Liquidity Proposal - this is an updated proposal based on feedback from the original proposal to execute a manual buyback. The main goals are largely the same:
- PRINTS tokens are currently inexpensive vs NAV, and buying them back for the DAO should be accretive to value for all token holders.
- Allows sellers to easily exit their positions and facilitates the shift of the token into the hands of longer-term oriented holders, helping create a more stable token price
- Helps create a more liquid trading environment for the token, which will be helpful as the DAO shifts some compensation out of USDC and to the PRINTS token
- As the pool matures, it should also make it easier for new members to join the DAO
In total, we propose budgeting 80 ETH for liquidity.
We propose placing 40 ETH into a Uni v3 pool to provide one-sided liquidity at a maximum price of 0.001 ETH/PRINTS. Uniswap already has a pool with ~14k PRINTS (not provided by the DAO), so buy-side liquidity already exists. However, there’s little to no ETH in the pool currently (and thus no sell side liquidity). Placing ETH into the pool will allow us to achieve the goals above in a controllable environment.
Rationale for the price range - average traded price over the last two months was 0.0011 ETH/PRINTS based on Etherscan DEX transaction data (~25k total PRINTS traded in this two month period).
Rationale for the amount - the OTC desk currently has ~15 ETH of sell orders (at a price ~0.0015 ETH), and the past two months have seen DEX volume of ~25 ETH. It’s extremely difficult to know how much volume will hit the pool before it’s set up, but based on the two datapoints above I’d expect 40 ETH to be sufficient to absorb any selling, particularly with the reserve (discussed below)
NAV as of 9/8/22 was ~0.0019 ETH/PRINTS, making any token purchases by the DAO significantly accretive.
We’d also propose reserving an additional 40 ETH to be used to help manage potential volatility or to be deployed opportunistically to support the pool - eg. if selling pressure escalates, the DAO can step in with the reserve to buy back tokens (essentially fulfilling the same purpose as the original buyback proposal).
I’m going to spend some time seeking out experienced Uni v3 LP operators to see if I can get some insight on how to best structure and operate the pool, as well as potentially get an idea as to whether the amount of ETH and the price range being discussed seem reasonable, and will post updates here.
Edit: I also want to add some detail on how this impacts the treasury. Current balances are as follows:
If the entire amount of 80 ETH were to be consumed via the pool + token repurchases, it would comprise ~15% of our ETH balance. Our stablecoin balance would not be affected.