TIP 47: Liquidity Bootstrappening Part 2: PCV (Governor Bravo)

Proposals
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TIP 47: Liquidity Bootstrappening Part 2 - PCV (Governor Bravo)

Proposal Type:

Token Holder DAO Governor Bravo

Overview:

This proposal is a multi-phased proposal intended to deploy a DAO-owned strategic plan to deepen tBTC liquidity and develop essential Threshold BTC-based Protocol Owned Liquidity.

It builds a DeFi revenue flywheel owned by the Threshold DAO and managed by the Threshold Treasury Guild (TTG) through four phases. This proposal was originally authored by Matt.

This version of TIP 47 is the result of multiple working sessions and iterations with the TTG. A previous version of the proposal successfully passed a Threshold DAO temp check period. Execution of this proposal will be done by the TTG. To aid that execution, intentional flexibility is included throughout the proposal across details like bond discounts, vest periods and thresholds for continuing to the next phase. This will allow the TTG to iterate and change tactics based on real feedback from deployed bond markets. For reference, the guild is in contact with Bond Protocol who has suggested optimal parameters for deploying these markets and will advise on proper steps.

Milestones and Deadlines:

  • Threshold DAO Temperature Check :white_check_mark:
  • Amended proposal submitted to Threshold DAO :white_check_mark:
  • Governor Bravo proposal kick off
  • Dates for each bond phase are intentionally left open to provide execution flexibility for the TTG

Who Is Involved?:

Threshold Token Holder DAO, Threshold Treasury Guild

Detailed Summary:

Phase I

The first phase is a test of the bonding mechanism, and our ability to get the word out.

We do a public campaign to retire v1, in coordination with Curve and maybe Convex: and offer all LPs a deal to sell their position for T. Initially we use Bond Protocol, the latest iteration of Olympus Pro, to avoid writing our own smart contracts.

General bond details (space for TTG execution flexibility):

Phase II

In the second phase, the DAO goes hard, converting as much Curve BTC LP tokens as quickly as it can to Curve tBTC v2. The focus should be on “dead” pools with little trading volume, whose LPs are likely open to switching pools (lazy mercenaries).

In this phase, LPs are offered both Curve tBTC v2 LP tokens and T for their other LP tokens… Because T isn’t used primarily to reward LPs, there’s less pressure than in Phase I — instead, the DAO is spending down its diversified treasury for growth, periodically unwrapping the BTC variants it receives.

If the TTG engages with renBTC, there is an option for the DAO to campaign around “Retiring renBTC”, ideally in coordination with Curve and Badger. “Have renBTC LP tokens? The Threshold DAO will buy them off you!”.

General bond details (space for TTG execution flexibility):

Phase III

At this point, the DAO will have a large Curve tBTC v2 position. The DAO will incentivize votes on the Curve tBTC v2 gauge, further strengthening growth and bringing more immediate value back to the DAO. The TTG will have discretion in determining the incentive schedule based on a budget proposed later in this document.

This is a great time for a Yearn Curve tBTC v2 factory vault.

Phase IV

In the final and optional phase, we deploy an ongoing bonding strategy. This exact venue for these bonds is out of scope of this proposal and will be discussed later.

General bond details (space for TTG execution flexibility)

  • The bond is for T. If possible, new stakers should be able to skip any vesting period
  • enabling a constant discount on T.
  • Bonds are bought for
    • Curve HBTC
      • Make sure we have a way to unmint HBTC consistently
      • Low discount, this is about getting people to switch.
    • Curve tBTC v2
      • This is our ongoing long-term PCV incentive

Cost and other parameters

Without testing the market, it’s difficult to know the cost of liquidity over time, or how sticky the liquidity will be. Thus, this proposal sets aside a high-level budget, managed and reported on monthly by the Treasury Guild. These numbers represent a spend approval and not a spend mandate.

  • 10M T for use on vote incentives via platforms like Votium
  • 40M T for directly purchasing BBTC-denominated PCV

The TG can then start low, and increase or decrease investment where appropriate.

6 Likes
2

I strongly support this as part of our multi-faceted bootstrapping strategy/partnerships, particularly given the flexibility it allows the Treasury Guild to fine tune as need (including deciding how to weigh the benefits of a marketing campaign around acquiring renBTC).

I’ll also note that Bond Protocol has been very helpful with questions from the TTG on operationalizing, and it’s great to see the excitement these proposals are generating (see the comment here from Polygon DeFi team, e.g.).

5 Likes
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Excited to see part II in action, things are heating up!

4 Likes
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Thanks @Will for this proposal, strongly support this plan.

3 Likes
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This proposal has passed the temp check Snapshot April 15th with the results:

Results:

  • For: 962M T - 100%
  • Against: 0 T - 0%
  • Abstain: 0 T - 0%

And following the procedure, has moved to Governor for on-chain execution.

2 Likes