0x32d1a53f…d4f5sent to0xf790a5f5…1365·#19,749,889·view on Etherscan
# stake 1k in rounds
*I didn't consult with this multisig before proposing this idea. i wanted to lay out the case in this format & hopefully generate some discussion; they can ofc signal they don't want to receive and the prop won't proceed.*
**tldr**
tx
1000 eth to the rounds multisig (Soli+Seneca)
campaign
* guarantee that rounds can experiment/scale over the next 12/24 mo
* reduce the exit (via fork) incentive, improving the seed liquidity prospects for the launch of $nouns, increasing the likelihood of adoption
**securing rounds' future**
I think many in the network recognize the outsized potential of rounds to revolutionize Nouns. Super low-friction, maximally diffuse, all-inclusive sandbox funding feels to me like the most interesting path forward, and I don't think I'm alone in this sense. I'm personally convinced that there's unlikely to be a better use of reserves in the next year.
The treasury's future trajectory is uncertain due to the volatility of inflows / spending rate, and potential forks. For instance, if a fork 3 occurs, it will deduct roughly 20% of the treasury in contributed eth and 10% of the treasury in extracted/arbed eth. The impact on the treasury of a fork 4 is likely be worse in % terms. It would be unfortunate if rounds couldn't be afforded the opportunity to significantly scale up its efforts when ready. While I'm generally not a fan of large outlays to multisigs, in this case it feels healthy to make sure its future is assured.
**impact on FORK / $nouns**
Additionally, earmarking this ETH reduces any exit premium currently embedded in the value of Nouns, lowering the floor price by as much as 20% before the potential deployment of the $nouns contracts.
*Who is the possible LP for $nouns?*
As it stands there is virtually 0 sell-side liquidity below current pro-rata book value (currently >10eth). This is because the financially-oriented owners (holders of all the "floor" nouns) all hope, at a minimum, to be able to sell back to the DAO via fork near this price.
This group of owners constitutes the potential market makers/LP for $nouns at launch, because they are the group that may be unattached to their Noun(s) and willing to deposit in the redemption pool. Given that the majority of pre-fork 2 Noun owners were uninterested in selling at 22, 33, 36 eth, it's unlikely they will now jump at the chance to sell at 10, let alone below.
*At what price will $nouns be offered?*
In order for there to be a successful launch of $nouns it is important there be reasonable liquidity in the AMM. 20 nouns would be a modest goal, with a number closer to 50 (or near 10% of total supply) being much better. But is also important that there is an offer price reflective of current fair market value, to attract buyers irrespective of where we are in the fork cycle at launch (ie priced as close to the current meme+governance value of NOUN as possible). Whether that price is 4, 7, or 9 eth, it makes sense to lower the price floor implied by the fork since generally buyers of $nouns will not be interested playing a (likely losing) near-term arbitrage game, but looking for a fair initial price, accurately reflective of true steady-state supply/demand.
In general, potential $nouns market makers are hoping to capture a minimum of 10.7 eth per noun. While the potential to accrue a blitz of transaction fees in the launch may incentivize a slightly lower initial price for the AMM, if you study recent successful memecoin launches with similar market caps, an optimistic estimate for initial price may be 7 eth, with likely not more than 10 nouns available below 10.7. This is because, while transaction fees may yield 10-30% on total liquidity in the first weeks, this yield quickly falls and is not enough incentive to offer meaningful inventory or sustained liquidity below the risk-free exit level.
nogs and higher tx fees around launch
https://info.uniswap.org/#/base/pools/0xe22a2dfaaaaec8a7b2b7acb4909eaaa5c5bd6e64
https://info.uniswap.org/#/base/pools/0xcc28456d4ff980cee3457ca809a257e52cd9cdb0
*What happens after launch?*
If retail demand for $nouns does not push demand squarely above 10.7, as transactions slow after the initial blitz, the LP will, in all likelihood, pull liquidity en masse, redeem NOUN and fork. In order for this not to occur, the launch will need to attract 1500+ eth at the entry price of roughly 10 per Noun or likely much higher. Due to the forking threshold, there will be a hesitancy to sell too many Nouns near this level since there is a risk of forfeiting the needed inventory to meet the threshold and helplessly watching the fork value fall as Nouns progressively spends.
By lowering the protective put (exit price), we increase the chance that the financially-oriented owners will look to the $nouns pool for exit liquidity/profit from fees etc rather than towards capture of treasury (*see below for comments on the case where this prop itself triggers fork). Much of the sell liquidity will be forced 2 eth lower, accommodating demand at 8eth, if it materializes. Of course the best way to ensure strong engagement with $nouns at launch is with addtl productive spend-down.
If successful, we may prevent fork eth from leaving our treasury, effectively redirecting (a portion of) its value to one of our highest-upside projects, and engineer a more vital $nouns market at launch in the process. The risk to Nouns is that we wish we could redirect this eth to another project down the road (which may still be possible by requesting a partial return from the multisig?).
*What happens if prop triggers fork?*
It may also be possible that a fork is successfully executed before this prop transacts. This is still a positive outcome. Liquidity will build up in the weeks following fork at a much more aligned price (auction prices will dislocate towards the meme+gov value due to forking threshold); if we don't do it the fork is likely to occur before too long anyway but may or may not happen in a timely manner wrt $nouns. And, post-fork, the arber bid may still be higher than what the market will be willing to pay for $nouns, due to the still-elevated exit price.
*conditional logic*
If sufficiently optimistic about rounds, if $nouns proposers are intent on speedrunning deployment, and if high likelihood of strong engagement at go-live is a priority, executing this tx is seemingly implied. stake-1k-in-rounds