[SCP-35] Proposal for $1M FOX:RUNE token swap and joint LP with THORChain [Official Ideation Thread]

Advancing this to Ideation after positive reception in the forum, discord, and in today’s Tokenomics Office Hours, and to move this through the governance process expeditiously so the DAO can be in a position capitalize on this awesome opportunity.

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 the FOX:RUNE Pool on THORChain and increase the depth of the pool’s liquidity by $4,000,000

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 FOX:RUNE pool which was just churned in today
  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.

Ideation vote

  • For: Execute $1M FOX:RUNE token swap and deposit $2M of FOX & RUNE liquidity to THORChain
  • Against: Do not execute FOX:RUNE token swap

0 voters

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

1 Like

All I have to say here is … LFG!!!

2 Likes

Samsies…been waiting to see this for a while. Woot!

2 Likes

I believe this is an excellent opportunity for the DAO. I do believe this would be better suited to fall under the Treasury Management and Diversification committee, so that it can be evaluated more holistically. Perhaps they would decide to add more than this to the pool.

So while I support this endeavor, I do not support this particular proposal and would like to see any recommendations come from the Tokenomics workstream/ the Treasury Management and Diversification committee.

2 Likes

Glad you agree this is an excellent opportunity! :slight_smile:

Thanks for sharing your feedback too.

Re: better suited to fall under the Treasury Management and Diversification committee - While I am fully in support of the TM&D committee handling this going forward, I don’t see any compelling reason to hold back this current proposal for a committee that has yet to be formed.

Once the TM&D committee is established, they can make decisions to add more than this to the pool. That said, a different sized tokenswap/joint LPing will also require THORChain community’s support. Currently the offer from the THORChain community is for a $1M token swap and joint LP, and they are ready to move on this immediately, just waiting for this to go through our governance process. There’s no reason the committee can’t decide to do a larger swap in the future.

So far the community has shown overwhelming support for this draft proposal, and when we polled the Tokenomics office hours audience on whether this should proceed as its own proposal vs. waiting for the TM&D committee, there were 8 votes in favor of moving this proposal forward as is (myself included) and 2 votes in favor of waiting to let the TM&D committee handle (yourself included). At that point, I felt I would be going against the community’s will by not advancing this forward, and did not see any compelling reason to do that vs. just moving forward this straightforward proposal through the governance process asap.

I actually think going the solo proposal route will be a great example that the TD&M committee can point to going forward as to why they should be empowered to make these decisions on behalf of the community (rather than having to wait ~2 weeks the next time an opportunity like this presents itself). For now, why not let the community do its thing? I also think it will be a stronger signal to the THORChain community and broader crypto community if this tokenswap is approved by FOX Token holders rather than a committee, but I admit that’s an assumption.

Mainly I just want this proposal to pass as soon as possible and believe advancing this forward as its own proposal is the optimal way to achieve that.

1 Like

I love me a good debate! I agree this would be a great topic for a Treasury Management and Diversification committee, and I’m very excited that you are proposing that. I also agree with @willy that we should move on this now, and let this proposal go through the voting process, and hopefully get that FOX:RUNE pool fattened up as soon as we can. Once the new committee is formed, if it is indeed formed, then they can take up future decisions.

2 Likes