Interesting proposal. My initial reaction is yes this is a positive for both daos. However, I see that liqwid is requiring 50% of the voting power acquired by Minswap to be distributed to community or SPOs or liqwid delegates. Should liqwid also do the same for the acquired Minswap voting power? Unsure how this is technically feasible, but thought it’s a valid point to consider.
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I do not support this.
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Minswap has a USD value twice that of Liqwid. A $1:1 exhange of tokens grants Minswap DAO twice the governance control over Liqwid that Liqwid DAO receives in exchange. Based on the above this deal would give Minswap Labs governance control over Liqwid to the extent of between ~2 and 6% of total supply unless I misread. This will be compounded by massive LQ rewards they can receive from staking. It essentially makes them a leading entity in control of the protocol.
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Unless I missed something, we are getting: the benefit of not selling any LQ on market, deeper liquidity on Minswap, and LP rewards including retaining a large % of the 2% of incentivized farming rewards. ---- What we are giving up for this is disproportionate control of Liqwid DAO, LQ staking rewards, and on top of that all of the LQ/MIN that we will LP will be going towards boosting Minswap’s TVL, whereas the LQ they gain does not contribute to our TVL (unless I’m mistaken that a protocol’s own staked tokens are counted).
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While their gamble is similar (albeit much less since the % of their supply is 1:2 against what we’re getting) we are tying 2-6% of our token supply to the gamble that Minswap remains the top dex on Cardano, does not suffer critical exploit, etc)
While I think it’s a good idea from a farming perspective, it is not a fair deal in my eyes and heavily benefits Minswap compared to the benefit we receive. Are we that desperate for deeper DEX liquidity and some farming PoL that we’re willing to give up 2-5% of our total supply and take on added risk?
Hoping someone can assuage my concerns.
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Hence 50% of voting rights.
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50% to the DAO, 50% for them to delegate to a “community member” at their discretion. Which can basically be anyone, someone who is very close to the Minswap team and votes in alignment with them. No matter how look at it it is giving Minswap a team-member level (or multiple team member) seat(s) at the governance table for Liqwid DAO and not giving us the same influence over their dapp. It might not cause market action but it is still a sale, of a large number of LQ tokens at a very undervalued price… in exchange for dex liquidity, POL and a minor share of control over Minswap DAO.
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I have known Minswap to always do the right thing by the community and ecosystem and I believe this will apply here as well. Plus this vote would also have to pass the Minswap dao as well for any of this to happen and if the dao is giving up their treasury then there will most likely be a vote passed down to the dao on whom that other 50% would be delegated to as well. I am voting yes.
Whether or not you believe they would vote for good things is beside the point. The point is that this vote effectively gives up 2-6% of LQ’s supply to another defi protocol. In exchange for non-critical benefits for which viable alternatives exist. The main goal of this discussion is to increase liquidity depth on dexes and generate PoL. Both of those things can be achieved in more gradual manner. There is no incredibly urgent need to rapidly accelerate them in exchange for a large stake in Liqwid DAO… a controlling stake potentially in many cases.
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Win - win on my opinion. Controlling stake is also given to you guys. Both min and lq would just be sold by normal lps otherwise. LQ dao will also be seeding a v2 pool and earning min from farming and staking that to compound yield earned in ada for treasury. Lq dao will have 1-1 voting rights in MIN as well, so the benefits are mutual (maybe even liss in MIN dao case). With boosted staking voting rights, your staked MIN will also have extra governance. Min dao gets another way to use their MIN as well instead of just triple farming and rewards being sold for profit (cresting more sell pressure on min).
I think it is a win-win as mentioned earlier. Sell pressure on both LQ and MIN for amount agreed upon is mitigated for 10 years and assets put to work to compound both treasuries.
I agree, MInswap is getting a better deal. I would rather see an allocation across the top 5 DEXes according to a specified metric or adjust Minswap’s allocation so it is more balanced.
I believe it is crucial that other protocols that provide value to the ecosystem must hold $LQ in their treasuries. The more parties, and players who hold a token, the higher the perceived value of said token.
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Controlling stake is not given to us. And no it is not 1-1. They will give 50% to a community member of their choice, which is essentially anyone they want. That is fluff. Again, it’s not a matter of whether it’s a fair trade only. It’s a matter of if this is even necessary. It is not. Min also gets “boosted” governance share after 6 months when their staking jumps from 5% to 30% and then to 50% at 12 months in LQ rewards (thousands more weekly they could compound).
Sell pressure is not “mitigated” by giving DAO controlled LQ to another entity… There is no sell pressure from that to begin with, without a DAO vote. We could simply use treasury revenue to build PoL. The only mitigated sell pressure would be if we did this proposal instead of allocating 2% to farming reward incentives. And the sell pressure mitigated would be very minimal, even dc agrees with that.
The only reason this is even a proposal is because some community members want increased liquidity death and to start growing PoL. This is not the ONLY method to do so, it is just the most accelerated option proposed. We can grow it organically and even dedicate DAO revenue to buy LQ off market to add to LP if we wanted to… We generate $20-30,000+/month now based on January numbers.
Not really. Lq gets 100% of the MIN tokens to be used as voting rights (while MIN dao only 50%), they get yield in a dex that dominates 75% of all market transactions, they mitigate LQ farming sell pressure, and also seed a v2 pool. Imo, voting on MIN governance currently has a much larger impact on ecosystem than any other ded due to their huge ada wallet from tvl. LQ dao now gets to own rights to control a piece of that vs less prominent dexs. Sure it is more decentralized to spread it, but you get a lot more value for your LQ by choosing MIN. Your yields, voting rights, and influence on ecosystem as a whole (especially with cip-1694) will be more prominent than other dexs.
Fruit for thought. Combine tvl of all other cardano dexs on defillama. It is still lower than min. Add all their volumes and its still lower. It would actually be bad stewardship of LQ dao assets in this case to spread across dexs. Your voting power and yield generated diminish greatly.
They get 2% of our token supply to their 1%. It is only 1:1 in USD value. Again, their market position is irrelevant and not assured. Spectrum topped at 20% market share within months of being live. Axo is coming up. Aggregators level the playing field of volume. But none of that matters. The question is whether this is necessary, and whether or not other viable alternatives exist that don’t demand giving up very significant (team level voting rights) to another defi application.
Liqwid controls a 70 million+ ADA pool for Catalyst voting. With the amount of participating votes in the first round, if Minswap had the allocation proposed here they could have unilaterally decided all 20 winners of that vote. 18/20 proposals were funded. That is not a small value.
Minswap TVL is also irrelevant to the debate. Beyond the point that we would also be benefitting their TVL with this trade whereas they are not benefitting ours I don’t believe (I dont think defilama or others count the protocol’s own staked token). I’m not proposing “spreading DAO LQ across dexes”. I’m proposing growing PoL/depth with DAO revenue.
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I think coming up vs already here for 2.5 years and still going strong are facts vs speculation.
The MIN wallet had 83,000,000 ada two funds ago to vote. Tvl matters because the higher tvl dex gets more orders and lq would essentially get real yield paid back in ada by holding MIN. As MIN has a staking program.
You look at it as MIN “gets” 2% of LQ supply. I look at it as this agreement would mitigate sell pressure on 2% of your LQ which would otherwise have to be distributed to farmers who are not obligated to hold for 10 years. LQ would reduce their circulating supply by 2% if this works out, making their asset scarce, but also putting it to work to generate yield for dao.
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this proposal contains too many actions in one, it should be split into few separate proposals as some are no brainer and some are contradictory
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I’m sure we can all agree Liwid is premier lending and borrowing platform in the ecosystem with rathers to UI/UX and functionality.
What the team at Minswap has accomplished over the past two years is outstanding. However, objectively speaking, implementing this proposal would be consolidating more power to an already dominant entity (Minswap DAO).
In an ideal world, Protocol Owned Liquidity (POL) would not be fragmented across different DEXes, but pooled together and accessible to all DEXes equally. These lowers the probability of any type of collusion or forming of an oligopoly.
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I am not sure of your math. What I calculate based on a $1M exchange of each:
$1M USD equals 1,694,915.25 ADA at $.59 USD/ADA
1,694,915 ADA converted to MIN is 27,812,852. Liqwid DAO receives 27M MIN Tokens
1,694,915 ADA converted to LQ is 242,889. MIN DAO received 242,889 LQ Tokens
MIN Current Circulating Supply is 1,082,367,249
LQ Holders receive 2.5% share of current DAO ownership
LQ Current Circulating Supply is 4,571,920
MIN Holders receive 5.3% share of current DAO ownership
LQ holders will retain a large share of DAO voting power than MIN. Further, 1.5% share of voting of the DAO is hardly going to run away with governance as there is still 98.5% of circulating supply voting from community and team.
Also, from the proposal:
B. Minswap DAO agrees to delegate 50% of their LQ voting power to Cardano community members, SPOs or Liqwid DAO stewards of their DAOs choosing.
So this 1.5% is further reduced because most of it is delegated voting to other members. I believe the idea that MIN DAO will have “control” of Liqwid voting is a red herring.
**The data will fluctuate based on exchange prices of ADA, MIN, LQ. If the total $3M were exchanged the percentages would be higher by (7.7% MIN for LQ DAO and 16% LQ for MIN DAO). Liqwid gains more governance on a percentage term than MIN DAO for higher amounts of USD.
We need deeper liquidity, we have from day 1. I was disappointed when the first proposal to deepen liquidity failed as I believed we needed it then. I think this proposal is preferable to triple farming where the majority will farm to sell rewards.
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1,694,915 ADA converted to LQ is 403,551 LQ. The FDV of Minswap is twice that of Liqwid, meaning that a 1:1 USD exchange equals out to a 1:2 exchange going by token supply doesn’t it?
Even with 200k LQ they would have the ability to unilaterally decide every proposal that has ever been put up for vote to date I believe.
Why pursue this when the objective is increased PoL/liquidity depth, and we are now generating $30,000/month and rising in DAO revenue. We can allocate DAO income to building an LP position naturally without giving away massive chunks of supply to a third party defi app for accelerated PoL growth. We have ~700k ADA depth currently. We don’t need a massive dramatic/instant increase in depth… a steady climb achieves the same goal in a reasonable time frame, especially considering revenue has increased month over month.
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OK, well I mistakenly used a DEX to calculate the ADA to LQ conversion without realize the slippage would give me a faulty number so you are right, quite a bit higher than what I posted. It does give them 8.5% of which 50% would be staked to community pools via delegation. I still think it is insignificant on the grand scale of governance. 4% would not be enough voting power to sway a vote if all members are voting. If all members are not voting, then perhaps a concern. However, that is a problem for Liqwid to solve to raise engagement of voting or at least get people to delegate to those who do.
“Even with 200k LQ they would have the ability to unilaterally decide every proposal that has ever been put up for vote to date I believe.”
I do not understand how you can conclude this if they have 8.5% of the LQ in circulation, even assuming they act in bad faith and do not delegate the 50%. I think you are making catastrophic assumptions that are not realistic, like a black swan event. Something to think about, implement certain controls, but not something you actively design around.
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Some have talked about the power of vote concentration as if it were irrelevant. First let Liqwid solve the problem of low voter turnout and then give 8.5% to Minswap. By the way, I’m still not sure if that 8.5% is stakeable and can it rise to 20% in 2 years?
On the other hand, Minswap is a DEX whose TVL is 50% based on its own token. MIN is such an inflated token and is currently overvalued. I would never exchange 1% LQ token for 0.5% MIN tokens because I value the LQ token much more. MIN is overrated, LQ undervalued.
Minswap’s market position is based on inflating the DEX token and may not be sustainable.
I’ve been thinking all this time.
My vote is NO
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