Provide a grant to Artis for post-LBP market making services for SHU token for six months

Shutter DAO DAO Proposals
1

Status: Proposed

Forum Proposal Author: Cornelis Theodorus van der Klooster, Artis

Forum Proposal Created: 29 Jan 2024

Summary

Provide a grant to Artis for post-LBP market making services for SHU token for six months

Proposal

Shutter DAO 0x36 recently voted to run a Liquidity Bootstrapping Pool (LBP) on Fjord Foundry in mid February. After an LBP, Shutter DAO 0x36 must transition funds from the LBP to DEX pools and CEX listings, and create liquid markets for the Shutter token (SHU, 0xe485E2f1bab389C08721B291f6b59780feC83Fd7). It is important for Shutter DAO to work with an experienced market maker for the SHU token to ensure this transition is successful.

Artis, part of Faculty Group, is the only market maker which has experience advising projects prior to their LBP (see Spool DAO here and here) and creating liquid markets after their LBP (see Valory here and here). Furthermore, Artis receives outstanding reviews from its clients (see here).

Artis will provide the following market-making services for six months (1 March - 31 August 2024):

  • Premium market making service

  • DEX & CEX launch service (2 pairs)

  • Coingecko and Coinmarketcap support

  • Communication: 1 call per month with at least 1 specialist, 1 full report per month upon request, 1 update per week upon request, seeks to answer questions in Telegram group within 48 hours

Shutter DAO 0x36 will disburse USDC $5,000 to Artis - Ethereum Mainnet address 0x108769199a98C65e68D2B9b5edc8d9464853A729 - each month for six months (payment for each month to be made before the 1st day of the relevant month).

Shutter DAO 0x36 will provide Artis with float funds USD $50,000 worth of both USDC and SHU tokens, which will remain assets of Shutter DAO 0x36 and returned to the Shutter DAO 0x36 upon conclusion of provision of services (minus transaction fees and other necessary costs).

Shutter DAO 0x36 will vote by 1 August 2024 on a follow-up proposal to extend this agreement on an ongoing monthly basis.

Context

Crypto market making is a process that helps with bringing buyers and sellers of an asset to the market, creating demand and liquidity for individual tokens. Market-making strategies are one of the most common ways of ensuring assets have sufficient liquidity to attract buyers and sellers. Without a market maker, many crypto markets will become much less active, as they fulfill the role of actively placing orders in order to earn profits based on the spread.

By hiring a market maker for the Shutter DAO token we help the buyers and sellers come together and increase the general outlook of the Shutter DAO token.

Platform

Snapshot (no on-chain action now, but Fractal votes will be needed to approve and execute monthly payments)

Vote

  • Vote “YES” to provide a grant to Artis for post-LBP market making services for SHU token for six months

OR

  • Vote “NO” to not provide a grant
4 Likes
2

See discussion here and related Telegram discussion:

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3 Likes
3

Any shutter token grants should be issued with a lockup period that matches that of everyone else involved, rather than being shorter.

3 Likes
4

Thanks for your comment. However, it may be more applicable to other proposals. The proposal above includes compensation in USDC - not SHU.

2 Likes
5

Also left this in the other proposal, but an extended lockup period is by no means a blocker.

3 Likes
6

I will elaborate on why this was a somewhat shorter script to satisfy the sentiment that would play by more folks than just Sebastian.

This proposal was to indicate the necessity due to prior experience and with that didn’t list the whole nine yards for applied services.

  1. the business model is a monthly charged retainer as indicated. Whether you end up going for Artis or not, I can’t stress enough how a loan model does not care about the wellbeing of your project and token at all. Considering the pushback around the token payment for advisory, it seems that a token loan could never be a viable option but I wanted to have it said. The profit share is 90% to Shutter and 10% to Artis to show goodwill (the industry standard would be 75-80% to Shutter). The conditions as stated are a 6-month contract for:
  • liquidity provision
  • spread and depth management (will dive into that for point 4)
  • 24/7 uptime (unless the exchange has windows of inactivity/maintenance → this is clearly announced by these platforms)
  • exchange listing strategy + flexible market-making strategy along with expert calls on a biweekly basis as standard (if the need calls for it 24/7 available)
  • human account manager support as opposed to chatbots
  • Coingecko and Coinmarketcap support to ensure accuracy and push through updates through internal contacts
  • communication:
  • 1 call biweekly (more if necessary)
  • weekly report with: account balances, traded volume for SHU + the total figures (so the split between Artis and organic participation), SHU 7 day analysis, macro update, comparison from SHU with respective competitors
  • monthly report with: DEX statistics, technical analysis macro + SHU for the broader timeframe, running account balances, insightful chart layout with state-of-the-art parameters, and a full printout of all orders executed by Artis throughout the month.

All of the statistics there are can be inquired about at any point in time as there’s 24/7, 365 (or 366 if the year calls for it) support. We don’t work with a dashboard as it’s a massive security risk. It would be easily implemented and considering we pull analytics like that upon request the choice is a conscious one to not have such a feature in place.

  1. In this proposal it does not seem of courtesy (yet) to discuss which exchanges but the listed fee is for a first platform with a free to determine number of trading pairs.

  2. We take multiple facets into account when it comes to liquidity provisioning. There are several scenarios where you would leave the +% depth thinner for free movement and, therefore, add more to the -% depth of the book. The suggested liquidity figures I have been presented in the proposal side very well with what is stated here. We presented those liquidity figures to make sure we can stack the book according to a $5K depth in the very smallest range of 0.2 to 0.5% depth, $15K within the 0.5 to 1.5% depth with the remainder being dispersed in larger chunks up to 50%. Part of a market-making strategy would be to be tactical about how it’s being used in case of big KOL activation and other marketing engagement to just name an example

  3. obviously, we have a full-fledged agreement which also stipulates the reasons for agreement disbandment and all other legal rectifications with it. This did not seem the appropriate place to share such a sensitive document on.

3 Likes
7

it should be helpful for the whole ecosystem, Yes

2 Likes
8

I will say yes for this proposal. Maybe we should also come up a evaluation standard for their work and make sure the interest align are the same.

3 Likes
9

In terms of aligned interest, it couldn’t be more straightforward. You pay for services provided and it is in Artis’ best interest to keep this contract alive for as long as possible. How does Artis do that? By delivering on expectations.

Of course this is open ended and whatever KPIs you would like to set we can have a back and forth about.

1 Like
10

Honestly “interest aligned” I mentioned is to make sure the MMr not do “rat trading” or other bad actions. I am not saying u guys will do it. But just prevent before it happen is always better to deal with it later.

1 Like
11

This is where a fully transparent party is your only option. To me that translates to providing trading insights on the regular and upholding pre-determined KPIs

1 Like
12

i support this approach for sure!

1 Like
13

In our opinion Artis would be a good choice as a market maker. After the defined term of the contract, the market maker can be re-evaluated.

2 Likes
14

A conversation with core DAO members will be held about the transparency of the whole engagement and execution parameters. Equally happy to back out of the agreement if we can’t reasonably come to such an understanding, which would bring it to the second party receiving most votes. We’re not trying to keep any party hostage for the long run and also aren’t in the business of dumping tokens (see advisory proposal).

1 Like
15

Seems that this proposal cannot pass in its current form but there might be avenue for agreement in a subsequent revision.

1 Like