Summary
This BIP is to decide on a reserve price for the 2nd Period:
A) no reserve
B) dynamic reserve - lowest of last 3 auctions, starting after 3rd auction.
C) keep 10 ETH reserve in place
Rather than proposing one option over another, this BIP presents different options discussed with their arguments and can be decided by a ranked choice vote where governors order their preferred options.
If an option does not receive 50% of the initial vote, the bottom choice is eliminated and those governors' votes are moved to their 2nd ranked choice. This process repeats until one option has >50%.
Rationale & Background
The DAO needs to decide on the reserve to set for the Fragmentation Period. Several options have been discussed, and as they are not overly complex we can do a ranked choice vote to move it forward quickly in time for the first auction starting Wednesday Nov 16.
The very first BIP was to set a reserve price of 10 ETH and passed March 4th, 2022. Discussion first started on the 10ETH reserve price after a sale of 7ETH that was generally seen as being due to bad timing for certain collectors, and when the price had been consistently around 10 ETH.
The 10 ETH reserve went into effect for the 20th mint, and reserve price was met or exceeded for 19/33 mints. The first 6 mints sold after implementation before the first non-sale. Of the non-sales, 9 in a row were from the final 10.
The reserve price functioned to keep Botto from selling for significantly lower during a bear market, and resulted in multiple Genesis pieces going into the DAO’s vault, which can be sold for significant figures during a hotter market. Some downsides however are that Botto may have less collectors and ETH than it otherwise would have with no reserve price.
Prior to the final auction of Genesis, BIP-13 removed the reserve price for the last sale. This auction saw 10 different bidders, and sold for 9ETH , with the winning bidder claiming they would have gone higher if another bidder came along. This is an indicator of the benefit of momentum form multiple bidders to reach the desired price for Botto pieces. This only removed the reserve price for that sale, and so the 10ETH reserve price still currently stands.
The DAO is now considering 3 options
Remove Reserve Price
- Pros: more bidders means more social signalling of interested buyers, and can help build momentum to reach desired prices in the auction. Even at lower prices, it could lead to more collectors who can help advocate for Botto and the DAO would be collecting ETH in the treasury.
- Cons: Accepting lower prices can hurt the perception of Botto even if they are simply due to a cooler market. May need another governance vote if there is a decision to set a reserve given too low prices.
Add dynamic reserve
- Pros: is flexible to changing prices and is data driven. Sets reserve price that is relevant to the Fragmentation period. Can reset to zero if no sales 3 times in a row, and re-open to all buyers without need of another governance vote. Retains some caution in the bear market and ensures we’re not underselling Botto. Possibility of setting reserve by bidding as BottoDAO, which can help nudge bidding momentum and add visibility via the sales bot and notifications.
- Cons: adds complexity, could hurt narrative if a reset to zero vs. just keeping no reserve. Would be better implemented if sales were sure to be consistent. Loses the signalling of no reserve. Requires a 2nd governance decision after 3rd auction.
Do nothing (keep 10 ETH reserve price)
- Pros: keeps a high bar for Botto, and collecting early mints in the DAO.
- Cons: No signalling of many bidders, potentially fewer collectors, may be above the right reserve price for Fragmentation. May need another governance vote to change mid-way, which is a bad signal.
Proposal Specification
A) Remove Reserve
- All auctions start at 0, with no minimum bid or reserve price
B) Dynamic Reserve - lowest of last 3 auctions, starting after 3rd auction.
- Start with no reserve for first three auctions in the Fragmentation Period. After each subsequent auction, set the reserve to the lowest price of the last 3 auctions.
- A price is considered zero if the reserve is not hit/no sale occurs. So in the event that three consecutive pieces go unsold the reserve would be zero.
- The DAO will decide how it will implement the reserve price after the 3rd auction so that it can be made with knowledge of the price range for Fragmentation Period
- The first option is to implement a straightforward reserve price in the auction on SuperRare.
- The other is for the DAO to not input a reserve price on the auction, but instead for the DAO to place a bid for the same amount after 12 hours.
- Again, this BIP does not decide the implementation method, only that there will be a dynamic reserve based on the lowest of the last 3 auctions. If no decision is made on implementation, the DAO will default to a reserve on SR.
C) Keep 10 ETH Reserve
- Do nothing, reserve remains at 10 ETH
Budget
The only potential cost is if the DAO decides to later implement the bid approach to creating a floor price. If the piece still goes unsold after the DAO bids, 15% of that sale would go to SuperRare.
Discussion was also that a sale to BottoDAO itself would not be considered a sale that is eligible for revenue distribution.
Criteria of success
- Number of bidders
- New collectors who bring good energy
- Average sales price relative to Genesis
- Number of non-sales
