SCP-73: FOX – GIV Treasury Swap and Liquidity Provision

SCP # and Title

SCP-73 - FOX – GIV Treasury Swap and Liquidity Provision

Summary

We propose to create a $1,000,000 FOX / GIV liquidity pool by swapping FOX tokens from the ShapeShift DAO treasury for GIV tokens from the Giveth DAO treasury, then adding the tokens to a combined liquidity pool.

Abstract

We propose taking a total allocation of $500,000 worth of FOX tokens from the treasury to create a FOX / GIV liquidity pool.

We initially swap $250,000 worth of the FOX tokens to the Giveth DAO for $250,000 worth of GIV tokens.

We will then take the GIV tokens we receive, pair them with the remaining $250,000 of FOX tokens from the initial allocation, and deposit them together into a new FOX / GIV liquidity pool.

At the same time, we ask that the Giveth DAO take the $250,000 in FOX tokens they receive, match them with a further $250,000 in GIV tokens, and deposit them into the same FOX / GIV liquidity pool.

The result will be a liquidity pool with $1,000,000 in liquidity.

Motivation

Shapeshift and Giveth have complementary goals around decentralizing finance and creating new ways for individuals to access funding.

To illustrate the alignment, here are the Shapeshift vision and mission:

Vision:

We envision a borderless financial system built on open, decentralized protocols.

Mission:

We shall be the pathway into this borderless financial system; an open-source, multi-chain, self-custody crypto platform enabling billions to achieve financial sovereignty.

Compare that to the goals of the Giveth team:

Giveth is a community focused on **Building the Future of Giving** using blockchain technology. Our intention is to support and reward the funding of public goods by creating open, transparent and free access to the revolutionary funding opportunities available within the Ethereum ecosystem.

To further those ends, it would be helpful to increase the amount of token liquidity available to both DAOs, increasing the overall utility of the tokens and reducing the friction of making transactions in both currencies.

The Giveth team has expressed an interest in exploring this partnership, and wants to gauge interest among members of the Shapeshift DAO.

Specification

If the proposal is voted YES, then the following steps will happen:

  1. The ShapeShift DAO and the Giveth DAO will both hold votes on whether to approve the trade.

If both votes are approved, the process will move forward.

  1. Both DAOs will agree on a day and time when the token prices will be set, and an exchange or website that will act as the definitive token price setter.
  2. Based on the price of FOX at the appointed day and time, the ShapeShift DAO will remove $250,000 worth of FOX tokens from the treasury, and send them to the Giveth DAO. In return, the Giveth DAO will send $250,000 worth of GIV tokens to the ShapeShift DAO.
  3. After receiving the GIV tokens, ShapeShift DAO will take those tokens along with another $250,000 of FOX tokens from the ShapeShift treasury, and put them into a FOX / GIV liquidity pool.
    a. Question: What chain and dex should we select to host the pool
    b. Question: What is the best way to manage the wallet that controls the LP tokens?
  4. We cannot explicitly control what the Giveth DAO does with their assets. But our expectation will be that they take the FOX tokens they receive, combine them with an additional $250,000 of GIV tokens, and put both tokens into a FOX / GIV liquidity pool.
    a. Question: Should we ask them to use the same pool as ShapeShift does? Or would it be better if they created a pool on a different chain and/or dex?

Benefits

The primary benefit is increased liquidity for token swaps.

The Giveth team is currently establishing liquidity pools with several other partner DAOs that are related, complementary, or otherwise similar. By enhancing FOX/GIV liquidity, we make it easier for those other tokens to interact with the ShapeShift ecosystem.

Drawbacks

It takes tokens from the treasury that could otherwise be used for other purposes.

While we expect the Giveth DAO will use the swapped tokens to add to the liquidity pool, there is no effective way to guarantee they are put to that use. In effect, once we swap tokens, the Giveth DAO is free to use them as they wish. Nevertheless, we believe they will add them to the pool.

Vote

YES : Swap $250,000 of FOX tokens to the Giveth DAO for $250,000 in GIV tokens, then add $250,000 of FOX tokens and the GIV tokens to a FOX / GIV liquidity pool

NO: Do not swap tokens with the Giveth DAO, and do not add tokens to a GIV / FOX liquidity pool.

What do you think of this proposal? Cast a vote in the poll below, as to whether you think we should move this to SnapShot for a final vote.

  • Yes: I think the token swap is a good idea, and I want to advance it to a final vote on SnapShot.
  • No: I do not want to do a token swap. Do not advance this proposal any further.

0 voters

5 Likes

Before moving this forward, I think it is important to have some of these questions answered.

E.g what chain/dex will this new fox/giv pool be created on and how will that be administered by the communities? Once that is figured out I would be happy to vote this forward from ideation.

5 Likes

This is a great q. As opposed to the joint multisig that ShapeShift DAO created with 1Hive, we can use the DAO’s new Gnosis Safe on Gnosis Chain to hold our LP: Gnosis Safe

There’s not much in there other than some NFBeez, but I’m planning to work with @MrNerdHair soon to leverage the Role Module in Gnosis Safe’s zodiac library to make ShapeShift DAO’s mainnet Gnosis Safe an admin of the Gnosis Chain safe.

Giveth has their own liquidity multisig that they will use to hold their LP.

4 Likes

Do we have a preferred chain and DEX where we should put the liquidity?

2 Likes

Good q. I was assuming honeyswap on gnosis chain, and think that would work great, but open to arguments for other DEXs or chains. ofc, without more effort, we are currently limited to mainnet and gnosis chain because these are the only chains where both FOX and GIV have meaningful liquidity paired with other assets. If we deployed a fox/giv LP on optimism for instance, the only way for people to trade would be to bridge either FOX or GIV over and trade one for the other.

The argument for Gnosis Chain is that FOX already has relatively strong liquidity on mainnet, so increasing liquidity on Gnosis Chain is more valuable from a DAO’s perspective. The argument for honeyswap is that it is the only dex on gnosis chain where GIV and FOX both already have meaningful liquidity with other liquid pairs.

3 Likes

Sounds like we have the outstanding questions answered. I’d say it’s time to move it to a Snapshot vote.

Who has the power to set up one of those? I’m guessing I don’t…

This proposal has been published on Snapshot for voting!

https://snapshot.org/#/shapeshiftdao.eth/proposal/0xebede5584ad8cd3ac25f6190c6707de9d730ce79a19ba9cdf30fae29f625030b

1 Like