✅ [RFC] - Addendum to DTOP Liquidation TDP

Simple Summary

TDP 36 (DTOP Liquidation) proposed and resolved in favour of liquidating the position the Asset Management subDAO holds in DTOP and swapping this token for CVX.

This RFC proposes to reconsider the swap part of the proposal as CVX token price substantially increased (more than doubled) in the last three weeks and DTOP position liquidation turned out to be paid in a mix of synthetics productive (sETH, sBTC) and non-productive (sUSD) assets

Abstract

On the 28 of March 2022, following TDP 36, the Asset Management subDAO liquidated its DTOP position composed of 180,210 DTOP and obtained in return the following tokens:

  • 1.2481 sBTC ($56,509)
  • 6.3214 sETH ($21,211)
  • 71,497.5762 sUSD ($71,388)

DTOP Liquidation RFC was originally published on the 7th of March 2022. At that time Convex token (CVX) price was $15.30. When the DTOP liquidation was executed, CVX token had gone up to $31.08 i.e an increase in the price of +203% compared to the first publication**.** At the time of writing, CVX token is $38.11 which represents a +249% increase compared to the original publication date

Please find below data from Coingecko highlighting these specific moments in time.

While CVX potential upside can be substantial in the short term (CVX is still 40.4% down from its ATH), it is proposed to keep the synthetic productive assets obtained from the DTOP liquidation (sBTC & sETH) in the Asset Management SubDAO while still swapping the 71,497 sUSD into CVX.

Indeed, the unexpected outcome of the DTOP liquidation enables the Asset Management SubDAO to get a long-term exposition to very resilient native tokens

Specification

The Asset Management SubDAO will perform the CVX purchase with 71,497 sUSD opportunistically & notify Meta Governors at the completion

The price range targeted will be an +30-70% increase from the original RFC publication price which gives a wide $19.89-26.01$ price range

  • If CVX enters the aforementioned range, it should be immediately bought
  • If CVX never reaches the aforementioned range, it should be bought regardless at spot price at the latest 1 month after the vote of this proposal

Motivation

  1. The Asset Management SubDAO will still take a $71,497 position of CVX and get the benefits described in TDP 36 as well as potentially staking it

  2. Total current market value of these highly productive assets is $77,720 representing only 2.089% of the AssetManagement Sub DAO holdings

  3. Create exposition to the best risk/return assets (ETH, BTC) the Asset Management SubDAO Treasury could get over an extended timeframe

Next steps

It is suggested that the community comment on this RFC in the coming days, and bearing no significant opposition or change in ideation, we would move ahead with this RFC in the coming week and create a formal draft proposal on Github to be used for the review.

Meta Governors are encouraged to provide as much feedback as possible until then, so we can create the best possible outcome for mStable and its users.

I would like to propose a slight alteration:

  1. swap sBTC to sETH
  2. swap sETH to regular ETH (no reason to have sETH over ETH)
  3. Allocate the ETH to icETH

The sUSD I think could just be used to what you propose.

2 Likes

Generally in favour of this proposal, and I agree in part with @dimsome that we should utilize the assets in a way that make them productive.

I am against simply swapping BTC for ETH, as BTC has proven to be the gold standard when it comes to diversification into crypto, and still the entire market pretty much follows BTC and not ETH, so I see no reason to give up the entire position for ETH at the moment.

I’d be ok with a middle-way approach though, like entering the 50/50 WBTC/WETH pool on Balancer, as this will give us the proposed hedge into ETH, while also making the allocation productive and gain us additional BAL to be used in the ecosystem in the future.

Agreed on both the proposed sETH and sUSD use. I think this is a cool way to make ETH productive in a leveraged way and diversify more while taking a very bullish stance on ETH overall.

Thanks for your comments @dimsome

Re-1
I feel like this move is about long-term expositions to productive assets of which BTC is a great contender imo. I’ll propose this exposition to be evenly distributed (50% ETH, 50%BTC) therefore swapping $17,649 worth of sBTC into ETH

Re-2
Totally agree, icETH seems to be an ideal structured product with no liquidation while keeping exposure to price upside

1 Like

Hello mStable team, My name is Alfonso from the Business Development team at Index Coop. I appreciate the comment regarding the possibility of including icETH in your treasury holdings. If you have any questions please let me know.

1 Like

Based on an expedite request by @TClochard, I’ll summarize the findings of this RFC on his behalf and compose a TDP now on GitHub that will formally propose the opportunistic purchase of CVX via the sUSD portion, trade the sBTC position into an equal sBTC/sETH position, then swap the overall remaining sBTC position into WBTC to be subsequently put into a 50/50 WBTC/WETH position on Balancer and use the remaining sETH to be converted into WETH and subsequently be put into the icETH Index token by Index Coop.

Any objections or strong opinions are to be put into TDP 39 to follow shortly. Thank you for your feedback, and LFG! :slight_smile:

1 Like