@sem - the scope of this proposal did change a bit after some brainstorming calls… once we started talking about governance for adding new tokens after launch we quickly realized there are a lot of challenges with that.
What works so well about Water comes from it being a purpose-specific token that only lives in liquidity pools. If $WATER is used for governance too that could hurt that utility, so a separate governance token for Water DAO might be needed, which raises a lot of questions:
- How should such a governance token be distributed? Is it distributed equally to all communities or does it scale based on amount of liquidity?
- Do new communities get equal governance as early ones, or should governance influence grow over time?
- Is governance done by individuals in each community, or do we need a system where decisions are made collectively by the communities?
Adding to these challenges is that Water needs to be mintable in very large quantities to be useful as a liquidity token.
The current proposal is meant to meet the short term need for liquidity while still working towards making a governance system that works long term. In the current proposal there’s a requirement that 75% of signers approve any transactions outside the scope of this proposal - the intent is that initial multsig signers will use that to ratify a full governance system soon.
This proposal is meant to be very restrictive to secure the token while it’s in this centralized multisig phase, but if you think we need more security then we can think through ways to do that.
It is unclear how each community will choose the representatives that will have the control of the multisig
The current multisig is made up of the people that are championing funding for Water from their communities - max 2 per token project.
which is going to be the criteria to add or remove communities from WATER.
This criteria is in the “Prenuptial Agreement” section. New communities can’t be added in this proposal unless 75% of signers approve, so I don’t expect new communities would be added before a full governance process for approving them is ratified.
why all communities should add the same amount, and how $200k of liquidity was chosen.
At the time I proposed $200k that was the most HNY we could realistically get in a single funding proposal, but since then HNY’s gone down so now we’d need 2 funding proposals. In my opinion we should be aiming for more than this - at least $1M, where a $15k swap has less than 3% price slippage. We have this already with HNY<>GIV, but this is rented liquidity and HNY<>WATER liquidity is permanent.
Liquidity needs are different for each community but I don’t think $400k in paired liquidity is excessive for any of the interested communities. Adding all tokens evenly also gives everyone the same skin in the game and helps diversify price exposure, since $WATER will correlate to its paired tokens.
@solarmkd - Each participating community funds $200k of their token to join, but there will be price slippage since tokens won’t get funded at the same time. We’ll then match the current value of each token to Water valued at $1 at the time the LPs are created.
$WATER won’t act like a stablecoin - its price will correlate to the prices of the tokens it’s paired with, so it’ll act more like an index fund of those tokens. But yes I imagine the auction price minimum will wind up near 0.7 xDai per Water.