This design is a nice step back to simplicity but I still don’t feel like it adds value for committed YAM holders.
A few comments:
- The funds should not be earmarked until we need them. We can set up a framework for how and when funds get added to the sale.
- The limit order benefits sellers more than committed holders and leaves the treasury with a bunch of YAM that it can’t use effectively.
- People who believe in the project should be rewarded for holding through this sale and there is no mechanism here to determine who was committed and who wasn’t.
- Doesn’t lean in to the Meme enough
So with that said, I present:
The Great Yam Wall - Remix
“The Weak hands have smashed themselves upon our battlements and dealt us a fine blow. But We, mighty and strong of Yam, stood tall before them. O’ those wretched hordes did furiously bellow! But when the clamor cleared, We few did rebuild again with great Vigor.”
-Unattributed Inscription upon the Great Yam Wall
When all looks to be lost and the Barbarians are at the gate, we must buy ETH with our treasury and build a wall. The wall is built with ETH, but it is manned by fearless Defenders who are armed with their delicious and deadly YAMs!
The Treasury provides ETH and community members deposit YAM into the Great Yam Wall smart contract. This YAM and ETH get added to an AMM pool. Pool tokens are stored in the smart contract. Depositors are given an ERC-20 representation of their claim to the share of the YAM in the pool. If the price of YAM drops then the ETH gets eaten up and there are more YAM in the pool. This is bad for the treasury who provided the ETH but good for the YAM defenders as they end up with more YAM than they put in. In this scenario, the treasury absorbed the impermanent loss from the price drop while defenders were rewarded with impermanent gain. If the price of YAM goes up then the YAM defenders lose YAM but can be given a share of the ETH profits above the initial treasury contribution.
YAM governance can set a Market cap/Treasury ratio at which the wall gets built. It would need to determine what percentage of the treasury gets contributed to build the wall and where exactly those funds come from (investment arm, yUSD, selling other assets, etc). The Wall could be built in phases to make sure the treasury isn’t drained.
Let’s run through the process:
YAM market cap reaches $4 million and YAM token holders vote to approve the building of the Great Yam Wall.
The contract is deployed and treasury funds are allocated toward building the wall.
YAM defenders are allowed to deposit YAM for our brave soldiers to take up arms.
Those YAM are matched with the ETH and deposited to the Sushiswap ETH/YAM pool.
- If there is a surplus of YAM then they are contributed proportionally from each defender and the excess can be reclaimed or left to be used if another round of wall defense is needed.
- If there is not enough YAM contributed then what is contributed will be matched with ETH and added to the pool. The rest of the ETH will be used to buy YAM from the pool until there is an equal proportion and that can be staked.
- For example, $50k of YAM is needed but only $25k is deposited, then that will be matched with $25K in ETH and the rest will be used to buy YAM until all the ETH can be deposited with the YAM.
- After the wall is built the price of YAM continues to drop. Then the AMM pool will gain YAM and lose ETH. When Wall defenders leave the pool, they claim their share of the YAM. In this case, they will get more YAM than they put in. The Treasury will get less ETH than it put in.
- After the wall is built the price of YAM increases. Then the defenders will end up with less YAM than they put in and the treasury will get more ETH than it put in. After reimbursing the treasury, excess ETH can be distributed to Wall Defenders.
- After the wall is built, not enough YAM is contributed by Defenders to match the treasury allocation and some is sold for YAM to match liquidity. The purchasing of YAM by the treasury should increase the price and cause a net loss of YAM for the defenders. But if the staked defenders are given the rights to the YAM from the treasury LP tokens then this loss is offset. The treasury has just bought YAM for the defenders
- After the wall is built all of the ETH contributed by the treasury is used and there is excess YAM that isn’t matched. We Either allow it to be reclaimed or left and added to the wall later if additional ETH is voted to be committed.
At some point you will reach an equilibrium where no one left wants to sell, defenders have gained lots of additional YAM, and some of the treasury has been sold off to keep it a certain level below marketcap.
In doing this, the treasury rewards committed holders with more YAM without giving them away to sellers. Defenders are taking a hedged short position on YAM, but the rewards are such that at the end of the process they either end with more YAM or less YAM and more ETH. Let’s reward the strong hands.
“All in all you’re just another Yam in the wall”