Liquidity Enhancement Initiative: Part 2

What:

Temporarily deposit currently dormant ETH and API3 tokens in the secondary and primary treasuries to the API3/ETH UniswapV2 pair. This will (1) minimise slippage loss in API3’s automated revenue treatment mechanism, the ‘API3DAORevenueIncinerator’ smart contract, which uses the API3/ETH UniswapV2 pair, and (2) accrue Uniswap transaction fees that will be added to the deposited amounts, ultimately withdrawn and returned to the treasuries pursuant to the conditions set out below.

Amount:

333 ETH from the API3 Ecosystem Fund (the Secondary Treasury).

Where:

The tokens go from the API3 Secondary Treasury to a Gnosis Safe 3/5 multisig.

Who:

Burak Benligiray, Andre Ogle, Ugur Mersinlioglu, Ashar Shahid and Varia Law.

The members of this multisig are long-term contributors to API3 who among other things lead the current mission “1B20N24”. All signers have legal agreements with the API3 Foundation which require their adherence to its directives, including the terms of this proposal should it pass.

How:

If both Part 1 and Part 2 of the Liquidity Enhancement Initiative proposals pass, an equal value amount (approximately US$1 Million) of API3 and ETH will be contributed to the API3/ETH UniswapV2 Pool. Any unused tokens will be sent back to the respective treasury immediately. The resulting Liquidity Pool Tokens will be held by the multisig until one of these conditions is met:

  1. The total liquidity of the API3/ETH UniswapV2 pool has sufficient liquidity such that the removal of the proposed position would reasonably keep the pool above US$5 Million in total liquidity.
  2. A successfully passed DAO proposal that directs the multisig to withdraw and return the tokens.
  3. Unforeseen security risks with the UniswapV2 Protocol, which would force the multisig to withdraw and return the tokens.

When any of the aforementioned conditions are met, the positions will be withdrawn and returned to the respective DAO treasuries in the state they are received, including any rewards that have been accumulated. Due to the functionality of the UniswapV2 Protocol the returned number of tokens might differ slightly from the initially deposited amount, but will be verifiable onchain.

In the scenario where one of the Liquidity Enhancement Initiatives passes while the other fails, the tokens received on the passed proposal will be sent back to the respective treasury from which they had been received, and the proposal will be treated as failed due to the essential connection between the two proposals.

The multisig wallet address will be public by the virtue of being included in the proposal.

Summary:

The DAO currently holds significant ecosystem reserves that are being diluted away with the staking target not being met. These resources were set aside to be utilised for the growth of API3 when suitable and in its best interest, as determined by voting on proposals such as this one. With this proposal the liquidity conditions of the API3 tokens are improved on-chain in order to minimise slippage loss in API3’s automated revenue treatment mechanism and accrue fees on dormant tokens.

Explanation of Proposal Parameters:

The destination will be a 3-of-5 multi-signature wallet address managed by Burak, Andre, Ashar, Ugur and Varia Law stated in the “Target Address”: 0xA742E1d181c59C9C4dD5687172eFC119E3868D09

ETH has 18 decimal places, and solidity is unable to deal with decimal places - hence we add 18 zeros after the proposed ETH number in the “Value” section of the proposal.

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