TIP-060 Solana Growth Partnership

Proposals
1

Vote Type:
Token holder DAO Governor Bravo Proposal

DAO Elected Representative Sponsors:
Sap, Will

Overview:
tBTC has successfully launched on Solana, but with limited usage and in competition with existing efforts to bring native wBTC to Solana. There exists an opportunity now for a first mover advantage to establish tBTC as the new canonical BTC on Solana. To do that, the cold start problem for tBTC TVL and volume on Solana needs to be addressed immediately with new protocol integrations that increase the liquidity & utility of tBTC as collateral.

This is a proposal for the Threshold DAO to engage in a partnership with Mango & Dual DAO to deliver products supported by CKS Systems liquidity to bootstrap TVL for tBTC across the Solana DeFi ecosystem.

These protocols are better together and a more liquid BTC market on Solana via tBTC is collectively beneficial for T, MNGO, DUAL and even SOL. By making this benefit clear to the respective communities it’s possible to engage a positive feedback loop to grow tBTC. The proposed deal structure is designed with this in mind and includes treasury swaps in the form of on-chain call options to formalize the relationship of our mutual successes.

Milestones:

  • Oracle Creation, Funding and Support
  • Mango Markets/Openbook tBTC listing & market making
  • Treasury Diversification switches to use tBTC instead of wBTC
  • Purchase and hold up to $3M of tBTC
  • tBTC option market & liquidity on Dual Finance
  • Add tBTC collateral weighting to Mango Markets
  • Primary liquid BTC market on Solana DEXs

Who Is Involved:
Mango DAO, Dual DAO, CKS Systems, Threshold Token Holder DAO, Threshold Treasury Guild

Mango Markets is the top derivatives DEX on Solana to trade, lend and borrow with a CEX-like orderbook experience.

Dual Finance is an options protocol focused on developing an incentive infrastructure that productizes market making.

CKS Systems is a DeFi native market maker born out of collaboration between Mango Markets & Dual Finance to bring back liquidity to Solana.

Summary:
Complete on-chain market making program to increase tBTC TVL, liquidity and volumes on Solana order book DEXs and unlock tBTC collateral on Mango Markets & Dual Finance. Liquidity and operational support are provided by CKS Systems.

Per recommendation of DAO representatives and to better demonstrate the process, the treasury diversification has already switched to using tBTC. The result is Mango DAO now holds the majority, 70% of tBTC TVL on Solana.

This proposal is designed to be fully executed on Solana and does not require any OTC lending or custody operations. Following the T transfer to the Threshold Treasury Guild, they will bridge T and mint T options on Solana using the Dual Finance program - this can be done using SPL-Governance, Squads multi-sig or a standard wallet.

The following table outlines the timeline of deliverables, expected results, incentives and rewards.

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*Incentives in T options are distributed 10% to Mango DAO, 10% to Dual DAO, 80% to CKS Systems.
**Rewards are issued from Mango & Dual DAO to the Threshold Treasury Guild. If and when TTG wants to exercise these, they can physically exercise on-chain or source a bid from CKS Systems for USDC on ethereum

Goals:

  • Make tBTC the canonical, dominant, trusted form of BTC on Solana, supported by a full suite of on-chain products.
  • Support a set of oracles to provide easier tBTC integrations
  • Increase Solana tBTC trading volume on spot CLOB DEXs
  • Target key potential holders for tBTC TVL, in addition to the Mango DAO treasury
  • Create value for tBTC collateral across the Solana ecosystem
  • Develop a liquid option market for tBTC
  • Spread tBTC awareness through a public dashboard tracking growth

Why these partners?

  • Partnering with Mango & Dual will help integrate tBTC quickly to become entrenched in Solana DeFi
  • Liquidity is expensive & paramount for tBTC success - existing efforts will likely go to mercenary farmers
  • Provides compelling DeFi use cases which users need to underwrite the risk of using non-native assets
  • Uniquely experienced team in market making, options, cross-chain liquidity and creating DeFi products
  • Proven track record bridging new assets and liquidity for Solana tokens - CHAI
  • Tokenized options are a trustless solution with low overhead and aligned incentives
  • Collective interest in each project’s growth and success
  • Explore new DeFi primitives and opportunities only possible on Solana

Tx Details:
Transfer 20M T to the TTG. Subsequently, bridge to Solana & mint the T option tokens

2 Likes
2

Clearly makes sense. After the FTX bridged BTC failure, the Solana world needs a canonical bridged BTC that not only is trustless and decentralized, but takes agency to grow and lead.

wBTC was seemingly adopted just as “oh theres thats the only option”, but wormhole seems to have little to no interest in actually driving its usage on-chain.

if Treshold wants to achieve a quick win in the time of bear market that could compound into a massive success over time, this is the time and opportunity.

2 Likes
3

Hey @DonDuala, it’s great to know that there is appetite and enthusiasm for tBTC on Solana, so thanks for the support. I’m broadly in support of this proposal, and would love to see tBTC become the dominant BTC on Solana.

That said, I think the proposal could benefit from additional structure around the T options, and clarity as to the expected onchain liquidity outcomes.

Rather than mint the full T option immediately, can it be broken down into two or three tranches? One at commencement, and the other one or two based on onchain volume/liquidity KPIs, to be minted after three and six months. Split say 10/5/5.

What do you think are some realistic numbers here?

In regards to the strike price of the reward options, it would make more sense to me to set the strike price based on the current MNGO and DUAL market price, similar to the way the T option has been set. It currently seems unlikely that the DAO would execute them.

1 Like
4

Thanks for the proposal! In general, I’m supportive of collaborations that explore uses cases that aren’t possible on ETH L1.

As of today (9/26/2023), the current price of T is ~$0.018, the current price of MNGO is ~$0.015, and the current price of DUAL is ~$0.025. So the T options are already in the money versus the MNGO and DUAL options which are relatively far out of the money.

Thoughts on making those equivalent and setting the strike price to the market price of each token +/- some premium/discount at the time the proposal passes?

2 Likes
5

Splitting up the option issuance based on KPIs was in the draft proposal, but advice was to limit the scope here to reduce complexity and prove the value of the program first. The intention would be to follow up with a KPI based option along these lines:
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Regarding strikes (cc @maclane) we can target similar moneyness across the tokens. The intended design here is to provide additional value in excess of a normal market making deal, so the size & structure (present value) of the rewarded options need not be equal. The comparison here would be a market maker giving options on its equity to its clients. Consider the disruption to the industry and benefit to projects/DAOs if this becomes standard practice :grin:

Nevertheless if the strikes are a sticking point, then I’d propose a $0.02 MNGO & $0.025 DUAL strikes. My sense is any lower may be a blocker within the respective DAOs. The initial T strike references prices from ~2 weeks ago and was fixed, again to reduce complexity, but if that’s not a priority anymore, it can certainly be floating. I’d propose an at-the-money option as defined by T close price on Coingecko the day a proposal passes.

Appreciate all the feedback so far. Open to ideas on all points here :pray:

1 Like
6

Thanks for the adjusted strikes @DonDuala, and the T close price when the proposal passes sounds good to me.

1 Like
7

Thanks for the proposal, this has been move to Snapshot for a temp check.

1 Like
8

I’ll have to reconsider my position, as it sems that tBTC on Solana will also be just bridged by wormhole.

We should not spend funds to incentivise the token that is minted by another part (Wormhole validator set) than us.

This presents an incredibly dangerous security implication.

9

tBTC is a native deployment on Solana. It just uses the wormhole front end

1 Like
10

I thought so too, but apparent’y that’s not correct:

The implementation is based on the Wormhole token bridge and does not require the off-chain client to work with Solana. Ethereum L1 Bank contract remains the center of the gravity of tBTC bridge and tBTC token is still minted “centrally” on Ethereum L1.

Which is why I am quite concerned.

11

Proposal passed on Governor Bravo on October 14th, 2023:

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T close price on Coingecko: $0.0224

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12

Thanks Eastban, we already took the fix as of the proposal passing the snapshot on 9/30.
Coingecko 9/30 Close = 0.01844605.

It wouldn’t have made sense to vote on a proposal where the outcome of the vote circularly depended on the price, especially since the lag times between each stage were unknown at the onset. Mango DAO & Dual DAO votes are active based on this strike as well.

We have created the TTG multi-sig on Realms and the proposal is live for signing at: Realms

Mango DAO & Dual DAO option swaps proposals can be tracked here and both are ITM already too:
4M MNGO 5/14/2024 0.02C
20M DUAL 5/14/2024 0.025C

13

I’m not following. Snapshot is a temp check, proposals are voted on Governor Bravo.

14

TIP-060 Stage 1 Options have been minted with the strike 0.022475 from 10/14 and distributed to CKS, Mango & Dual.

Executed on Realms: