Summary
In order to continue with the treasury fundraising for 2022, this RFC would like to gather feedback surrounding the utilization of Solv Protocol in order to create a MTA Bond market on their platform, which offers more flexibility for long-term bonds than our current endeavour with Olympus Pro does.
This is due to their permissionless creation of different types of bonds, as well as varying durations and additional features. We would like to initially earmark 400k MTA for their upcoming Convertible Vouchers product and observe the results.
Furthermore, we’d like to earmark at least 100k additional MTA for a special Metanaut Bond Program that is to launch in tandem with the above, and sell MTA Vesting Vouchers at a heavily discounted rate to existing Metanauts (thinking around a 50% discount for these) in return for a longer vesting period as a thank you for loyalty and support throughout the last year. These vouchers would be made available with the announcement of mStable v2.
Abstract
Solv Protocol is a project that issues financial NFTs in form of Vesting Vouchers, which can be loosely compared to Olympus Pro Bonds, but with some added flexibility. They recently announced to us their intent to release a Convertible Voucher product as well, and the TreasuryDAO believes that this product strikes a solid balance of risk vs reward for both the bond issuer and the bond buyer, and we would therefore like to continue the remainder of our ongoing funding with Solv Protocol in order to hedge risk and protect the MTA token from immediate sell-offs and reward long-term believers in the project.
Another benefit of issuing bonds with Solv is that their nature is that of an NFT, which means that it can be easily sold and traded on their native marketplace and offers additional functionality like transferring, splitting, and merging (see this screenshot).
More information around Solv Finance can be found here, and as their Convertible Vouchers product is not yet live, the closest equivalent is the UMA Range Token that was released a few months ago.
Motivation
The mStable Treasury currently has not yet achieved enough runway to fund core contributors and protocol expenses on their own, and additional means to raise capital are required to ensure smooth sailing for the upcoming year.
With this raise we wish to fund the operations for mStable for the upcoming round this summer, as well as earmark a small portion of the sale to promising ways of creating a redundant stream of funding for the long-term.
Since we do not wish to rely on fundraises forever, we need to think long-term and allocate a portion of the raise to strategies that will ensure that eventually we can divert more protocol fees to governors and can fund core operations out of the yield generated from the Asset Management subDAO.
Initial ideas for this are to allocate the earmarked amount to an Alchemix Vault once their v2 ships, hedging stablecoins in structured option protocols like Ribbon Finance to compound a portion of the raised amount, or simply open up a position in a lending market like Compound, Aave or Euler Finance to allow for small leverage to be driving the treasury growth forward.
Pros
- More flexible bond issuance
- Different kinds of bonds to suit our needs
- Bonds are issued as NFTs and can be treated as such
- Long-term alignment to MTA price appreciation
Cons
- Need to design the visuals around the bond
- Might take longer to sell bonds due to finality of price at the issuance level
- Low current price of the MTA token
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 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.
