I agree on pricing it at NAV. In order to set the buyback size, maybe we should get a sense of the supply at this price level. Is there any way sellers can privately/anonymously send their orders?
Agreed - I think a good first step, which kind of kills two birds with one stone, is just to start keeping an actively managed OTC workbook again.
This will help manage the OTC activity more efficiently, and it will also allow us to get a sense for demand on both sides of the book which we can use to better inform any potential buyback activity.
I’ll be setting up a workbook and sharing it in the OTC channel sometime today.
Now that we have one month of additional data after setting up the workbook, what do you believe to be the path forward?
Takeaways from the OTC desk so far:
The bid/ask spread has tended to be very wide - I believe that has been an obstacle to some trades getting done.
Only ~15k to 20k of PRINTS have actually traded in the last month. I’m not sure if that’s a symptom of the wide bid/ask spread, or if it’s representative of the normal trading volumes in this market environment.
A fair amount of PRINTS have traded below NAV. I do NOT think that is a symptom of the OTC, as I know some of the sellers and they are well-informed market participants, not forced sellers.
Overall - I don’t think the OTC is functioning as a very efficient venue for trading, so I’d be in favor of a new method.
However - I think we should get a sense from the DAO as to whether liquidity is something that is actually desired. If it is, we should explore new venues; if not, then I think the OTC may just be sufficient.
In relation to the buyback discussion - my preference would be to search for a way to provide real liquidity, rather than do a programmatic buyback. I think buybacks should be reserved for one-off compelling opportunities - not programmatic and regular, particularly at this stage in the DAOs life.
Here’s a potential alternative to a DAO managed OTC desk that I think may have some promise:
I spoke with a company called Size today. They’re a protocol that manages token auctions to facilitate liquidity events. Traditionally, it sounds like they’ve been used mainly to facilitate liquidity for larger sellers - either a treasury selling tokens or a few large holders who want to sell tokens. They set up auctions and then allow buyers to participate in a sealed-bid format, thus facilitating a liquidity event and price discovery.
I asked them if it would be possible to utilize the protocol with a fragmented base of sellers, rather than one or two large sellers. The idea being we could have regular, recurring liquidity auctions for the DAO, where any seller could place their PRINTS into an auction contract, and on the other side buyers would set the price via a series of sealed bids.
This would act as a form of liquidity for DAO members and prospective buyers. It obviously wouldn’t be the same as constant liquidity like on a DEX, but it sounds interesting enough to at least keep pursuing.
It could work, can we have a trial period?
Can definitely check, I don’t see why they would be opposed.
One alternative usage by the way would be to use them to have one main auction to find a market clearing price, and then use that price to launch traditional DEX liquidity. Just another option.
My only concern regarding DEX is the need to provide liquidity, I don’t think we should be investing ETH on that at this moment.