Proposal for $1M FOX:RUNE token swap and joint LP with THORChain

Gm foxes :fox_face:

Members of ShapeShift and THORChain communities have been discussing a FOX:RUNE token swap and joint LPing into the FOX:RUNE pool on THORChain. The pool is currently pending, but is on track to be churned in in the morning, enabling non-custodial cross-chain FOX trading for the first time :tada: This is a draft proposal for ShapeShift governance to approve a FOX:RUNE tokenswap and LP to help kickstart the pool with liquidity while also diversifying the DAO’s treasury with revenue-generating assets.

H/t to @PTT and @Orion_9R for getting this conversation started!

Summary

Proposal to swap $1M of FOX tokens for $1M of RUNE with the THORChain Treasury, then deposit $2M of FOX & RUNE to kickstart the FOX:RUNE Pool on THORChain.

Abstract

THORChain and ShapeShift DAO have long been good friends. ShapeShift provides a free web and mobile interface to THORChain, and THORChain powers ShapeShift’s cross-chain swapping. Our values are closely aligned, and we’ve been exploring ways to further strengthen our blossoming relationship.

A member of the THORChain community reached out to propose a $1M FOX/RUNE swap in which…

  1. ShapeShift DAO sends $1M in FOX directly to the THORChain deployer

  2. THORChain sends $1M of RUNE to ShapeShift DAO

  3. Both Treasuries deposit $2M of FOX & RUNE to seed the pending FOX:RUNE Pool on THORChain with $4,000,000 of liquidity

Motivation/Benefits

In addition to strengthening the relationship between the ShapeShift DAO and THORChain communities and aligning incentives, the following benefits will be gained:

  1. Diversifying ShapeShift DAO’s Treasury to include RUNE, an asset with strong tokenomics and upside potential
  2. Establishing FOX liquidity on THORChain, enabling decentralized cross-chain swaps for FOX for the first time, and opening the door for FOX holders to LP on THORChain
  3. ShapeShift DAO’s liquidity position will earn revenues from trade fees and RUNE emissions

Specification

Because the DAO’s Gnosis Safe cannot hold native RUNE (only ETH and ERC20 tokens), and LPing on THORChain requires native RUNE, a THORChain multisig address must be created to receive the RUNE and deposit into the liquidity pool on behalf of the DAO. Hopefully in the near future a solution for this is built (ie. Gnosis Safe + SafeSnap on Cosmos) and the multisig can be replaced by the DAO.

  1. To facilitate the receipt and LP of RUNE, a new THORChain multisig address will be created on behalf of the DAO by @mperklin and myself (@willyfox)
  2. $1M FOX will be transferred from ShapeShift DAO’s Gnosis Safe to the THORChain Deployer contract, and $1M of RUNE will be transferred to the DAO’s THORChain multisig address
  3. Both ShapeShift DAO and THORChain will deposit $1M of FOX and $1M of RUNE into the currently pending FOX:RUNE pool
  4. The DAO’s FOX:RUNE Liquidity will remain in THORChain generating revenues for the DAO indefinitely, and any changes will require a subsequent proposal

Drawbacks

For now at least, the DAO must rely on a multisig in order to swap and LP RUNE. Additional possible risks include the price of RUNE decreasing or the network being exploited and/or halted.

Thanks and looking forward to hearing your thoughts :fox_face: :zap:

7 Likes

In full support of this. THORchain is an amazing innovation that is already so aligned and integrated with ShapeShift. And we get to diversify the treasury! This is a no-brainer!

4 Likes

Love the cementing of the FOX/RUNE relationship with this token swap, this sounds amazing to me, full support!

3 Likes

Thanks for the shoutout, Glad that my reaching out to Orion got this moving faster.

Thank you Willy for taking the lead and getting this written up!

I am in support of this!

2 Likes

Clearly a great idea! Reinforcing the links and cooperation with THORChain seems a no-brainer :slight_smile:

3 Likes

I am no expert but this certainly sounds like a good idea to me.

3 Likes