWPR tokens in the DXdao treasury, this relationship is tenuous. If the SWPR token isn’t used for funding then it probably isn’t needed for it.

Governance

Every project has a “valueless governance token” and every project is trying to make it valuable without running afoul of regulators and speculators. Governance is a legitimate use case for tokens, and if Swapr needed robust governance and didn’t have any other tools for governance then it would make sense to have a governance token. But Swapr has not needed governance in the last year. The infrastructure hasn’t existed and there have been barely any votes and everything has worked fine piggybacking on DXdao’s governance system.

Almost all the functions of governance that would require a SWPR token have been done by DXDao governance participants. This has worked perfectly fine, which is no surprise as most Swapr participants are aligned with DXdao or are in the DAO. Cutting out DXdao governance and moving to SWPR powered governance will make active governance of SWPR harder since there will not be a stable set of governance participants (and those who do participate will most likely be the same who participated before)

I wonder if there aren’t other governance models to explore that provide value in ways that a general token like SWPR (or REP/DXD) can’t. For example, one of the main value propositions for Swapr is the ability for pools to set their own fees and be governed by their communities. A monolithic token governance model does not provide that granularity, but a governance model that uses LP tokens themselves would be. Each Swapr liquidity pool itself could be sovereign and govern the parameters of that pool (fees, incentives, etc). There may still be a governance use for a larger SWPR ecosystem token in an example like this, but it would be constrained. And with LP token governance, you could still make large scale changes but with the Gov-2.0 model where both DXD holders and LP token holders have a say.

Speculation

I realize that the SWPR token has recently had a spike in volume on Arbitrum and has been called out by people looking for “Arbitrum gems” but I personally worry that this as fool’s gold. I would be interested to see how many people who hold SWPR also provide liquidity on Swapr or trade on it other than to buy (or sell) small amounts of SWPR. I would be surprised if the vast majority of the volume is pure speculation. Swapr on GnosisChain has 10x the volume of both Arbitrum and Mainnet. This tells me that GnosisChain is where Swapr makes money.

What would getting rid of the SWPR token look like?

If the DAO decided to sunset the SWPR token, how would that even work? The simplest way that I can envision is to set a price at which SWPR is always redeemable for DXD and then create a contract that is funded with DXD and allows permission-less one-way redemption. DAO owned liquidity would be withdrawn and treasury SWPR would be burned.

There would be no need to change anything else for the time being. People could continue to use it, trade it, and do whatever they want with it, but the token would simply stop being used by the DAO. Fees and other income earned by Swapr would be sent to the treasury unless another plan is developed.

Direct Responses

Fee Collection

This seems like a step back from just having DXdao control these functions and contracts. Using full on-chain governance seems much more robust than delegating this to the Swapr Multi-sig.

If these funds went back to the DXdao treasury, they would benefit the DAO directly and benefit DXD holders who can redeem them for treasury assets.

Buybacks

I question the value of these buybacks you mention. DXdao has funded the work on Swapr, but a buyback returns almost no realizable value to DXdao since it is politically difficult for it to sell its tokens. The fact that the DAO cannot sell the tokens generally is a big problem with holding them in the first place. All of this complexity goes away if Swapr fees go to the DXdao treasury.

There are lots of arguments on twitter and around the space around whether AMMs should have fees above and beyond those that go to LPs. Those are discussions worth having, and I don’t see Swapr’s added fees hurting it in the market. But if there is going to be a fee that goes to some entity that isn’t the LP’s risking their funds then it needs to go to the entity that is funding the development and maintenance of Swapr, and that is DXdao. right now Swapr token holders add no value to the ecosystem. If we start paying them via buybacks for doing nothing then they are a value drain.

Seamless Bridging

I’m not sure I follow the logic here. Why is it valuable for Swapr tokens to be easy to send to multiple chains? Is this part of the “staking on pools” idea? If so, shouldn’t we have that scoped out before trying to make a decision about this?

I don’t really understand why having a governance token spread across multiple chains is a good idea. Cross-chain messaging means that you can perform governance on one chain and execute on others. Providing liquidity is an important goal, but trying to provide it on all chains and also provide bridge liquidity as well is going to be expensive for what gain?

When you say “partnering” what does that actually entail? Is the bridge going to be actively helping Swapr or is this just a question of which bridge we should promote and provide liquidity on?

Swapr Liquidity

Is it better for there to be a bit of liquidity on both Arbitrum and GnosisChain or should it be focused in one place so that buyers and sellers can go to one place and know they are getting the best price?

You mention that you want to attract arbitragers, but from an LP standpoint that is the opposite of who you want to attract. Arbitragers take money from LPs. LPs do better if there is only one venue for an asset and their venue is where price discovery happens.

Are we getting value from our main liquidity venue being on Arbitrum? Is Arbitrum planned to be the main governance hub for Swapr?

Finally, it is important to note that while the DAO has plenty of idle SWPR, it cannot provide liquidity without pairing with other assets. This is not news, but it is a cost that the DAO bears for this liquidity and would not need to be borne without a SWPR token since the DAO already has to provide liquidity for DXD.

Final Thoughts

Swapr is a project at a bit of a crossroads. It needs to figure out its positioning in the market and its strategy moving forward and using that knowledge can assess whether it actually needs its own token. If the answer is yes, then the properties of the token and elements around it can be fine tuned. If the answer is no, then Swapr should move to sunset the token in a fair and manageable way.

refri · March 1, 2023, 10:08pm

Although I see your point, as a plain user of swapr (more liquidity provider than trader) on gnosis chain and arbitrum, it disappoints me a bit.
This should have been discussed and decided by the DXDao before launch of the token.

I used swapr already before token airdrop, but for sure the token aligned me much tighter to swapr, therefore I can not agree to:

Cause at least the first point (incentivizing use) was done and, at least in my case, effectiv.

And I would be happy if the other functions a token could have, will also evolve, although you are right that it might not be necessary if the governance structure of DXDao will remain the one to hold this.

Regarding myself, not very familiar with the other parts of DXDao, I am not sure if this would feel like the right place for me.

But stepping beside my own wish: DXDao, as the largest swpr holder, might benefit from giving the swpr token value in the same way, or even more, than to deprecate it.

However, imo this should be disussed and decided by the DXDao first, before continuing discussion about the future use of swpr.

Hope the project succeed anyway.

0xSpicySoup · March 2, 2023, 10:42am

Agree on almost all points here.
Thanks Ross

0xVenky · March 3, 2023, 10:59am

Hey Ross, Thanks for your inputs.

DXdao made a decision about fractalisation of the DAO to sub squads and guilds to provide autonomy to them. I think we were able to achieve that only very recently where we have a base working version of DAVI that each guild is using. DXdao made a decision to release SWPR token and I think it makes sense to be in alignment with what was committed to the SWPR holders in the initial token model.

I agree to this that SWPR is a distraction. I would rather spend energy to make Swapr better than sitting and figuring out how to bring value to the token. But I think it is a decision for DXDao to make and how this will also affect all the other products that will be coming out of DXDao.

Swapr did incentivise the initial set of campaigns with DXD and WETH and it was rather successful. But it is not a viable option. If we need to make a decision to deploy Swapr on a different chain. I dont think it is a viable option to ask DXD holders to be able to distributing DXD for incentivising Swapr. I, as a DXD holder wouldnt like my DXD seeing the market as an incentivisation token.

I dont know what you mean by robust here It is already delegated to a multi sig like structure. In Arbitrum, our robust governance works like a 1 of 5 Multisig (3 of those have already left the DAO). The FeeReceiver is a EOA wallet currently and is not governed. This post wants to move towards an accountable structure and a gradual step towards using DAVI for any onchain execution.
In Gnosis chain, we always used the dev multisig to create farming proposals because it was never feasible to wait 5 days to create a farming proposal, stake upto 8000 to 10000 GEN because holographic consensus on 10 parallel proposals would increase staking limit. So, I am not too sure what you call a robust governance system here.

I agree we could use DXdao governance for funding of guilds and other high priority and critical items. But I dont see a reason why we should use this everyday for a daily buyback that is easier to schedule. If this is supposed to be done in our governance, I can create 50 proposals running buyback everyday basically stopping all of DXDao’s other governance proposals.

I think DXDao made a decision after Liscon 2021 that we will have ERC20 guilds that will solve all the governance problems, but we found there are limitations to this. It is not built for multichain and it is not built for LP governance.

Just because there was no governance in the last year doesnt mean there will be nothing in the future. How many DXD holders are voting or signalling in DXDao governance? Should we call that a failure as well since there were no DXD holder taking part in DXDao governance?

I would love to have SWPR holders perform these kind of actions like takeProtocolFee, updateSwapFee, initiateBuyBack, setContentHash using snapshot that tells an oracle about the result of the vote and in turn either SAFE or DAVI execute proposals based on the oracle response.

Swapr always wanted to have LP governance, but at the current scope of DAVI, this doesnt seem to be possible and I think there are better LP governance models that has come out with Solidly and Velodrome. Swapr could take a look into this, but at the current capacity and availability within Swapr guild (only 3 devs), this might be a big ask. We didnt work on LP governance earlier because DAVI was going to be implemented for governance and it made no sense for 2 squads to work on same product.

I think these should be thought through by DXDao before launching a token. Now that it is launched and it is in the hands of thousands, DXDao cannot backtrack and say all the fees is mine. As a DXD holder, it is very sketchy for a DAO to release tokens making promises and then doing something else.

I dont really understand what you are getting at here. For us to do buybacks in Gnosis chain, we should have better liquidity and there is about 75% circ supply in Arbitrum and about 20% in Gnosis chain. The only way to get this liquidity is to go through mainnet and is pretty expensive. Cross chain messaging is great, but I dont think our current ERC20 staking contracts can work with having tokens in Arbitrum and running campaigns on Gnosis chain. The UX is already pretty complex and if we want to add cross chain messaging on top of Carrot and SWPR, this is going to be bad UX for Swapr and insanely difficult for users to get their head around what is going on.

I know you have questions about why we should do buybacks, but this post talks mainly about adding value to SWPR holders and the fair way to provide simple value accrual is buybacks with the fees and then work on governance.

I think I mentioned about price discovery here, the arbitraguers provide this price stability across chains. I do not think it is right to say that they take money from LPs. As a LP, I will be happy to see the volume in the pair that offsets the IL.

There are no plans here, I wish SWPR will be fluid enough to be able to find its place on multiple chains just like SUSHI or LINK.

I think DXdao really needs to work on what it does with the products. It needs to show the community how committed it is to building the products. With the influx of liquidity, DXdao can decide what is the LP fee they would want to keep and at 3% LP fee, DXDao only needs to make 3M in volume in SWPR pairs to get the investment back and hopefully drives the product traction.

Finally, I like the discussion here and for bringing up right questions. I would request you to make a post about what you are thinking about sunsetting SWPR and then how that would work for DXdao, DXD holder, Swapr funding and SWPR holders cos this is a dynamic that I cannot wrap my head around.

rossgalloway · March 4, 2023, 9:02pm

Thanks for the thorough response!

I want to make clear that I don’t mean to be accusatory or imply that the questions I raise are a jab at the Swapr team or guild. I believe that Swapr has been successful and the initial vision was built out effectively and professionally. It is precisely because it was built out according to the initial vision that we can now look back and see whether or not the assumptions made at the beginning of the project still hold or whether they should be re-evaluated. This is an opportunity!

That is why I have tried to keep my comments high level and look at the big picture before trying to judge the best way to make smaller decisions. In that spirit, It doesn’t make sense to me to say “DXdao made a decision a year and a half ago and now we just need to act in alignment with that decision,” especially if new information points to the original decision no longer being optimal.

I agree with you that this is a decision for DXdao, and it is my understanding that what we are doing right now is how DXdao makes decisions!

Why is this question different for DXD holders vs SWPR holders? If DXD holders aren’t willing to incentivize a product that they own, then maybe the incentivization strategy itself is what needs to be questioned. DXdao owns half the SWPR, so any incentives paid in SWPR as still largely borne by DXdao. Paying incentives in SWPR is less effective because the token is far more volatile and has an even more questionable value proposition than DXD.

This is a fair response and I admit I don’t know the ins and outs of how Swapr is governed and managed. It would be helpful to have more context around the current structure so that those of us who aren’t super in the weeds can understand what the changes entail.

I agree that the day-to-day operations should not go through full on-chain governance. But I’m not sure why buybacks would be day to day events instead of intermittent ones (i.e. monthly) that are not a burden on governance. How much revenue is earned daily and does it warrant such short interval buybacks?

I didn’t intend my comment as a jab. I’m unclear as to what the problems are that SWPR governance solves that cannot be solved without it. The SWPR token doesn’t seem to help with LP governance or multi-chain governance. I’m not calling SWPR governance a failure, I’m saying it appears unnecessary based on the current state of SWPR. After the bonding curve was shut down, DXD also became functionally unnecessary and that is only now slowly being fixed. Maybe SWPR can just be fixed too?

Has there been any public discussion around LP governance models? What are the trade-offs and which are preferable? What are the potential blockers for them? The DAVI team have their hands full building their front-end and incorporating Gov 1.5. It seems unrealistic to me that they will also be able to build out a new governance model for Swapr too, especially if there are competing models and there is no spec on which one to use.

It just feels to me like Swapr governance is in this weird middle ground where it has half a governance system that doesn’t really do the things anyone wants, but still exists enough to cost time and effort. There is an opportunity to look hard at what kind of governance would make Swapr better and/or unique and either focus on that or get rid of it until it makes sense to focus on it.

Well, the horse is out of barn now. I agree that DXdao should have thought harder about the need for a SWPR token, but there is not much to do about that now. But I disagree with the rest of what you wrote. DXdao would not be rugging SWPR holders in any way. They would have the right to exchange SWPR for DXD at a fair price as determined by DXdao governance, which they can then choose to redeem or hold. They would gain whatever governance rights all other DXD holders are and further strengthen DXD’s distribution. Plus if all fees go to the to DXdao treasury then DXD holders (which includes anyone who exchanges SWPR for DXD) can directly benefit from the fees by redeeming.

This just seems backwards to me. In service of “returning value to SWPR holders,” which is a questionable proposition at best considering the small amount earned and small expected amount to be earned in the near future, DXdao is going to need to provide a bunch of liquidity in both bridges and LP pools. It is going to need to fund work on staking contracts to pay token holders who add no benefit to the system all while not being able to realize that value itself.

I can do that, but this seems like a good spot to talk about these things. If there were another post that dove into the overall strategy around Swapr and the SWPR token I would post there. But I haven’t seen that. And so if DXdao is going to put time, effort, and money into incentives, liquidity, and other initiatives it would be nice to know why.

Who is Swapr’s target audience and do the incentives reach that audience?
How is Swapr going to be incorporated into a larger DXdao strategy and how does this liquidity and the incentives help drive that strategy forward?
What value does SWPR token governance provide for DXdao and how does it further the vision and strategy that both the Swapr guild and DXdao are working on?
Do these initiatives and incentives benefit Swapr users?

0xVenky · March 6, 2023, 12:59pm

Hey @rossgalloway , Have tried to answer to the best of what I could.

I dont mind DXD incentives. Ultimately, the DAO decides, so if we can have a snapshot vote towards DXD holders if they would like to see DXD being incentivised and a weekly emission cycle, we should be okay. In fact, am actually hopeful that having DXD emissions would probably increase the liquidity in Swapr for some of the pool.

Comparing it to SWPR, I feel both are different scales. SWPR is released to incentivise new emissions and accrue value by buying back. And we should be making enough fees so that whatever we do emission, we buyback atleast 70% of that. DXD is raised for a different purpose and to build decentralised products. I think having a token that does one primary thing makes it easier to understand for the users and the community.

Its a personal thing that I probably prefer automated buybacks. Having to do this through the DAO is not very automation friendly and probably more expensive as well in terms of time spent. Even if it is only 100 USD worth of buybacks, I would just be happy that there is an automated solution that runs this instead of trusting an individual to do this for us. Masterchef from Sushi is pretty good and basic that suits this purpose.

A buyback at the current stage is to first run a takeProtocolFee and then bridge to a chain where there is enough liquidity, do a buyback. I think we will do this the same way that DXD does its buybacks in addition to collecting the fees and bridging it to a network with most liquidity. So, every buyback means 3 different executions on a single chain.

DXdao does the bridging through multisigs and I am not too sure if there is a way for the DAO to do bridging if we dont use multisig.

Not that I know of, I am not best to ask for about governance, maybe someone in the community can help us out here. All I know is that LP governance that we had in mind when Swapr was built looks a bit archaic now and there are better solutions out there that could very well be used. We need to have new discussions around what suits us best with low effort-high impact-fast delivered.

I meant that this is a new change to what was voted on. If the change has to be done, we need to have a new vote to decide what is the way to move forward and how the fees collected until that date will be used. Because buying back SWPR for about 50K is almost buying back 25% of the circulating supply of SWPR.

I think the 18% reserved for SWPR treasury (18M SWPR tokens) can fund the bridge with 1M SWPR on either side of Arbitrum and Gnosis chain. This shouldnt be accounted as coming from DXdao.

The liquidity for LP, yes, it does come from DXdao and we could get a signal vote on whether DXdao should add liquidity to Swapr pools or not.

I would like to believe that Swapr’s target audience is anyone that wants to perform a swap finds the best price with Swapr. I think we give more value than we get. I feel that based on what I have seen from the past, Swapr should slowly move away from being an AMM and work towards offering best tools for people that use DEXes. I will try to explain these tools and how this could bring revenue in a seperate post.

The incentives currently are towards whoever that provides liquidity and I think it fits well with that. I would also like to give this to the users that comes in to use Swapr for swaps as well. I think trading competitions are better sellable and in turn generates more fees to Swapr and to the LPs.

We will figure this out when DXdao comes up with a strategy and a plan forward. I think adoption and cashflow is a key metric to solve for DXdao. I think Swapr and the suite it builds will hopefully increase adoption and bring more cashflow to the table if DXdao markets its products right.

SWPR token governance should be providing governance for SWPR token holders first. DXdao can take part in it with the 50% SWPR it has. Plus, DXdao building the governance tools could be used in SWPR governance to test out the waters. For instance, SWPR was the first token to provide conditional incentives to test on for Carrot and I am pretty sure SWPR governance will be the first product used by token holders for the guilds. I think the value the SWPR provides DXdao is actually showing its potential projects about how it uses its products internally to be able to sell them better.

I would think so, we will know about it when this hits the votes. Else, it will just me rambling and the community thinks something else. Right now, we do not have a lot of users evident from the data that we see from usefathom. We will see if the incentives benefit Swapr and its users only when we run new emissions and see how the growth is.

Thanks again for the questions!

rossgalloway · March 7, 2023, 9:12pm

Thanks for all these answers and thoughts. Although we may have veered off from the initial post, I believe this conversation has been productive and will give readers a better understanding of Swapr and broader DXdao governance. To summarize some of the high-level points and questions we’ve been circling around:

How does Swapr governance work, and how are the different technical pieces needed for it organized and implemented? The original post focuses on the latter, assuming that the former has either been figured out or will be in the future. However, it’s important to explore and determine how Swapr governance should work before deciding on any specific implementation or strategy. What powers over the protocol should be given to SWPR holders or DXdao Governance versus LPs versus making them immutable?
How does Swapr fit into the larger DXdao strategy and ecosystem? This is both a product and token question. What role do DXdao members want Swapr to play? Is it fully integrated or spun out? Who pays for development, and who is the primary market for Swapr? Will it remain retail-focused or pivot with the DAO to become more community/DAO focused? How does a separate token help or hinder this? The answers to these questions will have a direct impact on how Swapr governance is best structured, how it’s funded, and what’s prioritized.
Who makes these decisions? This is the most significant question. There is no CEO or CSO empowered to make these decisions. In the end, we are the community and DXdao. Everyone with REP and/or DXD should be involved, but it’s naïve to think that any decisions will get made without leading the conversation and proposing clear solutions. It’s important to encourage a culture where everyone is invited to participate, but not rely on an undefined “everyone” to get things done. With the new Guild governance and budgeting process, DAO contributors are empowered to come up with solutions and present them in an understandable way to the DAO voters.

Swapr set out to be a decentralized, governance-enabled AMM protocol. It has succeeded in creating a robust and well-functioning AMM that adheres to DXdao’s ethos of building unstoppable, uncensorable products. While it doesn’t have its own governance system working, it has been built and managed by a decentralized team operating under, and funded by DXdao.

Now is the time to step back, review where Swapr and DXdao are, and determine where we (those who care and participate) want them to go. All stakeholders can be included, but leadership entails setting forth a vision and then convincing others that it’s a good one. We all have the opportunity to be leaders and craft a stronger vision together than doing so alone.

I would like to a part of crafting that vision and will collect my thoughts and present them to you and the community to further discuss and dissect.

refri · March 7, 2023, 11:30pm

Thanks for all the discussion and the many topics that have been laid out, ofc very important issues that have to been discussed and decided on.

As a person from the outside, a plain user, I like to add another, imho important point.

Which role should the users of swapr play in future governance?

If DXDao likes to manage swapr by itself the swpr token is clearly unnecessary overhead.

If however, DXDao sees a value in the engagement and opinion of users of swapr, the token needs to stay. Cause it was distributed by airdrop and liquidity mining to users and most likely accumulated by ppl in the expectation it will give them a say on further development of swapr.

Giving DXD in exchange to swpr holders might be an exchange that can be financially neutral or even beneficiary but it will never give the same weight in voting power, but dilute this to negligible amount.

Also I doubt the usual swapr user will get used to the DXDao governance structure soon, especially if he is mainly interested in swapr and not all the other activities.

In summary: deprecate the swpr token will remove the users from governance, this must not be bad, but it should be said as it is.

0xSpicySoup · March 8, 2023, 3:05am

What’s the counterargument to the following?

DXdao ceases funding Swapr
DXdao burns it’s stake in Swapr or transfers to a Swapr guild, fully handing over control of Swapr to the external tokenholders
Swapr holders are invited to determine themselves how best to fund development and invcentivise growth

The downside from forgoing DXdao’s stake in Swapr would be pretty quickly offset by funds saved for development and operations elsewhere.

Swapr tokenholders get increased ownership of the protocol and it’s future revenue. If future revenue prospects aren’t attractive viable, then DXdao shouldn’t continue funding indefinitely anyway. If they are viable and attractive, it should be possible to raise external capital for development and operations.

0xVenky · March 8, 2023, 8:23am

Its interesting thought. When Swapr was launched, it did mention that DXdao would be using the 50% allocated for DXdao to be used in partnership opportunities. It didnt mention in details, but I think the idea was DXdao would be able to partner with projects by doing DAO2DAO collaboration where this partnership will be able to further the DXdao’s presence in other areas. I feel some partnership with vested token swaps with any wallet provider, zkgovernance, marketing and growth studios might be a good way to include. We could even use Carrot to lay out the terms of the deal and have an exit deal clause if this doesnt work out.

It would also be good for DXdao to do these kind of partnerships with its other products that it makes the partner to be invested in the growth of the product, DXdao and decentralization in general. Guess this needs a radical change in approach to the way DXdao business teams should work and have a biz owner that will be able to capture these sentiments and act upon. Right now, DXdao doesnt have a biz owner like how product guilds have product owners and the way they are set up.

rossgalloway · March 8, 2023, 5:53pm

Personally I think this would be a slow death sentence for Swapr.

Currently Swapr relies on DXdao for funding and development, but the current token and governance relationships don’t reinforce this. The proposal that you posit, as well as one to sunset the token, are both attempts to clarify that relationship. Your idea clarifies it by “setting the project free” and forcing it to be sustainable in the short term. Removing the token clarifies it by accepting that it isn’t sustainable in the short term and cutting away the token and governance as a distraction in service of making it sustainable as a piece of DXdao.

This is the crux of things. From what I have seen, the people who make decisions and drive Swapr forward are the Swapr Guild members and other DXD and REP holders. Maybe if there is a forcing function, others will start to participate more actively. But like almost all crypto projects, decisions ultimately get made by those who are paid to make them. This is why funding is so important.

I personally don’t see a viable path for Swapr to seek outside funding. Funding rounds across the space are tight and valuations are dropping. Swapr would need to develop a new product or strategy to attract interest from investors as I don’t see how anyone would want to invest in a V2 fork with some added governance. Just look at the post about mStable. They are shutting down because their runway is disappearing and they have no avenue to raise new funds. It is a tough market out there.

Without funding, Swapr would need to rely on revenue and tokens to pay for development. There is almost no revenue and its unrealistic to expect much in the short term. Paying in tokens turns those who contribute into your investors and they will either need a strong value proposition and a high premium with vesting or will simply dump to oblivion to pay costs. This will further decrease runway in a potential death spiral.

Swapr’s future success is tied to DXdao’s. The sooner this relationship is made clear, the better it will be for both parties. DXdao, as an organization, has an opportunity to lead and show that it can manage costs for its products as well as develop a workable model for funding new innovations. DXdao should commit to funding the upkeep of Swapr and aggressively look at how it can be developed and improved to support the DAO’s mission and vision with an eye for breaking even in the medium term.