SWIP-02: SWD Token Liquidity Pairing on DEXs

SWIP-02: Snapshot

Simple Summary

What combination of assets should SW DAO provide as liquidity for SWD SushiSwap and Uniswap pairs?

‌Abstract

‌This vote will determine the asset pairing for our backstopped liquidity. Options for backing our liquidity are 100% the SWD-ETH pair, 100% the SWD-USDC pair, or a 50/50 combination of SWD-ETH and SWD-USDC. Treasury asset liquidity will be promptly aligned to the 50% or greater majority winner identified in the outcome of this vote.

Motivation

As a community governed DAO it is up to the public majority of governance participants to decide what is the best avenue for providing liquidity in current market conditions. Since our current asset pairing was initially launched by the Founding Team it is fair and just as a DAO to present the community with such a vote. The decision the governance community makes in this vote can be re-opened at any time by the community if governance members feel that the outcome is not properly addressing the market conditions at that time.

As 100% of the DAOs treasury is currently being used to backstop liquidity the outcome of this vote can have a significant impact on the availability of funds in USD terms for the DAO to use. Such investments the DAO is seeking to make are growth-related initiatives such as marketing and web/mobile development.

Specification

Overview

‌Governance participants will select one of the following three options:

  1. “100% SWD-ETH Pairing”
  2. “50% SWD-ETH & 50% SWD-USDC”
  3. “100% SWD-USDC Pairing”

As per standard governance operating procedures, 20% of the circulating supply must take part in the voting, and the outcome will be decided based on which of the three options receives 50% or more of the votes.‌ In case of no option receiving 50% then we will have a follow-up vote 7 days after the conclusion of this vote between the top two options.

When a 50% majority winner is determined, the liquidity asset backing will be promptly changed by the DAO Treasury in accordance with such outcome.

Implementation & Rationale

100% of the SW DAOs treasury (~900k) is locked up in backstopping SWD token liquidity. The asset pairing that we choose has the potential to significantly grow or shrink our treasury fund size in USD value should the crypto markets rise or fall. SWD token price is highly correlated to that of ETH movement since the treasury is currently 100% exposed to SWD and ETH market price by backstopping SWD-ETH liquidity pairing. It is now up to the governance community to decide if it should stay this way or change.

Backstop liquidity with a 100% SWD-ETH pairing: if we are optimistic and bullish of the current macro-environmental trend. With this, we can hope to ride crypto prices higher which would provide treasury fund growth in USD terms.

Backstop liquidity with a 100% SWD-USDC pairing: if we are pessimistic and bearish of the macro-environmental trend. Doing so will reduce the downside effect in USD in terms of damage done to our treasuries holdings should crypto prices decline.

Backstop liquidity with a 50% SWD-ETH pair and 50% SWD-USDC pair: if we want to be partially hedged, or generally unsure of the macro-environmental trend. This will allow us to capture partial upside potential in USD terms if crypto prices increase, but also provide us with partial downside protection should crypto prices decline.

Copyright

Copyright and related rights waived via CC0.

This one seems like a no-brainer to me, 100% ETH all the way.

If the macro market gets bearish, we’re going to see maximum downside in terms of SWD token price regardless of what decision we make as we’re simply too small to fight against the tide. If things get bullish, we absolutely want to be 100% ETH.

If we’re going down with the ship regardless, no point voluntarily cutting off a leg trying to prevent it.

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