Transfer Artis 2,000,000.00 SHU & $100K USDC in Float Funds for Post-LBP Market Making

Shutter DAO DAO Proposals
1

Shutter DAO 0x36 Transfer Artis 2,000,000.00 SHU & $100K USDC in Float Funds for Post-LBP Market Making

Forum Proposal Author:

  • Cornelis van der Klooster, Artis Global LTD
  • Hendo Verbeek, Director at Artis Global LTD

Forum Proposal Created: 16-17 Feb 2024

Title

Transfer Artis 2,000,000.00 SHU & $100K USDC in Float Funds for Post-LBP Market Making

Proposal

Transfer 2,000,000.00 SHU to Artis

Amount: 2,000,000.00 SHU (two million SHU) SHU Token Address: 0xe485E2f1bab389C08721B291f6b59780feC83Fd7

Vesting: 100% Unlocked

Chain: Ethereum Mainnet

Artis Float Receiving Address (Ethereum Mainnet): 0x108769199a98C65e68D2B9b5edc8d9464853A729

Transfer $100K USDC to Artis

Amount: $100,000 USDC (one hundred thousand USDC) USDC Token Address: 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48

Vesting: NA

Chain: Ethereum Mainnet

Artis Float Receiving Address (Ethereum Mainnet): X

Motivation

Shutter DAO 0x36 recently voted to provide a grant to Artis for post-LBP market making services for SHU token for six months. (See Forum and Snapshot links below.) That proposal / vote stated (among other things):

“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).”

Artis now recommends and proposes that Shutter DAO 0x36 will provide Artis with float funds 2,000,000.00 SHU tokens and $100K USDC in order to set up and fund a DEX liquidity pool on 26 February 2024 - immediately after the LBP.

In the future, Artis may submit additional proposals to Shutter DAO 0x36 to increase or decrease the float funds, depending on market conditions and liquidity requirements.

Please note, we have had to come up with a number of SHU tokens in order to get to voting in time. Therefore, we have opted to argue from a ‘worst-case scenario’ when it comes to final token price. This sets SHU at $0.05 → this in turn means that 2M*0.05 = 100K

!!EDIT!!

Having monitored the LBP for a good day now, we have the following solution/recommendation:

  • We will set up the liquidity pool for $75K worth of SHU + $75K of USDC
  • We will have the remaining $25K of SHU + $25K USDC as funds to provide market making services with in our respective wallets

Background

Forum Proposal

Forum Proposal Author: Cornelis van der Klooster, Artis Global LTD

Forum Proposal Created: 29 Jan 2024

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

Snapshot Vote

Snapshot Vote Creator: acidbird (own.fund) Snapshot Vote Status: Closed (2 - 5 Feb 2024) Snapshot Vote Link: Snapshot

Platform

Fractal (on-chain transfer will be executed if the proposal is approved)

Vote

Vote “YES” to transfer Artis 2,000,000.00 SHU & $100K USDC in Float Funds for Post-LBP Market Making

OR

Vote “NO” to not transfer

OR

Vote “Abstain” if you do not have an opinion but want to help the vote reach quorum

Executable Code

Transaction 1 - Transfer USDC


Target Address: 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48

Function Name: transfer

Function Signature: address,uint256

Parameters: <<ADDRESS>>,100000000000

ETH Value:

Transaction 2 - Transfer SHU


Target Address: 0xe485E2f1bab389C08721B291f6b59780feC83Fd7

Function Name: transfer

Function Signature: address,uint256

Parameters: <<ADDRESS>>,<<SHU_AMOUNT>>

ETH Value:
2

As in the related proposal the DAO already decided the procedure and party to work with in the following voting: Shutter DAO 0x36 Proposal: Shutter DAO 0x36 Proposal to Select and Provide a Grant to a Post-LBP Market Maker (snapshot.org) I need to put my trust issues (about handing over these tokens and money to a third party) aside and support the proposal in general.

I have to add that the setting and conditions are not clear. A higher level of transparency is necessary.

  1. Why did the parameters change as we initially talked about 50k USDC ?
  2. Who defines the liquidity pool size and in relation with what information. As it now has become double the size.
3 Likes
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I pushed back against the initial proposal and I still don’t see any of the details that I outlined before and there’s no way that a market making proposal with zero details should be passed by any DAO.

Look, I know it’s all bromance and nobody really cares because it’s not your money anyway, right? But it sets TERRIBLE precedent for DAOs being a slush fund to which you can just come and request money with a proposal that not even in crypto any company would sign off on. If this gets a YOLO BRO YES it is clear what will come next. Gate and other Tier 2/3 exchanges will approach Shutter DAO with 6 digit listing proposals. That will go on until all money is burned and no product gets built.

Now for the details that I requested before and didn’t get in the response (link above) here in brief:

  1. We need detailed terms. Artis previously responded that

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.

Bro, just because this is a DAO, we can’t just skip over EVERYTHING. Please share the full-fledged agreement that lists the services for and rights of Shutter DAO.

  1. On what exchange(s) will market making be happening? I understand from the previous proposal that this is only for a single exchange for an unlimited number of pairs. Who decides when on that exchange and pairs? If this is still unclear, I recommend halting this proposal until we have that knowledge.

  2. SLA and depth that will be provided in detail.

Let’s not reduce the quality of engagements just because we’re working with a DAO. The dream of DAOs will die with proposals like this getting approved.

8 Likes
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+1 for transparency and a contract with terms and conditions.

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Why would this require a discussion or follow up proposal? Shouldn’t this be assumed with pre-defined parameters as part of the initial proposal?

Thanks for the hard work on this @Cornelis. It sounds like the “full-fledged agreement which also stipulates the reasons for agreement disbandment and all other legal rectifications with it” will really help the delegates understand what the DAO is being asked to agree to.

Thanks in advance.

1 Like
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In the current form of this proposal we will vote No. I do not see any harm to MM operation should the term of this service be defined more clearly

I believe Artis also previously made commitment to update their proposal, increase trading pair etc and provide more transparency. It is a good practice to incorporate this in clearly defined term.

I do think may be difficult to specify which exchange to list. But this is also a important decision should be share with DAO. Before it is confirmed or pencil out also do not see if there is any need to transfer the asset. Happy to hear the opposite opinion.

1 Like
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I also feel that there is some lack of professionalism here. I feel this is partly because the original proposals were created and voted on without good governance; the DAO is now hindering its own execution capability.

Everyone demands “transparency”, but what is this transparency and how it is specified is missing. This is due to poor behavior on the buyer side (DAO) failing to communicate the criteria. … or it’s not a fool who asks, but who gives.

As a reminder, a list of things that can help the DAO to achieve good governance

  • Having a representative on DAO side to create requests for service purchases
  • Set up a criteria of choosing participants beforehand
  • Avoid accepting ideas for services directly from the service providers themselves, before the framework to buy the service is established
  • Actively look for participants to source the proposals and have a process for this - do not settle for “let’s see if someone posts on our forum”
  • Have longer periods of sourcing proposals

The ideas on how the situation can be improved for Shutter

  • Appointing a professional to handle service providers on the behalf of DAO
  • Biweekly governance calls
  • Longer proposal periods

Note that similar incidents have happened before e.g. Sushi DAO failed to pay their CEO after electing a new CEO in a vote. A bad governance leads to dysfunction, as the stakeholder groups cannot be aligned.

5 Likes
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in order to set up and fund a DEX liquidity pool on 26 February 2024

I feel Artis is not doing a good job here, as they do not manage to communicate the name and chain of the DEX, and why this particular DEX was chosen (out of pool X compared).

Also as far as I understand, DAO can set up DEX liquidity pools directly for most DEXes, as long as precauticious with frontrunning are considered - a problem Shutter itself attempts to solve.

1 Like
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Also from the DAO perspective the DAO should have discussed on the proposal on matters like:

  • What are the benefits: the token needs liquidity for the investor protection, to attract people to the project, to get treasury

  • What are the risks

In my view the risks are

  • Artis is a fraud and runs away with the money: I would rate this quite low likelihood
  • Artis screws up and is hacked: I would rate this medium likelihood - Artis has not discussed or demonstrated any security best practices, and we all know how common hacks are in the cryptocurrency industry
  • Artis is not doing great job and makes up stuff as they go, the efforts lead to bad results, and the DAO would succeeded better with another service provider: I would rate this also as low-medium, as Artis has been somewhat poor at communicating what they exactly plan to do, and there is uncertainty if there is a plan, or if is it good

Any need for transparency is need to understand the risks better, how they are being mitigated, and so on.

2 Likes
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Intro

Thank you all for the robust discussion. As @SCBuergel said on Telegram:

A good heated discussion is a sign of governance being alive - that is good :slight_smile:

This proposal is related to post-LBP market making. The LBP is set for Feb 21-25. And so it is important that Shutter DAO 0x36 makes a decision in an efficient and timely manner. With that in mind, I will try to summarise the main discussion points so far and outline actionable next steps:

Respecting Existing Decisions

Several members pointed out that Shutter DAO 0x36 should respect existing decisions.

Shutter DAO 0x36 already voted in favor of providing a grant to Artis for post-LBP market making services - which includes the transfer of 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)”. See:

https://snapshot.org/#/shutterdao0x36.eth/proposal/0x3a0396a8e018250455d600c31f3e6e26161b8dca9338a6fd477d408503b185a5

As a result, this discussion should focus on whether Shutter DAO 0x36 will:

a) transfer float funds of USD $50,000 worth of both USDC and SHU tokens (as previously decided)

OR

b) transfer float funds of USD $100,000 worth of both USDC and SHU tokens (as now proposed)

Explanation for The Increase

Several members requested that Artis provide an explanation for the proposed increase in requested float funds.

@Cornelis - Would you please share more info on this point?

Details Regarding Strategy

Several members requested that Artis provide details about their priorities and timelines for DEX pools and CEX listings.

@Cornelis - Would you please share more info on this point?

Terms of Service / Service Level Agreement

Several members requested that Artis provide terms of service and/or a service level agreement. Artis has previously agreed to do so, but also stated that the public Shutter Fourm may not be the best place to do so.

I am aware that Artis does have standard terms of service for market making. What would be the best way for Artis to share them with Shutter DAO 0x36? Ideally, it would satisfy Shutter DAO 0x36’s need for transparency and also Artis’ need for business confidentiality.

@Cornelis - Would you please suggest a way for Artis’ to share terms of service with Shutter DAO 0x36?

“Pure” DAOs and Contracts

Several members pointed out that Shutter DAO 0x36 is a “pure” (or “unwrapped”) DAO and, as such, Shutter DAO 0x36 is not able enter into contractual agreements.

Several other members pointed out that some other DAOs have legal wrappers and/or ecosystem partners that are able to enter into contractual agreements.

4 Likes
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Due to the sensitive nature of the topic, I wanted to have a proper sitdown to respond to all topics unclear for now. I urge everyone to treat this as an open forum the way it is intended to be used. I am not the contractor who is tasked with delivering something and will just have a go at how much I can possibly drain from the solicitor.

For all of these topics, please continue to inquire for further clarification if I am not doing it justice here.

Increase of Funds

First off, these funds are not Artis’ funds at any point in time. It is simply to set up the liquidity pool with. We will transfer over LP tokens to a trusted DAO member the moment the pool is deployed.

These tokens hold the power to rug a pool and have general control over it. Therefore, it makes sense that we treat this as a hot potato and have an address ready to send this ownership back to.

As for the funds allocated to create the pool, we simply envision an increase is for the better in light of uncertainty about the total amount raised. 50K of SHU + 50K of USDC may be sufficient but if it is not then we have a window of a hyper volatile LP while we have to go through another 6 days of proposing and voting before we can beef it up.

To add transparency to that. It is not to my benefit to have that extra power, it is to the benefit of the people who intrinsically care about the state of the pool especially when sell pressure may be substantial from the start. If it was entirely up to me it would make just as much sense to inquire for 500K worth of tokens and 500K of USDC so I know for sure that we’re on the safe side at all times → this increase is just an additional foot behind the door when the results of the LBP are clear.

Strategy

DEX:

It may be clear to everyone that a liquidity pool ought to be live the moment the LBP has concluded. We are set to launch the pool on Uniswap V2.

We have the very strong suggestion to stick to a V2 pool as it currently still makes up the most security-inducing iteration of a pool. For any newcomers/investors/organic interest it is increasingly important to see a V2 pool as opposed to just a V3 pool. It means that no matter the token price, the team behind it will support it. Uniswap being the clear starting place to go for the first pool. Later down the line an Arbitrum based pool may make sense or anything that flies with the community. Think of this as the foundation to continue from.

CEX:

A centralised exchange should not be rushed towards. The simple reasoning being that it is not a vital element of the starting phase of a go to market strategy. It is definitely a vital element of your overall token maturity and allows for plenty of opportunities that are left out by a DEX-only narrative.

As a whole, the DEX pool will be the leading price indicator and the main denominator for how the token should behave. Your CEX will trail behind it and follow what is being portrayed on a DEX. Besides it opening up the floodgates to a broader (less sophisticated) audience, there are valuable components there which also suit the more sophisticated participant.

The reason why we want to be on the frontlines with the leading DAO members to open up discussions with these exchanges already is due to their innate nature to blast up their listing fees when the overall market starts to perform well. Any project owner in here will know that KuCoin may charge hefty six figure sums in light of BTC performing better as opposed to the way we saw their pricing in October last year.

It’s vital to have the conversations and introductions out the way so there can be swift action to get on these platforms for an earlier inked listing fee. If they sense you’re scrambling to get a listing out, they’ll be more than happy to deliver on that desire but for a premium price (which is just part of outrageous demands we have seen).

CEXs are tricky to navigate and we have a subset of players in each general price range, which we would recommend. There are also parties we absolutely would never support. As a first listing, it makes sense to look at the range of MEXC, BitMart, Gate.io etc. Within this category MEXC is a clear winner for several reasons.

Criteria:

  • We look at what type of activity on the platform is actually organic (which to you means how many of these people would actually care about trading your token);
  • how is their track record over the years to the naked eye (public information);
  • how have they been to deal with from a market making perspective (nasty business like knowing you will have to deal with their high-horse attitude);
  • as traders ourselves and for the general public who will be engaged with simple trades: how smooth of an experience does the exchange offer? Are you in a way too complex environment and is it generally not a nice place to stay trading in for more than a couple of minutes? Is it just as smooth going on the mobile version as it is on desktop?

With these criteria in mind there is one clear contender for the blacklist price in here and that is Gate. We have had too many horror stories with these folks that I couldn’t sleep well at night pushing SHU to list there. The remainder of these platforms come down to how flexible they are in receiving their listing fee such as completely in USDT without any SHU tokens. I think we all know what happens when you give native tokens to a party that could care less…

MEXC for now is the recommendation considering the pricing, a close second would be BitMart due to being on the cheaper side of things. OKX and KuCoin would be great (also seeing a representative of the former here on the forum) but it may be a bit too pricey as a start.

Terms of Service

I reckon it would be a good idea to elect a few members from the DAO to review the document, that way I feel more comfortable in not providing confidential resources to an open forum. It is not for me to elect such an individual or more, that is absolutely up to you. Within these we can implement the suggested changes and see if we can abide by those.

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I am also leaning on the side of caution here and in general. This happened just yesterday: https://twitter.com/owocki/status/1759598056217911364

In the UK going to court anonymously for a commercial dispute seems possible (source).

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An intermediate step may be for the DAO and service provider to agree beforehand that a conflict would be arbitrated by an online arbiter such as Kleros. Full disclosure: I’m a Kleros developer.

For a ruling involving offchain meatspace actions, if one side does not abide by it, a traditional court of law may recognize and uphold the ruling from the online arbiter, as it has previously happened (source).

Alternatively, would a Shutter Foundation help represent the DAO or facilitate the onboarding of the service providers with a soft KYC? To apply for an Arbitrum DAO grant for example it seems to be the procedure.

Sorry if I’m not addressing the specific merits of this proposal, it just seems important and probably worth a dedicated discussion tbh.

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Thanks for your detailed replies.

One follow-up question:

The LP tokens can be sent to the Shutter DAO 0x36 treasury (as opposed to “a trusted DAO member”), correct?

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Absolutely, as long as Artis doesn’t hold custody over them the moment the pool is live. In a more conventional approach the project’s owner/founder would prepare an address to immediately receive the LP tokens on.

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I can agree with the point that paying CEX for tokens is a bad idea. And Gate is definitely not a preferred option or worthy to list should any payment is required.

But can hardly say MEXC or Bitmart is any better. Their liquidity at equal level (bitmart is worse) and has preferred treatment for their internal team and full of token from project that is scamy.

I actually believe there is very little urge to list on these Tier-3 Exchanges beside a DEx right now.

For Shutter, should at least try KuCoin, OKex and Bybit( for less extent) or just wait until condition are met with these exchanges.

@Cornelis transparency and contract obligation are also repeatedly mentioned topics in this discussion. Mind to response on these topics?

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I’ve responded. Appoint trusted individuals who will be going through the legal document. The other details have already been provided in the discussion following the original proposal. The points that matter to service provision:

As for the CEXs, that’s open for debate. I find it particularly worrisome to refrain from attempting to target any exchanges altogether from the start in order to wait for a higher tier exchange. That’s me looking out for the financial aspect of the endeavour and something that ought to be thought of in open discussion, which I simply aid in casting light on.

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When you say it is worrisome to do so … mind to be more specific why it is worrisome? Otherwise it sounds like a statement or declaration without providing rationals.

Should Shutter DAO pay a fee on list on not so great exchange with questionable reputation, with very little liquidity advantage compares to DEX, I do not see how is that better/ good for wellbeing of project.

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Because the road to a more “reputable” exchange is pretty difficult if you’ve not been on any other tiered exchange. It’s not impossible and I genuinely don’t mind it either way. If you can find a Tier 2 exchange that’s not partaking in debatable practices from the onset, then you have a decent way in to build a track record for the higher exchanges.

Maturity doesn’t look like: We’ve been on DEX for 6 months, therefore, KuCoin has to accept us now.

It does look like: You’ve got a proven track record on an MEXC for example, therefore, you’ve passed a certain DD process and shown to be able to uphold exchange parameters without getting kicked off. Having volume showing across the board aids that conversation towards these bigger folks significantly. (This is based on having worked with CEXs directly, as well as having people work for us who used to work for reputable CEXs)

The additional benefit is that of a financial matter, which allows the DAO to extend its runway through a CEX. This is generally a difficult practice on a DEX.

→ all of this is for your benefit, I gain absolutely nothing from it.

PS.: another MM would have tried to convince you to list on as many exchanges as possible to boost their contract value

1 Like
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!!EDIT!! Having monitored the LBP for a good day now, we have the following solution/recommendation:

  • We will set up the liquidity pool for $75K worth of SHU + $75K of USDC
  • We will have the remaining $25K of SHU + $25K USDC as funds to provide market making services with in our respective wallets

(Included the edit in the original post)

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Coingeko flags MEXC volume with a question mark for long time and mark it as 0 for awhile. Volume if is genuine it’s just a factor for listing decision. I doubt other exchanges would use the volume on MEXC as an indicator when they cannot verify and know their questionable practice.

If it is meant to increase the runway it’s much better list on exchanges has better liquidity. I don’t think user of MEXC will be very enthusiast to buy MEV prevention token they are probably would not even now what’s MEV

1 Like