SPS Governance Proposal - Convert Unused DAO Token Holdings into SPS
7f581a523c8e58a3df5a82652da9517d255b0c2c
Proposal rescinded.
This is a proposal for the DAO to begin turning it's unused tokens into SPS to remove counterparty risk, build up a store of SPS to be utilized for future rewards once the initial distribution phase ends, and to take advantage of the current price. The structure of converting these assets into SPS will be as follows:
Each week the DAO will convert $20,000 worth of unused tokens it owns into SPS via the SPS:BNB pool on Pancake Swap as long as the current price according to CoinGecko is below $0.02 per SPS token. This will continue until the price either rises above the target of $0.02 or the DAO has utilized all of the tokens listed below it sees fit.
As of the time of writing the DAO is in possession of 571,323 USDC & USDT, 296.36 ETH, 73,386 BUSD, 98.9 BNB, and 116,251 HIVE. The order priority for conversion will be as follows: First BUSD, then USDT, then USDC, then BNB, then ETH, and lastly HIVE.
This proposal will expire after 52 conversions or 2 years from the date of first conversion. At that point, if any desire or need by the DAO to continue converting tokens remains, a new proposal will need to be created and approved by the DAO. Any of the specified tokens not converted after the expiration of this proposal will remain in DAO custody until addressed by a separate proposal.
Personal thoughts and disclaimers:
This proposal is entirely my own idea and has no reflection on the wants or desires of the Splinterlands team or company (Steem Monsters Inc). I am not acting as an employee by making this proposal and the proposal should be viewed entirely from the perspective of me, as a significant SPS holder and long time Splinterlands community member, making a suggestion of how the DAO could more efficiently utilize its assets to offset counterparty risk, show that the DAO has faith in its own tokens over third party tokens, and build a stockpile of SPS that could fund rewards for years to come.
Personally I feel that any value held by the DAO that is not working for the DAO to increase the value of SPS is dead inflation. While DEC, the DAO's stable coin, is under peg, we are holding other stable coins that have counterparty risk. This signals that we have more faith in those tokens than our own. For the SPS DAO to succeed and DEC to reach and maintain peg, the SPS DAO has to operate as an SPS maximalist. It should value SPS and by correlation DEC being at peg above any other tokens.
I chose to structure the proposal this way to eliminate any large impact on the market and to de-risk the DAOs conversions by essentially making the DAO dollar cost average into SPS while it's below the target price. If the price rises, the DAO will continue to hold the tokens, which can be utilized and addressed by future proposals.
If the proposal were to pass, anyone could still come up with other ideas as of what to do with the tokens besides just holding them in the DAO wallets. They would have somewhere from 52 to 104 weeks from the time this proposal passes to get their own proposal passed and utilize whatever portion of the tokens remain at that point however the DAO sees fit.
The expiration is mainly for housekeeping purposes. 52 conversions maximum will help account for market fluctuations. The 2 year time limit means that if conversions start and stop due to minor price fluctuations over the target of $0.02 and back below it, there is still time to utilize the approved funds without need of a new proposal.
If you read all this, I'd like to offer my sincere thanks. Hopefully that indicates that you also care deeply for this ecosystem and want it to succeed as well. Whether we agree or disagree on how to get there, all I ask is that you keep the conversation respectful. Much love.
Thank you for participating in SPS DAO Governance @clayboyn!
You can place or monitor SPS Stake Weighted votes for and against this proposal at the link below:
Link to this Pre-Proposal
Updated At: 2023-09-28 07:23 UTC
Thank you for putting up the proposal, SPS is very likely never going to be as cheap as it is these days.
It should be in the DAOs best interest to accumulate as much SPS as possible and right now feels like the best time to do so.
I support this. To me its a simple concept:
Buy Low - Sell High
While I believe its smart to diversify at some point, the time to do so would be when prices are high, not when they are at all-time lows.
I believe in the long term opportunity of Splinterlands, and thus any chance we get to grab the governance tokens cheap for future distribution will get my vote.
This has to happen, we have no choice!
I’m not a financial man, so I can’t calculate the precise consequences of conversion, but as explained the proposal seems like a sound idea.
I do however have a question about the choice to convert ETH and HIVE:
Regarding ETH, wouldn’t it be prudent for the DAO to keep some ETH as a less volatile reserve?
Regarding HIVE, wouldn’t selling HIVE put pressure on the stability of the chain we’ve built SPL on?
Fair questions. Here's my thoughts:
I don't think the DAO needs or should ever have a backup plan. If the SPS DAO fails, there isn't much point in having a few hundred grand laying around for people to fight over when it'll just be too little, too late in my opinion. I left ETH and HIVE until last in the hope that they don't have to be used in this way, but as is they are just sitting in a wallet doing nothing. If the SPS DAO is a SPS maximalist (which it should be) it should value SPS more than either of those. If we as individuals value those tokens more than SPS, we should probably just buy whatever percentage of those makes us feel safe and not have the counterparty risk of the SPS DAO holding them for us.
That was a really good answer! You've got me convinced. I support this proposal.
I am for this and agree the SPS DAO need to be into holding SPS
I upvoted this post because I love that you are bringing this topic up.
However, I will be voting against this if it becomes an official proposal for the following reason.
I believe the DAO should be more concerned with DEC being at par value than with loading up on SPS. I would suggest that this proposal be modified so that the DAO would use the funds to buy DEC if its value is below 90% of par. If DEC is over 90% of par value, then the funds are used to buy SPS as put forth in this post.
So in my opinion the proposal should be modified to read like this. (Bold text are my edits)
This is a proposal for the DAO to begin turning its unused tokens into DEC and SPS to remove counterparty risk, build up a store of DEC and SPS to be utilized for future rewards once the initial distribution phase ends, and to take advantage of the current price. The structure of converting these assets into DEC and SPS will be as follows:
Each week the DAO will convert $20,000 worth of unused tokens it owns into DEC or SPS via the DEC:BUSD or SPS:BNB pool on Pancake Swap. If the current price of DEC is below $0.0009 according to CoinGecko, then the DAO will swap the $20,000 for DEC. If the price of DEC is at or above $0.0009, and the value of SPS is below $0.02 according to CoinGecko, then the DAO will use the $20,000 to purchase SPS. If DEC is over $0.0009 and SPS is over $0.02, then no tokens will be swapped for the week.
As of the time of writing the DAO is in possession of 571,323 USDC & USDT, 296.36 ETH, 73,386 BUSD, 98.9 BNB, and 116,251 HIVE. The order priority for conversion will be as follows: First BUSD, then USDT, then USDC, then BNB, then ETH, and lastly HIVE.
This proposal will expire after 52 conversions or 2 years from the date of first conversion. At that point, if any desire or need by the DAO to continue converting tokens remains, a new proposal will need to be created and approved by the DAO. Any of the specified tokens not converted after the expiration of this proposal will remain in DAO custody until addressed by a separate proposal.
I wouldn't mind a proposal to do something similar with DEC, but we have already no voted a DEC proposal. Personally I don't believe the DAO should ever own DEC and only burn DEC, so my proposal if made for DEC would likely be more contentious. Ultimately I see removing SPS or DEC from circulation as the same thing, so to me approaching it from this direction is more of a flavor change with a slightly different recipe. The end result should ultimately be the same. I do entirely agree DEC to peg should be the biggest priority of the DAO currently as it drives value to SPS. In the end I made the best proposal I could that I felt could pass, because doing nothing and sitting on these tokens is not adding value to SPS at all.
But why don't you want the DAO to hold DEC?
I addressed this on bulldog's proposal:
The DAO should never own DEC and burn any DEC it possesses. The reasoning for this is that the DAO can mint DEC with its own SPS tokens if it ever needs DEC. The DAO holding DEC is just holding its own inflation and pointless.
I guess we see this differently, I think it's pointless for the DAO to burn SPS to get DEC. Why not just have it ready to use for rewards when the time comes and SPS stops inflating?
Kill 2 birds with 1 stone, accumulate/remove DEC from circulation while it's below par, and stockpile it for reward payouts in the future.
Because DEC is not the reward token. SPS is. The proposal I'm making is to do exactly what you're saying. My point about the ability to burn SPS for DEC is just that there's no point for the DAO to hold DEC. It's like a bank printing money for itself and not even lending it out or investing it to make money, it's just got it sitting there because maybe one day it'll use it. It's just printed money inflating the circulating supply to no real end. Unless we move back to rewarding DEC for battles, then there's no reason to hold DEC. Unless you think SPS is going to be way lower than it is now in 3 years (or whatever the date that we run out of SPS distributions is) it would make more sense to hold SPS and then burn SPS for DEC at that point to award DEC for battles as you would end up with more DEC for a better conversion rate. It ultimately comes down to "do you think SPS or DEC has more upside potential over the next 3 years or so." DEC has a ceiling and SPS doesn't. If one fails they both fail. There is literally zero point for the DAO to sit on DEC for the next 3 years or so. Just burn it now and print it later if there's ever some hypothetical situation we need to spend DEC.
Basically I think you're getting things out of order. Let's get DEC to par, then everything else can follow logically.
Somebody has to buy up DEC for it to reach par, why not have all of us do it collectively by using our DAO funds?
As I've said, I'm not opposed to the DAO getting DEC off the market. Getting DEC to peg is critical. The problem is that I don't want the DAO to be buying and holding DEC. It should burn it. I also don't think the DAO can buy enough DEC to really move the needle, but it is what it is. We'll just have to agree to disagree I suppose.
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STOPGreat proposal. We needed something like this! Well though! Congrats
100% in support of this. Thank you @clayboyn for putting this together.
I like the sounds of this but also have a question.
Tokens in the DAO like HIVE for example it's still earning a APR on it right? or is everything liquid so there's no revenue generation and all of these tokens are just sitting around doing nothing?
If they are doing nothing that seems like a greatly missed opportunity to build the value of the account right now.
All tokens I linked to are liquid and the HIVE is actually SWAP.HIVE on hive engine.
i like this idea. The only part I am hesitant about is selling off HIVE... which is not only needed to transact on the HIVE blockchain, but is also the governance token of the chain SPL operates on. I personally think the DAO should retain (and potentially increase) its HIVE holdings.
That's why I have it last on the list. Hopefully it never gets that far, but if it does I imagine things will be looking pretty rough at that point either way.
I like the phrasing. The idea that the DAO needs to be an SPS maxi. Totally agree.
That said, I look at the response @holoz0r's proposal had (to sell stablecoins for HBD and use the 20% interest to buy up DEC) and I don't like our chances of getting this one through.
Letting the perfect be the enemy of the good - has become standard practice here; and we all have slightly different ideas on how perfection looks.
It is what it is, but I'm tired of repeating the DAO needs to care more about SPS than holding third party tokens and doing nothing with them. So far we've signaled that we'd rather hold those than our own tokens and that bothers me personally.
Totally agree. Ride or die :)
Looks good bro
i've been thinking about this for a while now, and although i sympathize with the dao collecting sps and us trading other people's tokens for our own.
I think this is the wrong way!
if the dao trades foreign stablecoins for their own stablecoin dec, good sign.
if the dao helps the system to bring the stablecoin dec to the peg, also good.
if the dao helps that the flywheel finally kicks in and thus the sps price rises naturally because the ecosystem cycle finally runs as intended, also good.
but if the dao simply buys sps permanently and thus artificially keeps the price high and obscures the true supply-demand relationship. and does nothing for the stablecoin to peg or that the flywheel finally runs. then i think this is nothing sustainable, but simply a price manipulation that feeds extractors and raises the price for the players/buyers....
If you have a better suggestion, make a proposal! I'd love to read it. I agree that DEC to peg is the priority, but I don't think the DAO can really solve that problem with its limited resources. I've stated my case for why I think the DAO accumulating SPS this way makes the most sense to avoid market manipulation and allow others to make proposals before the tokens are gone.
The buy pressure wouldn't be that serious and it's not enough to maintain a price point on its own compared to how much we are printing. To be clear this proposal has nothing to do with price stabilization of SPS, it's just a very opportune time for the DAO to accumulate imo. If people agree, the DAO will do so, if they don't it wont happen. I'm not going to have hard feelings either way, but we need to stop doing nothing and if nothing else, we've got the conversation going now!