TDP 39: Addendum to DTOP Liquidation

Posted on behalf of @TClochard for the Asset Management subDAO

Simple Summary

As an addendum to TDP 36 (DTOP Liquidation) it is proposed to reconsider the swap part of the proposal as CVX token price substantially increased (more than doubled) in the last three weeks and the DTOP position liquidation turned out to be paid in a mix of synthetics productive (sETH, sBTC) and non-productive (sUSD) assets.

It is proposed to swap the sBTC portion of this asset into an equal amount of sBTC and sETH, and use the remaining sUSD portion to purchase CVX as originally ratified.

The resulting sBTC are to be swapped into WBTC and put into the 50/50 WBTC/WETH pool on Balancer to generate BAL rewards that are to be compounded in perpetuity into the existing 80/20 BAL/WETH position on either Balancer or Aura Finance, while the sETH are to be swapped into WETH and be subsequently put into the new icETH product from Index Coop.

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.

In line with this discussion, it is therefore proposed to swap the sPositions as follows:

The resulting sBTC are to be swapped into WBTC and put into the 50/50 WBTC/WETH pool on Balancer, while the sETH are to be swapped into WETH and be subsequently put into the new iceth product from Index Coop.

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

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

The Asset Management subDAO will then proceed to swap sBTC to the amount of generating a proportional basket of 50% sBTC and sETH from the previously performed DTOP liquidation, and then proceed to swap the sBTC portion to WBTC and enter the 50/50 WBTC/WETH pool on Balancer as well as use the sETH portion of the liquidation to swap to WETH and subsequently enter the icETH product as described above.

Next Steps

Pending no significant changes to its content, this proposal will be taken to a Snapshot vote on Monday, the 25th of April 2022 .

Voting will be open for a 5 days window to give adequate time for a concurrent discussion. Governors can change their vote at any time should the discussion sway their decision. We look forward to hearing what MTA token holders have to say and seeing how they cast their votes.

4 Likes

Thanks for this sir
100% aligned with this, CVX is entering the buying range :sun_with_face:

1 Like

I would not hold this proposal back but:

  • I don’t think choosing the BTC is a good choice given our alignment with Ethereum values and the fact that it is an asset that has no use for us.

  • The positions are rather small and there are a lot of tx to make this happen. Quick napkin calculation based on my previous own transactions: it would take the WETH/WBTC position 1.5 Months to recoup the transaction cost and fee (Multisig is even more expensive in gas usage)

  • Gas is currently cheaper, those positions become inflexible once gas price rockets up again. In this case any gained profit might be just enough to cover for getting the position back.

I would prefer not to fragment our positions into many small ones and to choose assets that have value to mStable itself. So I will abstain from this vote.

1 Like

I am in favour of this addendum. I think it is wise to only use 1/3 to buy Convex given price increase, but also use the remaining to be exposed to high quality volatile crypto

1 Like