Attributes
- Author(s): @nelson
- Recipient(s): The DAO
- Category: Treasury
- Asking Amount: 6m POKT
Background
As relays on the Pocket Network have seen significant growth recently, the Pocket DAO’s treasury has grown with it to over 56,473,171 POKT, (over $56.4m at current OTC prices). As a reminder, the Pocket DAO earns 10% of every relay (0.001 POKT per relay at current rates). To date, the Pocket DAO only holds POKT.
Summary
I am proposing that the Pocket DAO begin diversifying its treasury with a sale of POKT from the DAO’s treasury, providing the opportunity to grow the Pocket community and allow the Pocket DAO to diversify some of its treasury into stablecoins.
I propose that the Pocket DAO sell up to 6m POKT (roughly 10.6% of the DAO treasury) to the community at a 10% to the 7-day TWAP to the OTC price in the days ahead of the sale. Individual allocations would be capped at 20,000 POKT each with no lock-up or vesting and would be subject to KYC/AML in accordance with Cayman Islands Law.
The DAO diversification sale could be conducted by spinning up a front end to accept USDC for POKT, with these funds going directly to a community multi-sig (e.g a Gnosis Safe) with these funds being controlled by the community members.
Motivation
To date, the DAO has funded a number of community tools and growth initiatives including the Pocket Free Tier, Pocket Block Explorers and Strategic Token Swaps to build the community and strategically align the Pocket Communities interests with those of some of the blockchain’s we support.
By conducting a DAO sale, this would allow the DAO to diversify some of its holdings, allowing the DAO to ramp up these funding efforts while ramping up adoption efforts such as hackathons to drive growth, while also decentralising the number of node operators and token holders. By diversifying the Pocket DAO, this would make the Pocket DAO more resilient for the future, while providing more options for funding community Goals.
Selling more POKT to more individual holders would also make Pocket more attractive to exchanges by expanding the number of individual POKT token holders.
Budget
For the sale itself, we would be looking to sell 6m POKT which at the current OTC prices of ~$1 would raise $6m for the DAO treasury. There may be additional costs associated with spinning up a front end if a third party is to be used to develop this for the Pocket DAO to facilitate the Pocket DAO sale and any legal costs which may arrive in determining the sale is compliant with laws and regulations.
Dissenting Opinions
A treasury sale may increase regulatory scrutiny on Pocket Network which could be mitigated through KYC/AML processes and exclusions of some jurisdictions.
Selling tokens with no lockup will increase the circulating supply of POKT, which may cause the OTC price to fall.
It will be difficult to implement a “fair” sale without incorporating KYC into the process to prevent whales from amassing a material portion of the tokens on sale.
Strategic investors - i.e. community members who have demonstrated their long-term interest in the network - should be onboarded ahead of a general “community” sale.
A DAO sale may draw attention from the wPOKT LBP, something that may be detrimental to the wPOKT project.
Deliverable(s)
- DAO Approval (PEP-16)
- Pocket DAO Sale front end establishment
- Legal Review
Contributor(s)
I am happy to work with the PocketDAO, Pocket Inc and community members who are interested in helping make this DAO sale happen.
Copyright
Copyright and related rights waived via CC0.