It would be helpful if you can summarize the strategic benefit of each partner to API3?
I’ll answer this generally, since we’re expecting similar benefits from each partner. Namely these revolve around ecosystem support activities that have provided big wins for us in terms TVS growth, and that we have recognized as providing a competitive advantage for our business development. This round is meant to further align our interests and provide incentives for existing partners to support our project’s growth, and tap new opportunities through two new partners. A large part of the recent growth that you have seen has come through such activites and partners, and when we recognize something is working, we’ll generally want to do more of it.
the relatively short 6 month linear token unlocks will create significant sell pressure as this overlaps with the call option maturity of the current market making deals
The 6 month unlock is followed by another 6 months of linearly unlocked tokens, so it’s not exactly in the interest of the token holders to dump their newly unlocked tokens and crater the value of the other 50% of tokens. Also, I’d personally say we’re pretty happy with our market makers atm, so the expectation is that we will be rolling over the relevant market making deals with new strikes that are proportional in their margins to the old ones (median around 100% above spot), so this further provides a disincentive to do anything too disruptive.
I think we were under the impression API3 has a healthy treasury
The treasury is there to be seen on the tracker by anybody who’s interested. Our treasury is healthy, but it’s not quite as simple as that. As you can see, we have about 2.5M USDC remaining in the secondary treasury. Considering we’re currently burning about 400k per month just with the consolidated proposal, the liquid runway could be longer. The ETH is not meant for paying contributors or vendors in its current form, but as a store of value that would need to be liquidated to USDC for contributor grants and such. There doesn’t seem to be significant appetite to start liquidating it yet. The API3 in the primary treasury, however, is currently being diluted with an inflation rate of close to 14%, so as we’re holding it it’s actively losing value at a fast pace. Considering these points, I thought it would be timely and prudent to extend the liquid runway by selling a small portion of the API3 in the primary treasury, in the most beneficial way possible - which, to me, was as locked allocations to buyers who had more to offer than just cash.
The 7-day TWAP should commence measurement only after the proposal has been accepted. This ensures fairness, preventing any potential manipulation where a proposal could be initiated based on advantageous past prices
It might be in the interest of the DAO to only set a price for a deal once the proposal has passed, but it is difficult to find buyers who will commit to buying before knowing the price. If you don’t find buyers you don’t have a deal to consider. Due to regulatory reasons, we also want to do this as a direct sale to identified private entities, so just setting public terms and allowing participation by anyone was not an option.
I would also note that getting this together took more than 7 days, and the terms generally need to be in place before pitching anyone. I feel like the somewhat significant price increase just hours before the proposal was submitted may have had an effect on how this deal was perceived by our community, considering how subjectively advantageous the terms were to us when they were committed to by the buyer. Keep in mind that large OTC deals for locked tokens of any lockup period currently go for average discounts in the 40%-50% range (and are not done transparently like this one).
The decision to set a nominal price based on past 7d twap was made to ensure that the both the buyer and the seller know what the price is going to be, and so that the price reflects the true value by disregarding individual awkwardly timed peaks (beneficial for seller) and valleys (beneficial for buyer).
