Chiming in on my thoughts on this proposal – which I’m supportive 100%.
Here are my rationales – and hopefully this goes in line with all the questions/concerns that have been brought up.
The main idea behind this BIP is to wind down the LM program now vs Oct 2024 – and can be summarized into 2 buckets of debate.
1) Changing the status quo:
A few people have mentioned that eliminating the program is ‘unfair’ and that people ‘trusted’ this program to last until 2024 so that’s why they invested in Botto. These comments are subjective and should not be used as an argument. (Please note this point is strictly about the messaging that has been conveyed, and not about the urgency and liquidity questions – that will be addressed in a later point).
This argument of ‘unfairness’ is akin to saying that if any government/country decided to propose a legislature to change the legal drinking age from 18 to 16 – and people are complaining that it’s not fair because those that are 18 followed the rules and missed out on 2 years of drinking legally. But in reality – things change fluidly and the DAO needs to be able to react fast and adjust to changing conditions. Just because it was memorialized 2 years ago does not mean it should remain. The US Constitution has amendments – because circumstances change.
2) Why now?
The other thing people have mentioned is why does the DAO want to do this now and what is the urgency?
It comes down to supply and demand economics. The DAO is currently giving away tokens to the LMs (adding supply to the market), and as a result, the LMs are selling a portion of the rewards (causing a downward sell pressure) whenever the tokens are claimed. This LM programwas a decision made in the past to incentive and create liquidity for the Botto tokens – but now that the tokens are fairly liquid relative to 2 years ago, and with 8M tokens remaining in the LM program – it makes sense to stop immediately, preserve the 8M token from being released into the market, and use it for strategic purposes. Reducing supply is a benefit to the token (similar economics to BB&B).
At the end of the day it comes down to the best interest of the DAO – and not one specific group, or person or whale. What Ben has proposed is, in my opinion, the best interest for the DAO. Let’s take a look from a realistic POV. Say we don’t touch the LM program – and come Oct 2024, when it ends, what do people think the liquidity providers will do now that they’ve received all the possible tokens. Sell? Hold?
Alternatively, say we eliminate the program now, so effectively pushed up the time line and ask the same question – what do you think the LPs will do? Sell? Or Hold? Both questions don’t have a definitive answer – it becomes whether we want to find out now or delay the inevitable question. IMO - the decision of the holders will be the same regardless whether it's now or 13 months later.
In all honestly – no one knows what the big LPs will do with their existing share – but one thing is for sure. If the LP takes out all or majority of their liquidity/selling BOTTO (whether now or when it matures) – it means that they were only in it for themselves. So if we’re worried about these individuals – why are we waiting until 2024 to find out who they are, or what they might do? It’s going to happen one way or another – so pull the band-aid now and have these individual reveal themselves instead of punting it till Oct 2024.
However if these big LPs really care about the DAO and the longevity – they would rather have the DAO reinvest in itself (sort of like reinvesting the free cash flow into the business instead of giving them out like dividends). If the DAO wins – so is everyone that is a $BOTTO holder, regardless of size.
Lastly – on the 5% discount – this part I don’t agree with in the proposal. I think it’s unnecessary and creates additional operational headache for the Botto Core team. Unless the team can create the LM redemption process like the way that Rare Staking has built in the smart contract (where anyone can swap their $RARE for ETH at a 10% discount to fund the staking pool) – then I would be supportive because it’s easy to implement – and creates an incentive/optionality for the LMers.