RE: SPS Governance Proposal - Convert Unused DAO Token Holdings into SPS
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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.