[SC] - Making the DAO own Liquidity on DEXes

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Thanks @UgurMersin for very thoughtful thread.

I think there is sufficient consensus (backed with logic and evidence) that:

  1. We have a significant liquidity issue as further evidenced by @Ashish here

  2. 27M ($100m+) API Treasury balance is missing out on the large staking reward (50% APR) and left with a large dilution each year.

Now, here are my thoughts.

  1. Option B of creating smart contracts and doing a 10 day TWAP selling have few concerns:

  • With the current levels of weak liquidity, anyone with 6 figures can manipulate the pricing and suppress the price down to enable them to acquire at a massive discount. Kucoin already supports shorting so the said malicious actor does not even need to acquire API3 token in the first place. One thing we can’t predict and undermine is that there are a lot of sophisticated crypto scammers who exploit these vulnerabilities. We don’t even need to go so far, the Mesa DEX exploit is one of them. If there is a single exploit, the said sales balance will be drained quickly.

  • Smart contract sale require diversion of our engineering effort (planning, coding, auditing,etc) and makes us susceptible to unforeseen smart contract risks. If we want to add extra features such as restrictions on staking, voting, vesting, etc all creates additional engineering burden. The core product shipping needs to be the utmost priority and the logistics should be spearheaded by non-engineering team for the most part.

Option A seems to be the most plausible and pragmatic option.

  • This is what VCs would call as a strategic round. We would raise funds from pure strategic investors and partners, instead of vanilla VCs who just provide capital with minimal value-add. These could be:

1, Strategic partners and projects: DeFi bluechips (AAVE,Compound,Yearn,Curve) with large treasury who would also be interested in a bespoke and additional integration with Airnode. And Foundations of protocol layers, DOT, ATOM, ADA. The L1s.

2, Data providers :Coingecko, Coinmarket cap, Kaiko, AmberData,etal

3, Strategic venture arms: venture arms of Coinbase, Binance, Okex, Huobi, Bybit (they recently launched a 9 figure DAO and close to Pantera), AmberAI, Woo or the likes of Galaxy who is experts on financial operations and have ties with traditional finance (Goldman Sachs, Jump, etc) sourcing data and integrations with their projects

The gist is to go for strategic and value-add partners who can help with Airnode adoption. Once this is done and deal terms are concluded, we could do a small public LBP on the same and similar terms to not negate the general public.

Deal parameter (Consideration Point 2) discussion will be long so before we go there, we need to decide on option A or B.

But general principle or the function that we want to maximize is:

  1. increased liquidity with minimal stakeholder negatives
  2. maximizing adoption for Airnode

To maximize these functions:

  1. Discount kept at minimal 10-15% but rather give them incentives once certain KPIs are met to align projects success. As an example, if we get to market cap of $500m, $1bn, they receive a certain % more. This could be based on number of requirements, such as number of partners, API calls, protocol revenue. The gist is to not blindly give them discount for being an institutional investor but reciprocate only if when they have added value, as measured by KPIs.

  2. We should limit the ticket size. Say $0.5-$1m so we can have as many partners to max Airnode.adoption. And we should try to onboard as many partners while the entry market capitalisation is still sensible.

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