[DIP-20] SSV Foundation Market-Making Service Agreements

Proposal summary

This proposal aims to establish market-making agreements between the SSV foundation and at least 2 Market-making service providers in order to allow and sustain market liquidity for the ssv.network DAO governance mechanism (“SSV Token”). For this proposal, the ssv.network DAO will be required to mint 100k SSV tokens to be used by the Foundation. The 100k SSV will be given as a loan to at least 2 market makers in order to support its market liquidity on multiple venues.

Motivation

The ssv.network DAO and protocol have expanded significantly in the staking ecosystem as such, its current size stands above 700,000 ETH staked. In the previous proposal approved in January 2023, the SSV network was at an early stage, both in its development on testnet and its market liquidity. A loan to Efficient Frontier at a size of 48,041 SSV amounting at the time to $1.3M was given to support its activity. At the current stage of its development and increasing market participation, and in order to allow steady access and market liquidity to the SSV Token, the ssv.network DAO is seeking to increase its current offering of a single market maker to at least 2 service providers to address the current and future growth and provide the required market liquidity. 100k SSV would equate to ~$4.5M at the current price, which is needed to ensure sufficient liquidity by at least two selected market makers across multiple venues.

Proposal particulars

Mechanics

The ssv.network DAO will be required to mint 100k SSV tokens, which shall be minted on the day this proposal is passed, not later than 7 days after. Once minted, the 100k SSV tokens will be transferred to the SSV Foundation Multisig wallet.

According to [DIP-13] ssv.network DAO Foundation incorporation and its Bylaws, section 8 subsection A point (vi), the SSV Foundation has been given the power to engage in commercial agreements for the provision of the token to the community. With this power, the SSV Foundation will negotiate commercial agreements with parties on how and where to make the SSV Token available.

Market Making

The SSV Foundation will negotiate with top-tier market makers well-known in the industry and engage in a 12-18-month agreement with at least 2 Market Makers in a commercial loan agreement. At the expiry of the agreement, depending on the option agreed upon, the remaining SSV tokens or USDC received will be sent back to the SSV Foundation wallet. Once received in the foundation’s wallet, they will be returned to the DAO treasury within 30 days.

The Foundation will seek the best commercial terms and options agreement, taking into consideration the following:

  1. Provision of liquidity on multiple venues and multiple pairs
  2. The best competitive market spread
  3. The best commercial option and uptime

The selected market makers are not allowed to use the capital given under this proposal for any DEX usage.

The SSV Foundation has conducted preliminary research and recommends the following market makers:

  1. Selini Capital
  2. Keyrock
  3. Efficient Frontier
  4. 1 Konto
  5. DWF Labs

After this proposal is approved, the Foundation will continue to negotiate and choose at least two of those market makers. The DAO will be informed about the progress, final decision, and conditions to extend the agreement with the market makers to allow the publication of such terms.

7 Likes

I support this proposal. Healthy market liquidity is an important piece of the protocol, and now is a good time to improve it.

2 Likes

don’t choose efficient frontier

2 Likes

Any insights you want to share on why not choose them?

1 Like

We need to change a new one of course.
DWF Labs maybe?

I suggest that the proposals for 100k SSV token mint and election of market makers should be separated.

We appreciate the SSV Foundation’s transparent and community-focused approach to establishing market-making agreements. Deep liquidity is essential for the success of any token, and we are confident that this proposal will enhance the overall health of the SSV network.

We are excited about the potential to support the SSV Token as market makers and are happy to answer any questions the community may have.

2 Likes

absolutely makes sense imho

1 Like

Liquidity is key to a healthy protocol. I will support.

1 Like

:vertical_traffic_light:Voting is now underway!

[DIP-20] SSV Foundation Market-Making Service Agreements

Oppose any type of inflation of SSV token, which will hurt current SSV token holders a lot.

Hello everyone, I am the Chinese SSVdiver for the SSV project. Regarding the recent [DIP-20] proposal, there have been some discussions within the community about how to balance the liquidity needs of the SSV Token with inflation control. I would like to share some of my views and strategies here, hoping to help everyone better understand and discuss this issue.

1. Limit the Number and Time of Minting

We can limit the number of new SSV Tokens minted and specify that these tokens can only be used for market-making activities within a certain period. This ensures that market-making does not indefinitely increase the supply of tokens in the market, thereby effectively controlling inflation.

2. Maintain Transparency and Community Involvement

Maintaining transparency is crucial. We should regularly report the progress and results of market-making activities to the community and invite the community to participate in the decision-making process. This can increase the community’s trust in the minting decisions, ensuring that these actions are in the long-term interest of everyone.

3. Performance Evaluation of Market-Making Activities

We need to establish clear performance indicators to evaluate the performance of market makers, such as market depth, trading volume, and price stability. If market makers perform poorly, we can reassess and adjust our strategies to avoid unnecessary increases in token supply.

4. Buyback and Burn Mechanism

After the market-making activities are completed, any remaining SSV Tokens can be reduced through a buyback and burn mechanism. This mechanism can help offset the increase in token supply due to market-making activities, thereby controlling inflation.

5. Dynamic Adjustment Strategy

Based on market conditions and liquidity needs, we can dynamically adjust the scale of market-making activities and token supply. Market conditions are dynamic, and flexible adjustments can ensure that we effectively balance liquidity and inflation at different times.

6. Use Part of the Revenue to Support Liquidity

We can also consider using part of the transaction fees or other revenues to support liquidity instead of solely relying on new minting. This can reduce dependence on new minting, thereby controlling inflation while still supporting market liquidity.

7. Diversify Liquidity Sources

In addition to relying on market makers, we can also increase market liquidity through liquidity mining and staking incentives. Diversifying liquidity sources can spread risk and reduce dependence on a single strategy, thereby better controlling token supply.

Conclusion

By comprehensively applying these strategies, we can increase market liquidity while effectively controlling the token supply and inflation. This will not only improve the market acceptance of the SSV Token but also protect the interests of existing holders and promote the healthy development of the entire ecosystem. The active participation and feedback from the community are crucial in this process, and we welcome everyone to continue the discussion and provide valuable opinions and suggestions.

Yesterday, they can inflation SSV token for incentive operators.
Today, they can inflation SSV token for market markers.
Tomorrow, they can inflation SSV token for this and that…
This endless inflation of SSV, will hurt all of current SSV holders and supporters.

The DAO should think better ways to do things instead of rely on minting new SSV token to solve issues.
Especially the DAO keep selling SSV tokens Ethereum Transaction Hash (Txhash) Details | Etherscan

1 Like

The TX you’ve provided is not linked to the DAO Treasury!

Here you find DAO Treasury and all of the TX.

All other addresses belong to non-DAO entities.

PS: Yes, you’re right. We need to find a good balance and a working group is on it already.

1 Like