Create $PRTN Uniswap liquidity pool

PRTN Proposal # 14
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Idea/Project Title: $PRTN token Value & Liquidity

Submission Date: 13.5.22

Your Name: Mark

Discord Handle: Rendar Mark#6686
Summary: The creation of a $PRTN: ETH liquidity pool on the Uniswap V3 exchange.
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Purpose:
We believe it’s time to assign the $PRTN token a dollar value by creating a Uniswap liquidity pool.This is achieved via a crypto application called a Decentralized Exchange (DEX). We propose to create a $PRTN : ETH liquidity pool on the Uniswap Dex, funded via Protein treasury & trusted investors. In addition to this we propose creating a treasury funded liquidity rewards program to compensate the investors.

Specifics:

  • Date of creation: 1st June 2022
  • Exchange: Uniswap V3
  • Blockchain: ETH Mainnet (Polygon TBD)
  • Swap Pairing: $PRTN : ETH
  • Token price: This will initially be set at $0.10c based upon our and trusted advisors estimation of $PRTN having a current fully diluted value of $10,000,000 ( $0.10 x 100,000,000 )

Funding:

  • The Protein DAO Treasury will contribute $5k towards the creation of the ‘Founding’ Uniswap Exchange pool.

  • Two trusted investors will add $70K of $PRTN & ETH tokens ( ( 50:50 split) into the founding pool.
    This will result in a $PRTN : ETH liquidity pool with a TVL ( total value locked) of approx $150K
    As customary with all liquidity provision programs, our LP’s will receive a ‘reward’ payout for the opportunity cost of deploying their funds.

  • In this case, the rewards will be: 4% APY, compounded daily, and paid monthly in $PRTN tokens ( at current dollar value) direct From the DAO treasury
    Therefore a $140K pool will command a monthly reward of $458 = 4,580 $PRTN tokens ( subject to a token price of $0.10c) sent directly from the treasury. Please note: Due to market conditions the dollar value of the pool and $PRTN (therefore reward amount) will fluctuate.
    Reward program will continue monthly until the community decides to end it

  • It must also be noted that the Protein DAO treasury will receive a small reward from the pro-rata share of the Uniwap pool’s (0.3%) swap fee.

Benefits:

  • Liquidity is credibility. Having $PRTN available on the Uniswap Exchange broadcasts our dedication to the long term growth of the Protein DAO, along with the values and beliefs it stands for.
  • The creation of the pool will also enable $PRTN holders to visualize and directly benefit from the value they help to create.
  • The Uniswap Exchange offers another route for newcomers to enter the Protein DAO (subject to meeting membership criteria) and also honours the freedom of individuals to exit their Protein token holdings.

Concerns:

  • Current market conditions.
    Whilst we don’t think it’s practical to wait for more ‘bullish’’ market conditions, historic crypto bear markets have lasted months even years… there is an argument for delaying pool creation until the worst of the current market ‘meltdown’ has passed.

  • Less committed sell tokens.
    There are currently 369 addresses holding $PRTN tokens on ETH mainnet.
    Therefore it’s likely a small percentage of these will sell into the pool. And whilst this may create some short term downward pressure on price, we believe it’s healthy to provide a financial exit for the less committed holders of $PRTN, and by default create a healthier ecosystem for the majority of token holders that remain.

Other Notes

  • When ready, we will look to include a Polygon pool but that will form a separate proposal

Timeline:

  • Forum discussion until 20 May

  • Snapshot vote from 23 May to 27 May

  • Setting up liquidity pool from 1st June (subject to investors being ready)

  • Liquidity rewards program starts 1 month after pool is created

4 Likes

I’m fully supportive of this proposal and hopefully, it will increase the engagement of the community within web3 space and attract more contributors.

2 Likes

Thank you Mark. As a non technical person I think I can say I follow through with most of it. Very well explained. A few considerations for the broader group for this major milestone:

  • Communication:
    now that Protein Tokens will have value, how are we planning to communicate this and create awareness and momentum around this topic?
    Twitter storm, mirror article? This feels like a great opportunity to inform (liquidation event) while inspiring the world of web3 with Good Growth values.
  • Membership:
    With Protein available for purchase, what is the access to community strategy. Can people buy and become part of Protein? are we planning on attracting new members and create new momentum for new joiners? Are we ready for it or should we get ready developing new onboarding journeys?
  • Holding vs selling
    in your opinion what is to be considered a healthy ratio of hold/sell Protein tokens. I guess a lot depends on the tokens demand, but I could see the opportunity to educate our members as well on holding value.
3 Likes

Hey Andrea, the questions you are asking are super valid and also on my mind too. I don’t think buying will not be an option since we are adamant about keeping the application/green lighting system in order so we can really bring in people who align with gg. We are also maybe thinking about NFT membership models but it’s just a discussion right now so if you have any sources or ideas to share on this front please feel free to share on the Membership Team channel. Token gating vs NFT gating is a valid conversation to have atm.

4 Likes

From a community perspective, one of the biggest elephants in the room was the question " why should I engage with a community and earn a token that has no value?" so liquidity MAY help clear this out - however if PRTN tokens valuation are quite low, there’s a risk of that question metamorphosing to “why should I engage with a community whos token value is so low?”

I’m not an expert in economics but what will happen if the value of our token is so low that we have to increase the amount of tokens we attribute to certain kind of contribution? How can you value a work/compensation when the value is so volatile? How do you price a contribution when a token is liquid? :)))

1 Like

Hi Andrea
Thank you for your comments - all great points, which I’ll endeavor to answer below:

  • Communication:
    now that Protein Tokens will have value, how are we planning to communicate this and create awareness and momentum around this topic?
    Twitter storm, mirror article? This feels like a great opportunity to inform (liquidation event) while inspiring the world of web3 with Good Growth values.
    IMO This is a tricky one as whilst we would like to publicise the availability of $PRTN, holding them ( as I understand things) won’t necessarily grant access to the Protein DAO. So I see this as more of a ‘soft launch’ just to establish the pool.

  • Membership:
    With Protein available for purchase, what is the access to community strategy. Can people buy and become part of Protein? are we planning on attracting new members and create new momentum for new joiners? Are we ready for it or should we get ready developing new onboarding journeys?

Having Protein available on Uniswap will certainly offer the potential to grow members. Though I think membership criteria will have to be met so we don’t upset the equilibrium of our community.
**Ref the onbarding docs - yes the creation of these (along with a native Uniswap site widget) is on our roadmap

  • Holding vs selling
    in your opinion what is to be considered a healthy ratio of hold/sell Protein tokens. I guess a lot depends on the tokens demand, but I could see the opportunity to educate our members as well on holding value.
    Yes I guess it will depend on current market conditions and token utility, and I think you raised an important point on publicising the many benefits of holding $PRTN, and the DAO membership criteria which needs to be clarified.
    ** As we’re a small yet commited community would expect to the vast majority to ‘HODL’, with maybe a smaller percentage of holders looking to exit some or all of their tokens

Hope this has gone someway to answering your questions, please reach out if you need further clarfication :slight_smile:
**

3 Likes

Hey thanks for commenting, you raised intersting points.
Ref valuation of token, $PRTN has a higher token issuance ( 100,000,000) against other community tokens which typically have around 10,000,000. There are pro’s and cons with both. The benefits with a higher issuance is more room for experimentation especially in the early days when new ideas are being trailled. When a community has ‘only’ 10mm tokens there is less room for this.
However a higher issuance can generally result in a lower token price, albeit at the start of its life.
We propose only to set the intitial price at $0.10c, the movements within the pool will then find its appropriate valuation.
Also for me a ‘lower’ token price may act as filter for speculation and to weed out those who fail to see the value in the Protein DAO and GG…resulting in a tighter community where we can work together on our mission.
Hope this goes some way to answering your questions :slight_smile:

3 Likes

Excellent proposal and thanks for breaking down the funding structure so simply, Mark. Purely from an alignment point of view, I like that liquidity could pave an “off-boarding” opportunity for those looking for one and buy-in for individuals who want to support Protein in our endeavors; both feel like a natural progression.

My only concern was how “buy-in” could affect the membership process, but I see you and Deniz have left thoughtful responses about how onboarding integrity can be sustained. :+1:t5:

I am excited for us to potentially explore this very important aspect of the GG journey (i.e. balancing our mission at the intersection of “ownership”, finance, community, and service in a public sense. as is represented by having a liquid $PRTN token)

3 Likes

Thanks for this Mark.

  • Could you explain the rationale for Protein “only” putting in $5k one 30th of the total pool. I am not familiar with structuring these things and my naive perspective would be for Protein to have a bigger share to for example prevent liquidity being pulled…
  • Could other investors/community participate too or is this now set
1 Like

Hi Mel
Thanks for your response :slight_smile:
Yes as I understand things, new $PRTN holdrers wil still have to meet membership criteria before they are green-lighted into the community.
For this reason I believe we should ‘soft launch’ the liquidity without a big marketing push as we don’t want people buying $PRTN thinking it will automatically grant them access to the community.

Hi There
Thanks for your response.
Ideally, I would prefer the DAO to be the sole provider of liquidity, but as I understand things there is only 5k available from the treasury.
So as the next best option, we have chosen trusted investors who believe in the project and are unlikely to pull liquidity without giving us plenty of notice.
As you have highlighted the treasury ‘owning’ its own liquidity is by far the safer choice, and I will work to achieve this as things progress.

completely freestyling naively here:

  • instead of $35k PRTN35k into LP. could they “buy/invest” $35k worth of PRTN, then PRTN treasury uses that as the $ side and matches with PRTN to make the pair?
  • some kind of reward upfront instead of ongoing?

((assuming the 5k limit came from the USDC reserves rather than the PRTN))

3 Likes

Agreed, This is something that I have suggested and will push going forward.

1 Like