After $mUSD being listed on Coinbase last month, it has become apparent that any major CEX listing of mStable assets need also to be accompanied by a market making services to ensure liquidity for that asset on launch day. This is a requirement from the exchanges as a pre-condition to listing on their platforms and is non-negotiable.
With this in mind, I suggest to earmark the use of up to 2,000,000 MTA from the TreasuryDAO to serve as a loan to a trusted Market Maker should MTA ever get listed on a major centralised exchange and the need arise. The term of this loan would be for a window of service during the first few months of bootstrapping MTA liquidity for that specific CEX.
When mUSD got listed earlier last month on Coinbase Pro, there was a request by the exchange to provide sufficient liquidity on the pair. This was provided via a Market Maker on very short notice.
In order to avoid any similar headaches in the future, I suggest to earmark up to 2,000,000 MTA from the TreasuryDAO to loan out to trusted Market Makers over a previously agreed upon of time in order to bootstrap the MTA market on the to-be exchange, whichever one that may end up being.
Unfortunately, centralised exchanges are not integrated enough into the DeFi stack to make options like Tokemak a viable alternative for liquidity.
If approved, these funds would be sent to the funding subDAO, so that they can be deployed quickly should the need arise.
Historically, when a new market is opened on a major CEX, a certain amount of liquidity needs to be provided by professional market makers in the ecosystem. Since we do not know the exact time and date if or when MTA will get listed, we should prepare ahead of time, as failure to provide a sufficiently liquid market could result in a delisting from the exchange.
- Easy onboarding flow to the CEX once MTA gets listed
- Deep liquidity on the exchange, which will drive bigger trades
- Ensuring that the relationship between the CEX and the mStable core contributor team starts off on the right foot
- Improved probability of major CEX listing with these funds earmarked
- Lose the ability to temporarily utilize 2m MTA in the treasury, which will be eventually custodied and maintained by a centralized party
- Custodian risk with the market maker
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 weeks and create a formal draft proposal on Github to be used for 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.