Summary
The following post comes as a follow up to the recently passed Doughpamine termination proposal. Meaning incentives on every Dough pair and on BCP have been terminated on the 27th of October.
By terminating Doughpamine, the DAO is effectively interrupting its liquidity renting strategy. As a result, a number of LPs which have been farming Dough may now consider to exit their LP positions and potentially sell its Dough side. This posts outlines the Buyback program designed for LP and eDough holders exit.
Motivation
One of the main reasons why the Doughpamine program was terminated was to avoid further selling pressure induced by LPs dumping rewards. As LPs now look at potentially unwinding their positions, they could potentially cause the very selling pressure the team has been trying to avoid through the proposal.
Moreover, as LPs exit and unwind, dumping would occur on an increasingly illiquid market which would exacerbate price decline. This would thus result in a lose-lose situation for LPs and the DAO as the former will incur both lower selling price and higher slippage, while the latter would have failed in its attempt to mitigate selling pressure.
In order to prevent the eventuality outlined above, itās proposed to run a buyback program for LPs and for all floating Dough held by the market, to also represent an alternative for holders willing to opt-out from the proposed migration to Auxo. In this way, holders who wish to sell their Dough can do so through an OTC deal directly with the DAO treasury. This solution therefore aims at protecting Dough from the negative price impact that would be induced by heavy market selling. In addition, this would allow holders to sell while avoiding price slippage.
Scope
Dough buyback
There will be 9 buyback epochs, lasting 2 weeks each. Each epoch will have an increasing discount applied on the buyback price. The buyback price will be fixed at the 30-day TWAP (daily opening price, Coingecko source), calculated at the day preceding the start of each epoch, plus the discount relative to the specific epoch. Discounts per epoch and epoch calendar periods are summarized in the table below.
eDough buyback
This part of the buyback program is intended for eDough farmed by LPs which may not be able to vest before the protocol migration to Auxo or anyhow provide an exit solution for LPs that may prefer a short-cut alternative to the vesting of their eDough reward. Buybacks will follow the very same epoch distribution as for liquid Dough. However, the buyback price will be fixed per epoch and not dependant on market price, considering that eDoughs have no market/price set until vesting. The table below displays buyback price per epoch.
Next Steps
The proposed budget to be allocated to this buyback initiative is intended to be deployed in the buybacks contracts on an epoch-by-epoch basis, with residual balance from the previous epoch rolled over, to constitute the new epochās budget together with any required amount top-ups.
Holders that wish to opt for the buyback program will be able to do so through the PieDAO website interacting directly with the buyback contract.
The websiteās UI will be available by the first epochās start date, currently scheduled for November 15th 2022.
As always, weād like to gauge sentiment before moving forward with the Snapshot voting.
Whatās your thought on this?
- I support the buyback program
- Iām against the buyback
- I need more info
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