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

Shutter DAO DAO Proposals
22

Perhaps there have been conversations outside the forum and perhaps some members of the DAO have been shown the aspects of this agreement that Artis prefers to keep private. Perhaps that’s okay. If so, it would be helpful for other voting delegates to have that confirmed to them here in some general way.

I personally voted against the original snapshot vote due to lack of clarity in the original snapshot proposal, and I still feel that same lack of clarity exists in this proposal. Taken on it’s own, this thread seems to show intentionally evasive and vague answers to legitimate questions.

  • What address will the “surplus” tokens be sent to immediately after the LBP?
  • What wallet will hold the LP tokens? (as even Cornelis mentioned - these tokens hold great power)
  • What exchanges will be used?
  • What is process for the 0x36 DAO to end this arrangement with Artis? What are those terms?
  • What are the “other necessary costs” the DAO is committing to?

I’ve been involved in “pure DAOs” that interact with service providers. While contracting fully executed documents can be problematic, this doesn’t exclude service providers and proposers from setting clear expectations and making specific commitments to the DAO that can be later used to judge their performance or hold them accountable. I personally would expect much more transparent commitments on processes in situations like this.

I know there is a time crunch, but is that being used against the DAO in the case?

3 Likes
23

I agree with what @miohtama said， we have long way to go to improve shutter dao’s governance. And for this proposal, I will also agree,because provdiing token to set up pool on dex is a “have to” option . And I think this will be a automatic agree as far as we agree artis providing MM sercise for shutter dao. But I hope we can have a better and deeper discussion when spt want to list on CEX, because the non-transparency processes are anywhere for that.

2 Likes
24

I voted against this proposal in the snapshot vote for the concerns listed by other people. I do however also realize that it is vital to act quickly in this early phase of the DAO and I am leaning toward voting “yes” for this reason. I would appreciate if Artis posts daily updates in regards to their progress during the Market Making if this proposal goes through.

Another option that might be worth thinking about is to have a Safe with Artis and some people from the Proto DAO for example so that Artis can’t act without txs being signed off by community members too. I know this last idea is quite last minute, but at least it’s something to keep in mind for the future too.

1 Like
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UPDATE

In less than 1.5 days, the LBP has raised $1.88M USDC and sold 12.36M SHU. By the end of the LBP, Artis projects the LBP may potentially raise $2-$8M USDC and potentially sell nearly 40M SHU at an average price of $0.125.

Based on these projections, we have re-evaluated the best strategy for Shutter DAO 0x36 and the SHU token - and the resources needed to execute this strategy.

Please note that Artis makes these recommendations for the benefit of Shutter DAO 0x36 - not for itself. Furthermore, Artis is revising its earlier recommendations based on the progress of the LBP and the need for an adequately sized DEX liquidity pool immediately after the LBP.

DEX RECOMMENDATIONS

DEX - We recommend Shutter DAO 0x36 sets up a Uniswap v2 SHU/USDC pool. In theory, Shutter DAO 0x36 could do this by itself, but this would create delays, create an opportunity for potential front-running (pool set up with non-optimal/maliciously set initial pricing), and weaken confidence in SHU. As such, Artis offers to do this on the Shutter DAO 0x36’s behalf.

Liquidity - We recommend that Shutter DAO 0x36 funds the Uniswap v2 SHU/USDC pool with 4M SHU ($500K worth of SHU at $0.125 per token) and $500K USDC (10% of the amount raised in the LBP). These funds are for the creation of the liquidity pool and never sit with Artis any longer than necessary for deploying the pool.

LP Tokens - We recommend that Shutter DAO 0x36 holds the LP tokens in its treasury. Artis will immediately transfer the LP tokens to the treasury after setting up the Uniswap v2 SHU/USDC pool.

Market Making - We recommend that Shutter DAO 0x36 provides Artis with 800K SHU ($100K worth of SHU at $0.125 per token) and $100K USDC (20% of the DEX pool size) as float funds for the purpose of market making.

COMMUNICATION

We would like to host one or more calls with Shutter DAO 0x36 members in the next 24-48 hours, if they are interested. Please DM me for meeting and link at 15:00 CET 23rd of February.

We would also like to set up a Telegram group with a few Shutter early contributors to share terms of service and discuss market making strategy on an ongoing basis. Please DM me for a group link.

NOTE

We thank you for your patience and understanding. Shutter DAO 0x36 and Artis need to make adjustments to our strategy quickly as conditions change. We know this can be difficult in the context of a DAO. We look forward to working together for the best outcomes for Shutter DAO 0x36 and the SHU token.

4 Likes
26

Yes. The zodiac roles modifier can very effectively deliver a scenario where entities such as Artis have certain freedoms inside a certain safe while leaving true control of the assets to a governor contract (and likely Fractal, but I’d defer to that team).

Probably too short notice for today, but a tool that could be considered in the future.

3 Likes
27

I would like to emphasize that even a 500K USDC liquidity might be insufficient if we consider the ongoing success of the LBP.

According to our preliminary calculations, we are expecting the LBP to sell out earlier than its closing time, with an average price of $0.158.

Even if we consider the average case scenario by Cornelis, with a $5M raise, liquidity should be distributed more thickly if we take into account:

  • The upcoming unlock schedule on March 18th, with a target price of $0.125, will create a maximum possible selling pressure of around $5M.
  • According to the genesis allocation schedule, around 15.75M SHU will be unlocked each month over 24 months. This will also add another layer of selling pressure, with a maximum of around $2M, which is dramatically huge.

Considering the hyped emotions in the blockchain space (fear-greed) and the successful ongoing LBP, the DAO needs to support a thicker liquidity to justify its valuation and to eliminate potential volatility for the sake of investors, as well as to protect the future incentive value for the Shutter ecosystem.

With a 1M liquidity pool and an extensive unlocking schedule, LP might be insufficient and portray Shutter as having weakened confidence with price volatility.

LBPs are a good way to generate attention for the project. That attention creates a considerable amount of demand and drives both the price and valuation during the LBP.

However, remember that the post-market should see some demand too! Combining these elements with an insufficient pool might create huge sell pressure, leading to SHU capitulation.

This drives investors’ decisions and sentiment negatively, while the price drops, the liquidity pool gets weaker, and upcoming unlocks. This sentiment and perception could never be erased from people’s minds.

I advise the DAO to seed the liquidity with no less than 1M USDC + 1M USDC worth of SHU. Remember, the success of the valuation of Shutter means a greater incentivization mechanism for the project as well as a funding opportunity to grow Shutter further.

So I propose Artis to re-evaluate the latest update according to ongoing LBP metrics as well as propose Shutter DAO to funds the SHU/USDC pool with at least $1M USDC + $1M worth of SHU.

1 Like
28

Great comment, I would suggest that the Uni V3 pool is listed with a floor price, of 2X the FjordFoundry final price, with only SHU token in it, no USDC. USDC is the open door for people to sell their SHU. It’s the principle of Uni V3 brackets.

That way, we avoid paper handed sellers, MEV, JIT etc… of steeling USDC from the pool.

2 Likes
29

I think it is everyone’s intention to provide sufficient fund for sake of DAO and LBP participants, but DAO member do have suggestion on transparency and would like to have a good commitment of service which looks Artis is willing to make.

Just to sum up everyone’s comment:

  • What are the “other necessary costs” the DAO is committing to
  • What address will the “surplus” tokens be sent to immediately after the LBP?
  • Can Artis sign statement or declaration or setup a Safe to manage MM fund together with DAO members
  • On what terms will the asset be return? Return in full in 6 months?
  • Use DAO process for select CEX and be transparency about these asset provide to CEX, condition and cost to reasonable extend
  • SLA and orderbook depth that be provided in detail.
  • Frequency of providing update of progress. Current balance & surplus/loss, trading cost

Please feel free to add concern question or remark to Artis.

I also asked the access to TG group to Artis. Hopefully this issue can be address in a way is more comfortable for Artis

4 Likes
30

notice

Please DM me here on Discourse for the meeting link in 1.5 hours → this is the best solution to tackle pain points

Please DM me here on Discourse for the Telegram invitation

1 Like
31

Would be very good to join the call to have questions answered, but:

  • there are no costs except our service fees. All the latest discussion has been around funds to deploy a liquidity pool with + anything used for managing activity thereafter (ALL YOUR FUNDS AT ALL TIMES)

  • there will be no surplus tokens in this case. I don’t appreciate how that was labeled as ‘vague’ communication from me before. If the LBP played out worse than it did, we would send back any tokens overshooting the mark to DAO ownership. I couldn’t care what address it is, as long as it isn’t in our custody. The exact same premise applies to the LP tokens.

  • there needs to be clarity on the parameters of the safe. We can’t have a multisig situation wherein we have to wait for every MM order to be signed off on before execution (which is what I read before)

  • the assets are never fully ours and on a CEX this would have been way more apparent. On a DEX we will have to take custody if we like it or not. However, the assets will remain in your name. If there’s a decision to call quits, that’s when the assets are returned to a predetermined wallet.

  • regarding CEX, that doesn’t seem aimed at me. I gave my professional take on the matter and pull out of the conversation in its current state

  • the SLA is for a few people who will overlook it, said this before. It’s a DEX for starters until CEXs accept you so depth is not any more relevant than what we previously agreed to which I have already presented twice now.

  • we provide standard weekly and monthly updates through 2 reporting formats

JOIN THE CALL FOR QUESTIONS

1 Like
32

Appreciate your understanding of the matter and how it’s being scaled. That’s largely what the call was for instead of infinitely trying to get proposals through.

For any other client we served through such a process we make sure at least 10% of LBP proceeds end up allocated for the creation of a liquidity pool.

You’re 100% correct about the fluctuating nature of the parameters and that we need to constantly adjust based on the LBP performance

1 Like
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INTRODUCTION

Today at 15:00 CET, Artis held the first of regular conversations with fellow Shutter DAO 0x36 members. It was a highly productive conversation. Artis looks forward to continuing the conversation here in the Forum, in the Telegram group, and on future calls.

Thank you to 5pence (Keyper) and Han (ProtoDAO Member) for joining the call, and for sharing their insights and questions.

A number of Shutter DAO 0x36 members were unable to attend, and so Artis is sharing a recap of the conversation and next steps.

Note: I refer to Artis by name (and not as “we”) throughout this post for the sake of clarity.

RECAP OF THE CONVERSATION

Separation of Proposals

We discussed that proposals should be discussed and voted on separately whenever possible.

Example: Proposal 9 combines a proposal regarding deploying funds (4M SHU + $500K USDC) to a Uniswap v2 pool and a proposal regarding providing funds (800K SHU + $100K USDC) to Artis to do market making. Ideally, these two proposals should have been discussed and voted on separately.

DEX Pool Process

We discussed the process for setting up the Uniswap v2 pool:

  • On Sunday, February 25 at 23:59 UTC, the LBP will end. Immediately thereafter, Fjord Foundry will trigger the “withdrawal” function, which will transfer the remaining SHU and the raised USDC to the Shutter DAO 0x36 treasury.

  • On Monday, February 26 at approximately 01:15 UTC, voting on Proposal 9 will end. If passed, Proposal 9 can be executed, which will transfer 4.8M SHU and $600K USDC to Artis.

  • Immediately thereafter, Artis will create the Uniswap v2 pool, add 4M SHU and $500K USDC liquidity, transfer the LP tokens to the Shutter DAO 0x36 treasury, and use the remaining 800K SHU and $100K for market making.

DEX Pool Timing

We discussed the need for setting up the Uniswap v2 pool immediately after the end of the LBP.

DEX Pool Liquidity

We discussed the need to add liquidity to the Uniswap v2 pool, specifically an amount equal to or greater than 10% of the funds raised in the LBP - on each side.

If the LBP raises $5M USDC, then Shutter DAO 0x36 should add at least 4M SHU and $500K USDC liquidity. But if the LBP raises $7.5M USDC, then Shutter DAO 0x36 should add at least 6M SHU and $750K USDC liquidity.

Proposal 9, if passed, would add 4M SHU and $500K USDC liquidity. One or more future proposals on Fractal could add additional liquidity if needed.

CEX Listings

We briefly discussed CEX listings, noting that it is not an urgent topic at the moment.

Artis stated that they would engage with fellow Shutter DAO 0x36 members to define a CEX listing strategy. Artis will use their extensive relationships with CEXs to execute that strategy, securing CEX listings on favorable terms.

Market Making

We discussed whether it is necessary for Artis to engage in market making on DEXs and CEXs.

Artis stated that it is not strictly necessary to engage in market making on DEXs, but that it may have benefits, including: increased liquidity and decreased volatility. Artis will follow Shutter DAO 0x36’s preferred strategy regarding market making on DEXs

Artis also stated that they can add the most value to Shutter DAO 0x36 by engaging in market making on CEXs.

If Shutter DAO 0x36 wishes to engage Artis exclusively for market making on CEXs, that would be fine.

Market Making Strategy

We discussed that a market making strategy cannot strictly be defined prior to the market being live. We discussed that it would be beneficial for Artis and select Shutter DAO 0x36 members to communicate on Telegram and video calls on a regular basis so that Shutter DAO 0x36 members could provide feedback, offer suggestions and define constraints.

Ownership of Funds

We reaffirmed our shared understanding that all liquidity and market making funds transferred to Artis are owned by Shutter DAO 0x36 at all times. Artis is merely using the funds to execute Shutter DAO 0x36 instructions.

Incentives

We discuss that Artis does not have a financial incentive to engage in bad behavior - for example selling tokens SHU into the market.

Wallets

We discussed the set up and security of Artis addresses used for market making.

Artis committed to:

  • always using dedicated addresses for managing Shutter DAO 0x36 funds, and never co-mingling Shutter DAO 0x36 funds with other funds, and

  • providing Shutter DAO 0x36 with the Artis address(es) used for market making, so Shutter DAO 0x36 can verify balances, activities, etc.

5pence recommended setting up a zodiac roles modifier on a Safe that describes and contains the permissions Artis needs, without granting Artis the ability to withdraw funds. 5pence said he had seen this setup used very successfully in other DAOs.

Terms of Service

We discuss the need for Artis to provide Shutter DAO 0x36 with a more detailed commitment regarding the terms of service. We discussed that it is not possible for Artis and Shutter DAO 0x36 to enter into a legal agreement, but that a clear statement of commitment from Artis would suffice.

NEXT STEPS

Proposal 9

We encourage all Shutter DAO 0x36 members to vote on Proposal 9 on Fractal: https://app.fractalframework.xyz/daos/0x36bD3044ab68f600f6d3e081056F34f2a58432c4/proposals/9

Potential Additional Proposals

We agreed to watch the progress of the LBP and create additional proposals to adjust to market conditions.

If (highly unlikely) the LBP raises less than $5M USDC, Shutter DAO 0x36 may consider proposal(s) on Snapshot, instructing Artis to decrease Uniswap v2 liquidity and return a portion of funds to the Shutter DAO 0x36 treasury.

If the LBP raises more than $5M USDC, Shutter DAO 0x36 may consider a proposal(s) on Fractal to add additional liquidity to the Uniswap v2 pool.

If Shutter DAO 0x36 believes the 800K SHU and $100K USDC would be best deployed as additional liquidity to the Uniswap v2 pool (rather than as float funds for DEX market making), Shutter DAO 0x36 may consider proposal(s) on Snapshot, instructing Artis to add those funds as additional liquidity to the Uniswap v2 pool.

Terms of Service

We agreed that Artis will provide a clear and simple list of bullet points outlining their commitments to Shutter DAO 0x36 in the next day or two. The list will include the following topics (also discuss above):

  • all funds transferred (except service fees, as agreed) to Artis remain are owned by Shutter DAO 0x36 at all times

  • dedicated address for market making - with no commingling of funds

  • transparency for all transactions - since they are on the dedicated address

  • a process for ending the engagement of Artis by Shutter DAO 0x36

  • a process and timeframe for Artis returning all funds to Shutter DAO 0x36 after ending the engagement

2 Likes
34

I’d like to thank the Artis team for setting up a call so quickly to talk through some of the more difficult points in the proposal. The service Artis is providing the DAO is not only necessary, but also very valuable.

The market making side of the proposal seemed to be what needed some additional details, and the additional clarity Artis provides in the coming days should alleviate this. The commitments to maintain separate dedicated safe(s) for the MM funds will ensure excellent transparency.

I will vote ‘Yes’ on this proposal. I believe the DAO should ensure this proposal passes so that Artis is able to create the appropriate sized liquidity pool immediately following the LBP (and promptly return the liquidity tokens to the 0x36 treasury as promised). At that point, with the clarity of the LBP outcome and the liquidity tokens returned, the market making strategy should be a much easier conversation to have.

4 Likes
35

This Proposal has gone to two separate votes:

Proposal 9: Transfer 4.8M SHU & $600K USDC to Artis for Post-LBP Market Making Voting ends Monday, Feb 26 at 02:00 CET

Proposal 10: Transfer An Additional 2M SHU & $250K USDC to Artis for Uniswap v2 Pool Liquidity Voting ends Monday, Feb 26 at 23:00 CET

–

Due to the rapidly changing progress of the LBP and the robust discussion in this discussion thread, both votes on Fractal are based on this proposal in the Forum.

3 Likes
36

In regards to proposal 10.

In 2.25 days, the LBP has raised $4.33M USDC and sold 24M SHU. By the end of the LBP, the LBP may potentially raise $7.5M USDC and potentially sell nearly 40M SHU at an average price of $0.125.

Where did this number come from?

Price has only traded below $0.13 for less than 5% of the current LBP duration, so not sure how it averages to $0.125.

2 Likes
37

At Kleros labs we have initially voted NO on the Snapshot vote as we believed the proposal was underspecified and we shared the concern from many community members.

However, we understand that we are under time constraint with the end of the LBP coming soon. ShutterDAO needs to have proper liquidity on the chain, this is a key requirement as low liquidity could quickly spiral in irrational price action. Moreover we really appreciate the responsiveness from @Cornelis with the call to clear the last details and thanks @5pence and @han for following this topic closely.

Based on these last information, we will vote YES on both proposals. However we would definitely welcome having some ways in the future to have the DAO manage its LP without relying on an external third party. (CFO, Financial committee etc.)

In the long-run we do believe ShutterDAO could benefit from systems like the Zodiac Roles modifiers mentioned by @5pence or things like Hat Protocol. As it was mentioned by @jaybuidl we believe ShutterDAO could also benefit from using Kleros courts with an escrow to deal with its agreements with Service Providers and key milestones and would be glad to help the DAO in setting this properly if needed.

2 Likes
38

The quote above comes from a comment written by Cornelius at Artis, but I can try to explain:

$0.125 is not a historic SHU price. It is not a prediction of the future SHU price.

$0.125 was used to calculate the minimum amount of SHU that should be added to the DEX liquidity pool immediately after the LBP ends. This calculation is needed because we won’t know the last price of the LBP until it ends, but Shutter DAO 0x36 needs to propose treasury transfers at least 72 hours in advance. By choosing an intentionally very low price for calculation, Artis is erring on the side of having more than enough SHU for the DEX liquidity pool - rather than not enough.

3 Likes
39

This Proposal has gone to a third separate vote:

Proposal 11: Transfer Another Additional 2M SHU & $250K USDC to Artis for Uniswap v2 Pool Liquidity Voting ends Monday, Feb 27 at 19:30 CET

–

Due to the rapidly changing progress of the LBP and the robust discussion in this discussion thread, both votes on Fractal are based on this proposal in the Forum.

1 Like
40

In the interest of keeping this thread up to date and accurate:

It’s my understanding that immediately after Proposal #9 passed 17 hours ago, Artis fulfilled their commitments exceptionally well by deploying the pool, sending back the LP tokens, sending back the extra SHU tokens, and providing the DAO with the address of the wallet they’re holding the mm assets in.

Here are the Tx links from Artis:

We deployed the pool:
https://etherscan.io/tx/0xd6849031b09993e91999f4b8836b02a6ff1884deef8357df0d1c3e2923fcd3a1

We sent back the LP Tokens:
https://etherscan.io/tx/0x2271cfa45956317bfdecaf2dc9d66230e1e56c611fb2f41c9fbe785af1d865a2 

We sent back the redundant SHU tokens:
https://etherscan.io/tx/0xcd1a67af8a65f94cace9070a79a1bd60d80cdce7f8691244c37becd4b2a56549

Artis wallet DEDICATED TO ShutterDAO:
https://etherscan.io/address/0x108769199a98c65e68d2b9b5edc8d9464853a729

Proposal #10 “Transfer An Additional 2M SHU & $250K USDC to Artis for Uniswap v2 Pool Liquidity” has cleared quorum and should be executable in another 4 hours. Fractal Link for Proposal #10

Proposal #11 “Transfer Another Additional 2M SHU & $250K USDC to Artis for Uniswap v2 Pool Liquidity” has not cleared quorum yet, but many DAO members are waiting for an update on the progress before voting to pass #11 (which closes in about 24 hours) Fractal link for Proposal #11

5 Likes