Peg Game Plan

[ghost]

Thoughts:

The ETH peg restoration is something that needs to happen slowly/sustainably, preferably without use of treasury funds. If the peg is quickly patched with treasury funds, sellers will 'flood the gates' leading to further peg, and now, AUM issues leading us right back to square one. This time with less treasury funds. A good example of this is the BTC pool, gets drained almost every time money is added because its at peg and sellers rush to sell.

If we can slowly fix the ETH peg over time:

1. We may get additional investors in the meantime to provide collateral (NEAR pool is still close to peg).

2. Eager sellers will sell at the haircut they are most comfortable with, reducing the losses the treasury would take if it took it straight to 1:1 (when the eager sellers were willing to leave at below peg).

[I know this piece may be a bit controversial however, building a temporary 'bridge' for panic sellers to use, that will eventually rek the long term holders and Eric is not good for the longevity of the project. Also, other pools offer better redemption rates, they will just need to be patient to cash-out or drive more AUM so that there is more room in the pool (this ideal).]

3. It will prevent a bank-run due to current fear crushing AUM which in turn stunts the fee growth.

We must drive AUM/fees to give the treasury more 'ammo' to fight with. The good news is, in the grand scheme of things, the money needed is relatively small if the project blows up.

Potential Plan of Attack

Tweak mint and burn algo

Necc/LP bonds (and maybe other new tokens to trade to help increase trade volume and fee revenue)

Look for ways to drive additional AUM/fees

As each of these happen, we can essentially, quantitatively ease the peg back to 1:1 with a % of the revenues generated by the protocol in the meantime? (new idea I thought I would throw out there)

If we do decide to QE to accelerate the peg getting back to 1:1 its important that it happens with a % of revenues generated and not money already in the treasury. This way, the treasury will still continue to grow.

This is my 2c. Looking forward to hearing your guys' thoughts.

[ASAP-Beans]

+1 on all Schmeckl3s, one point however is I'd guess with the redemption value as it stands we will slowly see fees tend lower and lower so the % based on new protocol revenues could lose efficacy very quickly.

Perhaps there can be a weekly disbursement of funds from the treasury but with a % of protocol revenues to fund it, if fees do dry up quickly the treasury will be our only option anyway, so signalling to participants its improving can incentivise people to use the platform and generate the fees to pay it back.

[ghost]

The issue with setting a set number of disbursements each week from the treasury that isnt new money meaning the treasury will be operating at a negative cash flow. So, we are at a race to get AUM up during this time otherwise the treasury will end up underwater and depleted. Then we are really stuck. If we take it from fees earned, then the peg is replenished from new money and the treasury still profits.

[ASAP-Beans]

I do think there may be some misconception on getting your funds given the general public image of necc right now but overall I think you are right. I would prefer being capital efficient avoiding treasury usage but worried the fee % may be too slow... I guess depending on how we can tweak some of the fees captured also so the house wins more than it is doing now it can expedite closing the redemption value gap

[ghost]

Yeah. It really is a good thing it happened now and not later. It wont take much new money to put things back. I agree, I am anxious to see how a new algo would effect the fees being generated. I think AUM is definitely the ultimate priority. It all trickles down from there.

[McryptoMax]

Plus 1. lets do this, Killing it Schmeckl3s

[ghost]

Thanks ser! Just trying to help where I can.

[magmac12]

I agree with weekly over X weeks as well. Gradually restore confidence as Necc heals/evolves.

…

On Tue, Jan 4, 2022, 3:38 PM ASAP-Beans ***@***.***> wrote: Fees are on a negative trend because of the redemption value (traders clearly do not want to use the platform at current redemption values understandably, we have generated less than 20k iirc in the last 24 hours). The efficacy of using the fees generated from here on in to restore that redemption value will be very low due to the low fees generated to the redemption value... etc etc I like the premise but we need a more impactful attempt at restoring the redemption value in the short term to encourage more traders to use the platform, we can then use your fee sharing suggestion to pay back that disbursement as trading activity increases due to better redemption value (or at least a belief in a soon to be better one) so does the nominal revenue captured to contribute back to treasury and pay it back. As mentioned I don't think a single lump sum direct transfer is wise because of the issues you mentioned but instead a pledged disbursement of x funds of y weeks until it is restored - even if the redemption value wasn't restored completely traders would start to use the platform as they'd have confidence they could get their funds out at a fair value, over this time period the fee capturing you mentioned may pay off the treasury payments completely or at least to a high %. — Reply to this email directly, view it on GitHub <https://github.com/neccdao/frontend/discussions/26#discussioncomment-1908613>, or unsubscribe <https://github.com/notifications/unsubscribe-auth/ARXOBSJ33SD5HB7ROWVGUYTUUNSGBANCNFSM5LIJRCSQ> . Triage notifications on the go with GitHub Mobile for iOS <https://apps.apple.com/app/apple-store/id1477376905?ct=notification-email&mt=8&pt=524675> or Android <https://play.google.com/store/apps/details?id=com.github.android&referrer=utm_campaign%3Dnotification-email%26utm_medium%3Demail%26utm_source%3Dgithub>. You are receiving this because you commented.Message ID: ***@***.***>

[KuroXLB]

Given the current utilization rate of NEAR and the current prospects for the token, it could be interesting to consider rebalancing the treasury to have more NEAR. At the moment, ETH is at a 3.88% utilization rate while NEAR is at 99.99%, more NEAR with a similar utilization rate would lead to more fees generated for the protocol leading us to a faster pace on restoring redemption value closer to 1:1. Obviously, this solution has some issues but it is one of the ways to accrue more fees organically.

[McryptoMax]

ultra giga brain

[wockslush]

+1 insanely giga brain