c8934f56df3a4a2a1da2e605f0368e912df4109e

Proposal Payment

https://hiveblocks.com/tx/c8934f56df3a4a2a1da2e605f0368e912df4109e

Proposal

According to the treasury report (@sps.dao/sps-dao-treasury-report) the DAO currently holds 103,486.5033 BUSD. This proposal aims to take that BUSD and put it in the DEC-DAI Uniswap pool on Ethereum.

Purpose

Due to recent regulatory events the issuer Paxos stopped the new minting of BUSD. https://www.coindesk.com/business/2023/02/13/paxos-to-stop-minting-stablecoin-busd-following-regulatory-action/

To help mitigate the future risk of holding BUSD, this proposal aims to remove BUSD holdings from the DAO Treasury. As mentioned in this tweet below from CZ, Binance will move away from BUSD into other stablecoins over time. In my opinion, so should the DAO.

We have many ways of achieving this. For example, we can simply swap the BUSD to another stablecoin. This would achieve the goal of removing BUSD from the DAO Treasury but wouldn't provide any value to the ecosystem. One way to provide value, is to use the BUSD funds and provide more liquidity into the Ethereum network by putting it into the DEC-DAI Uniswap pool.

Background

The DAO currently operates two important liquidity pools: PancakeSwap and Uniswap V2

Source: https://peakd.com/splinterlands/@sps.dao/sps-dao-treasury-report

Adding liquidity into the Ethereum network has many advantages. Firstly, it would not take up much of the team's working time. We can also provide easy access to one of the richest blockchains currently available. As everyone knows, DEC is the in-game currency used for most financial transactions (such as purchases in the game shop etc.) and therefore it should be clear that it is very easy for other people to have access to DEC.

Implementing this proposal would also require splitting the current BUSD funds into 50% DEC and 50% DAI so that they can be added to the liquidity pool. This would also help to bring DEC back to peg. If this proposal is approved, about $50,000 worth of DEC will be bought up, which will have an impact on the price of DEC, thus helping to re-peg DEC - a nice side effect.

The DEC – DAI pool currently holds 408,056.20$ USD in value provided by the community. This pool can be rated as low-risk, because they are mostly stable assets and DAI is a decentralized stablecoin, which makes it harder to regulate. This is important because the DAO does not lose any value and can use the funds for other purposes in the future. In addition, we are getting rid of the risk of holding BUSD. Furthermore, the DAO would be generating income in form of trading fees (please be aware that SPS LP rewards are currently excluded for the DAO account).

Execution

In terms of execution, the DAO would let the SPL-team decide when the transfer/swap/bridge process should take place to prevent frontrunning etc. And also in which form the acquiring process should happen like periodically to avoid big price impact etc.

These decisions should be under the full control of the SPL-team and they would provide feedback to the community when the process is complete.

Conclusion

This proposal should make the community aware that we are in control of the DAO treasury and we need to react accordingly to market events to protect our value.

To take things into perspective:
If we consider that almost 500 million SPS are staked and we would distribute the 100k BUSD to the SPS stakers, this would result in ~$20 per 100k SPS staked (100000 BUSD / 498909205 Staked SPS = 0.00020043$ per SPS). In comparison to the whole treasury, it has not much value (but it's honest work :D) but we should protect it anyway and not put it at risk because of uncertain regulations.

Sponsorship

The 100,000 DEC fee for this proposal was paid by https://Splex.GG.

If you are interested in having your proposals paid for, please visit SPLEX on their discord at https://discord.gg/Splex to make suggestions and work with their team on formatting and promotion of your proposals.