DXdao DXgov Weekly Gathering, 22 Jun 2022

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From YouTube: DXgov Weekly Gathering [2022-06-22]

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00:04 Welcome
00:12 Mainnet Proposal Roundup
02:10 Gnosis Proposal Roundup
05:00 RAI Redemption Discussion

A

Recording is on hello and welcome to the dx style governance discussion today is the 22nd of june 2022.. A few proposals live. We can jump right into the proposal. Roundup, so first proposal on mainnet is actually staking eve with stakewise.

A

So I know this had been a discussion over the past couple of weeks. Regarding the d-pack of lido, there was some discussion in the community whether it would not be better to acquire lido instead of stakewise if due to the discount, but in the meantime, pretty much all stake. Tokens have de-pegged and currently uh stakeh lido is slightly lower, a couple of bucks lower than uh staked eath, uh but on the other hand, stakewise also pays out reward as a separate token.

A

So if you like calculate that all of that in they're pretty much at the same dpeg level, and uh for that reason I believe it just makes sense to move on with stakewise um we're still getting the discount there and we're still supporting kind of like the original platform we wanted to stake, with which kind of puts more effort into the whole decentralization aspect and um yeah. So that proposal is live.

A

It's passing in three days: it's currently uh passing, so if you want check it out and we'll also monitor the d-pack situation, to make sure you know we are getting a premium uh thanks to the d-peg. So of course another two proposal will be done as well for stake, wise and um yeah during that time. We'll just monitor how the kind of d-pack situation evolves.

A

Then we have a second proposal on mainnet, which is the caney fork vested dxd claim from september 2020 to june 2021. So of course, a few people started claiming that dxd uh chris made a great uh proposal template. So if anyone else is looking to claim some of that dxd, they can uh I'm sure chris wouldn't mind if you take his template and claim yours.

A

According to that then moving on to uh gnosis chain, we have buyback number 212, 13, 14 and 15 live. We have cadence vested dxd withdrawal on gnosis chain. We have dave's association if paris stipend.

A

We also have an amendment to the dx referral program. Metro, if melanie, you want to give a quick overview of the exciting new stuff. That's changing in the dx referral uh amendment.

B

Yeah sure um so um last year we um can, you guys hear me we can.

C

B

You, okay great, um so last year we implemented our first dx referral, which essentially awarded dx style contributors um for referring any new contributors into our ecosystem, and I recently made an amendment to the referral program to reflect the new guideline amounts um and basically it combined the rewards into four new levels. So one and two would be together.

B

Three and four would be together: five and six and seven and eight um and the reward amounts would be split um into 2000 for levels, one and two four thousand for levels: three and four: five thousand for levels: five and six and six thousand for level. Seven and eight um more details can be found in the actual proposal. I just wanted to give just a brief overview of it. um It was in the forum for about a week um and I didn't receive any additional comments or suggestions.

B

So based off of that, I feel like the community is good to move forward with it. But please check out that proposal and vote on it. If you'd like to see those changes, go through.

A

A

Cool well moving on. uh We have a couple of worker proposals live on. We know this chain as well. We have wix z, uh two proposals, one from his last worker uh period, one for the new one, um we're actually yeah correct. Then we have nathan as well the same one for the end of his last worker proposal, one for the new one. Then we have george lopez contributor proposal live as well as melanie's contributor proposal and that pretty much already sums up all the uh proposals.

A

uh A couple of other items we had on the agenda uh uh was actually regarding rye, so I don't know.

A

If uh most of you have been on the forum, you would have likely seen the forum about offloading some rye from the treasury, so I just shared a link in the chat where you can sign up, see the reflexor finance, dashboard and ry currently has an annual redemption rate of negative 18.4 percent, which means that rye itself is actually being devalued uh at that amount uh over uh over one year, time frame and uh ryze current redemption price.

A

uh The price at which you can actually mint dry is 2.9 us dollars, but uh on the open market. So, on uni swap and curve have pretty good liquidity and you're still able to kind of sell off your rye at around and three cents, three dollars and four cents around that kind of um um price range, and also taking into account that dx style owns almost 20 percent of all outstanding rye um people are actually interested in buying this right to like set off uh their debt and um by selling ri.

A

It's also likely that the annual redemption rate will decrease and as the market recovers, that will probably also uh happen if the market does recover, and so we're currently just like in a situation where we kind of have to decide if it makes sense currently to kind of, uh sell the rye and like enter some other stable coins positions. For example, usdc die, increase those holdings, perhaps some l usd, and um I guess we want to do so- not not necessarily in a rush.

A

But uh you know the the annual redemption rate is negative, so we kind of do want to make a decision and move forward with that. The market is very liquid and I think you know if you also take into account that uh I think the last try was purchased when, if was at uh four and a half thousand dollars, um you know, I think, we're in a very good position. Even if rye is currently a couple cents below the price uh we bought it at.

A

um It's still, you know uh definitely nothing to worry about, but something we could think about how to take action on that and uh yeah. There's a forum post live and chris actually just replied to the forum post, but if anyone else has any comments or ideas about that, please feel free to share.

D

Is the rye redemption rate, something that is getting paid from like one party to another.

C

That is the internal price for or repaying rye, in the like reflector system so like in die. When you pay off your debt, the die is always 1.00, but in like reflexer you could be paying off your debt, but the price your debt is being paid at or the price that's being minted is actually moving up and down, and it's moving up and down based off like the collateral in the system, and so it's like moving down because the collateral on the system has lost value.

C

There's been that and so it's targeting a lower price and that's why there's that difference right now,.

D

So does that mean? Can you like uh uh illustrate it with like an example, if I'm, if I'm trying to get my collateral out yeah.

B

D

Right, it's actually like 17, less yeah.

C

D

C

It's like worth the um like two right now: one rye in the system's debt is worth two dollars and ninety seven cents right, even though the market price of that rye is three dollars and six cents.

C

So if you had collateral, this is why, like people that have debt on in reflexer that have ride, debt are kind of in a pickle, because they have to buy rye at three dollars and six cents on the open market or three dollars and four cents, but then, when they pay it back they're only getting credit for like 2.97 or 98 cents or whatever. It is now.

D

I gotcha and what is sorry I mean I'm trying I'm going to dig more into this. I think it's a little bit complicated, but so what is the relationship between the annual annualized redemption rate and the redemption price.

C

Yeah, that is a relationship over like time right. So it's like the two prices over like annualized over one year, whatever the change in that is.

C

So, like I think, the redemption price is actually the only thing that changes. It's like the annualized rate is a reflection of the difference between the redemption price and the market price.

D

D

Perplexer yeah goal for the week understand right: yeah.

C

I mean it's it's like I mean they actually have a lot of documentation, but it's like almost too much documentation, but maybe it's also helpful to like run through like what the arbitrage opportunity should be here and maybe why people are not taking it so right now we were just talking about how you could repay debt right, and so, if you had died, if you had ride debt, you don't want to really repay, because you have to pay more for rye than you're getting credit for, but leveraging up on rye gives you the opposite right.

C

So you could deposit, eth and mint rye at 2.97 in the system and then go on the open market and sell it at three dollars and six cents, um and then you just like make uh you know profit on that now. The reason it's tricky is it's. You can't actually just continually continue that arbitrage loop, because what you would do is right, so you deposit, eat mint rye. So now you have rye debt and then you sell that rye.

C

But you have to sell that rye to eat and then you take that eat and you have to put it back into reflection and mint more rise. So every time you're doing it, you're actually leveraging up, and so that makes the trade like a lot riskier and then of course like in these environments, like the demand for leverage is already very, very low.

C

Well, it's in the forum now.

D

Yeah, I also want to do some of my own research just to try to understand the system better, but I mean so, but I mean basically what you're saying right is that eth is going down in price and so that's going to pull right down with it. So it makes sense to get out of our right position. Essentially.

C

This the reflexer system is setting a lower target price for rod right and that's because it's gone down right.

B

C

I think there's also important that, like if eat turns around right, then like the system will will change right. The redemption, the the redemption price could rise and then, especially if people are willing to lever up more because the price goes up, they're not worried about liquidations, um then, like the system, could change um elsewhere like right now, the system is like targeting, uh you know a lower price for rye, and so this is. Why actually a mean um when they originally talked about rye? It was like there.

C

It was kind of called dampened eat, because it would really just like soak up this volatility into like a somewhat like more stable asset, but it would still like float around. But what actually happened is because there is this arbitrage opportunity, where everyone can see that what the system is trying to target the market.

C

Participants like get out before the system actually reaches there and by getting out you're actually like stabilizing the system, and that's like why rye um is, is stable because, like the market, participants can see like the writing on the wall, and so in this case, if dxdao has a lot of like rye, and you see that you're yielding negative, then you're incentivized to sell, which then also helps like the system get back into balance.

C

I should dave- and I were talking about before this is like I also I mean I think ryan is like, because it's complicated um but like it does seem to be like the most decentralized like clean. You know thing uh stable coin or stable asset. I guess is a better way that dx dow um is used, and so like I don't know what the number is, but if it was negative three percent yielding like. Maybe that would be like worth it, considering um the other decentralization benefits that rye um gives dx.

C

Now um you know, because if we do sell rye here, like it's going to go into usdc dye or lusd, or you could talk about what stablecoin but like there really.

B

Aren't any other.

C

Like that many good options, so I think there is a point where, like we're willing to eat some negative yield or some like downside, um because there are like other decentralization uh benefits and as ross says like so we plan on buying back later. I think that should be like a goal. I don't know if we should make it like yeah condition on what we're talking about that now or maybe just like target it.

C

If things change- and I I should say like again like if the market changes um you know, market goes up, you know, then you know the whole rate could kind of change a little bit and it maybe won't be um out of whack. Now horse could go down and then we get like probably a lower target price there, and the system is like kind of further incentivizing things uh there. But yeah there's, obviously like the system kind of depends on the market conditions.

D

Is there some idea, if I'm not sure if you would know this, but like, is there some idea of like given a certain eath price, then rye should settle out at a certain ripe price? Is that a wrong assumption.

D

Like, for example, if, if eats, were to stay at a thousand dollars for one year, do we have an expectation about what the price of rye would be.

C

Yeah, I think the variable is how fast market participants like react to the incentives right so like right now, they're not really reacting to the incentives to like close the because really like what makes rise stable is the fact that market participants see what the system is doing and then they like front run it basically and that actually makes it like stable in a way. But I don't know like kind of your your question. Maybe there should be yeah, I don't know what, like the the inputs, would be to determine that.

C

I assume maybe like the overall collateral rate too of the system, but yeah not sure multi-variable function. That sounds smart.

D

Dave is basically saying it's complicated, but yeah. I mean it's interesting because, right if it's a negative n 17 interest rate, that sort of implies that like where I would go down 17 annually, but obviously that's not necessarily constant. I don't know it's an interesting, complicated system. The other thing that's like kind of striking is, if you actually look at the holders of rye.

D

Dxdao is number one by far and holds about 18 of the rye supply, which I guess in some ways is cool, but maybe also concerning just in itself.

D

Yeah ross asking another question which is basically like what is the liquidity of rye.

A

Yeah you can sell two.

D

A

Of rye on uni swap today, and you just have a negative price impact of 1.2 percent, so it's uh it's deep liquidity and curve curve has pools as well. Yeah well, relatively.

D

Speaking, I guess right because yeah yeah, but.

A

B

D

Supplies, or or not even what the supply is 16 million dollars worth. So the fact that you can sell.

A

Two million.

D

With one dollar is pretty impressive,.

A

Yeah, exactly if there's a there's a um right, yeah.

C

Yeah, I think, like all almost most rye printed, is being used to like as liquidity provisioning. That's not in deep style.

C

I don't there aren't that many other use cases for it yet, and I guess, like the other question I have- and I don't really think there's an answer. Is this like an opportunity for duke style to be like, I don't know more involved in raw ecosystem or do kind of something as as this is changing, or you know as we're talking to different parties, but I don't really think there's anything except you know I think we're still interested in rye and someone to hold rye through through all of this.

D

So this proposal calls for uh offloading 700k, correct yeah, and what is the? What do you guys have thoughts on like where we want to end up like? Is this.

A

In terms of like how much right to sell or and what yeah.

D

Yeah, where do we.

A

Want to end up in our right position: yeah exactly yeah. I think it really depends on the like redemption rate and how that changes right. So it's really difficult to say um I think, over the long term, if you look like a dry over the year, the redemption rate has been pretty much around zero. I mean, if you just think about it, when we bought drive, we bought at like 3.05 3.06 and that's at 3.04 right now, so I you know, I think it's highly dependent on that.

A

I think it makes sense to hold some rise still and then just depending on how the market evolves. You know re-evaluate that on like a ongoing basis, because it's it's really just dependent on the redemption rate. I would say you know like if it if it stays so negative, highly negative.

A

uh Of course it doesn't make sense for us to hold too much, but um you know I think it's never been so long like negative for a really long period of time. But then again, you know, like we've, also not had such a bear market in a while. So there we go, someone is sharing the the redemption right. So if you look over like the past year, it actually doesn't look that bad.

D

Is that chart a year long.

C

A year and a half I think this is this is since launch, so you can see march april.

D

C

D

Going up for the early part of this.

C

Yeah, I wonder if this could be almost too early to draw like it there's a lot of volatility here, even though each was like roaring during this time. It seems like these. You can see they're like they're like a little bit clump like lumpy or ear, so that's might have been like the market, that's stable, so I guess.

D

C

The market was going up a little.

D

That was a peak right there where and then after the market starts coming down. It goes decidedly negative on the rate.

C

And so it's basically going yeah down. Since then market came back a little bit, so it is obviously very affected by yeah the uh price of youth.

C

And I guess just let's go ahead.

D

Well, I was just gonna say you, you said it, you recall this, it's dampened eat is one way people described it right, so I mean at a high level like conceptually like. If eat is just going down over a long period, then price should be going down as well right. I guess we just don't have a great concept of by how much exactly yeah.

C

I guess that's what I was kind of realizing, so the annual redemption rate is actually how much this number, the redemption price is set to go down in the system right now.

C

So like right now, it's a 2.97 and if, like nothing else, changes in the system, it will go down at 18 a year and it's going down right now at like 0.019 there and so like. This is actually like the target, one that they're they're using and I don't know what is in the it's, not a black box, but a complicated box that, like ends up spitting out this negative 18. But it's this.

B

C

At which this number is changing.

D

The current rate at which is changing at it, but presented as an annualized number.

C

So I I think we should you know, talk about the state beast thing um like in how we dealt with that and.

B

C

Of talking about that was a really good discussion. I think people kind of understood that the financial opportunity, maybe and then balancing some things and then just kind of in the middle of that you know, stake wise and it became like a better opportunity for geek style to kind of keep going on its uh on its on its original strategy. There, I think part of that was because of the you know, as the market moves and changes.

C

You know it's hard to time things uh precisely so even for this one, uh and maybe especially for this one, because dx dow will like surely either affect the market price or affect the in the ryze system like there's a whole other thing of how paying off you know, affecting the market price, there will actually affect the ryze system. um I think it makes sense to like not do you know a huge amount all at once, but to see how this um plays out.

C

I don't know how we do this in terms of proposal there's a proposal that would like authorize a total amount and then that would be split up in separate, separate proposals.

C

That's what we did with like the stakehead or maybe there's like one proposal that sets out, like you, know, 750 000 or a million dollars a ride to be like sold, and we could even follow up with another proposal, like you know, right after that, if this was something that needed to be uh done, but I think that there are a lot of moving parts here and deep styles like moves will affect the market. So I think we want to be mindful of that.

D

The other question I have sort of a goal for myself to try to understand- and I guess also just a general question. I have kind of from a risk perspective for dx now- is seeing the fact that the three million dollars worth of fry that the excel has is like 18 of outstanding rye, like what would happen if just the usage of rye were to like decline.

D

Sort of like you know, just keep going down and like takes that was left with a super big chunk of the remaining supply like what, if it went down to you know five million dollars right. Dx now has 60 or something like what.

D

What are the implications of that and something that I'm like have in my mind, as like sort of a reference point is actually like the emergency shutdown or I guess in the end, it wasn't an emergency shutdown, but just a shutdown of the single collateral die or psi that they rebranded it to from maker.

E

Yeah john is psy still even with eid prices where they are. Do you know if sai is still worth like? One side was worth like 20 like six months, I'm.

D

Pretty sure it's still above a dollar because you yeah, but it.

E

Has no liquidity.

D

E

Do you get to clean? No, no say you can claim the east. That's that's backing it basically right and so is that what happens with rye, like if everyone else gets rid of their rye, does rai become the thing that can claim the eat, that's in the system and then actually could become valuable like more valuable.

D

Right like which would be something that would be like a good setup right like that, would give assurance right that, like oh, if this thing were to like kind of fall apart to the point where there just wasn't enough rye left, I'm sorry enough right left in the system to like support people.

D

You know who want to redeem their collateral that, like it, wouldn't just get shut down and then the rye is basically directly redeemable for the collateral, because you're right, like the psy, that, if you still have psy, you can go directly to the old contracts and uh and redeem it for the underlying collateral eth. Without having to be the cdp and that's like what a shutdown is is basically you you open up the cdps to anybody who has rai.

D

I think, instead of just the owners of the cdps or psy yeah, the current price is still well above.

C

Style has some psy has like six, how much in the treasury uh 6.65 psi, which is 39.

D

This is a bit of an aside, but I actually think maybe there'd be some collectible value someday because it's like you know the original decentralized dollar. It's like one of those lydian coins from ancient lydia anyway, yeah.

C

So I don't answer questions john about the emergency shutdown. I don't really know or understand the specifics of it. I know that there is an emergency shutdown and I think it is like somewhat similar to maker dow because, like the original like this ryze system is actually like. Someone argued like almost with the original maker system. Was this guy nicola? Who designed both actually was involved in both?

C

um But the thing I think the way the market is broken right now or the things that's like amin is like kind of worried about and wants deep style to sell is the fact that the market price is so high right and the market price being high and the redemption price being low right.

C

The the bigger that gap gets, the less people are going to want to pay off the ride debt because it's like not worth it, and so that's where, like I don't know, liquidity crisis or something could come in, but I think the system would be designed to keep lowering this redemption price. So this gap would just get bigger and bigger and it should incentivize really, I think, like people to lever up at that point, because that is like a large enough, um a large enough gap, but I think yeah.

C

The big concern is that the market price stays so much higher than the redemption price, and then people don't want to buy rye to pay off their debt.

D

Yeah- and I mean the these systems right, like rye and like the original single collateral maker or even really maker today, like the product they're sort of offering, is like it's like a two-sided part. One is a stable coin, but on the other side, it's offering leverage right or like borrowing, borrowing which can be used without much leverage or with like more leverage right. So I guess in crypto, which is very speculative.

D

A lot of the like usage of maker and presuming the reflexer system is to get leverage right, but we're seeing why? Why that's not always a good thing but yeah like uh but yeah, I'm guessing that's sort of drying up which is what's driving this gap here right. The demand for leverage has gone down a lot.

D

But yeah good good points to bring up but glad you guys are on top of this.

A

Sweet yeah and then what the last item was just a bi-weekly trade volume update of dxt which, uh in uh with the same state of the market. Currently it's decreased again, so we have a three month, average volume of 54 000 and, of course we also do our buybacks based on that volume amount. So the size of the buybacks will likely decrease slightly over the next couple of weeks um and that's pretty much it so, not sure if anyone else has anything to share. um Otherwise we can um call it a day.

D

There is this interesting post. I don't really have anything to to say directly about it yet, although I think it is relevant to the extent just because of our involvement with gnosis chain yeah, you knew it here. It is there's this forum post about the xdi team's involvement in in no sashing going forward, and it it's get some.

D

It gets a little spicy and again I don't yeah. I don't really have much to say at this point, but something that we probably should have our eyes on.

D

I guess I would say there are some questions that are like kind of in my mind. After reading this thread, one is like well, what is happening to the x die team? Obviously, they built a lot of the infrastructure which we rely on, so it would be nice from that perspective. To have them continued, continue to be involved.

D

And yeah what is happening to the ecosystem fund, because that seems like it's supposed to be for funds. These are all mentioned in the thread, but yeah I mean, if you guys want to talk offline, we can also do it without the recording but yeah. Just some basic questions come to mind which are like yeah kind of obvious. I think after you read the thread.

C

Yeah, I'm just gonna, say I also think it's interesting primarily just reading reading now and not really don't really see how to do something specifically, if there's anything kind of to do, but definitely very, very relevant to deep style.