PEP-20: Market Making Reimbursement

Attributes

Abstract

On January 12, 2022, the POKT token was listed on 4 exchanges with more on the way. In support of these exchange listings, Pocket Network Foundation engaged with two market makers (who will not be disclosed due to NDAs) to provide effective on/off ramps to users. As part of doing so, the Pocket Network Foundation provided 11,000,000 POKT from its own treasury to this effort. The Foundation is seeking a reimbursement from the DAO for these tokens.

Motivation

This allocation of POKT was required to provide stable and liquid markets for our users. To give readers that aren’t familiar with market making a sense for what they do, here is a quote from Gemini.

The decision was made, by the Foundation Directors, that multiple market makers would provide the most benefit to the project, which they funded out of their treasury. Having a tight, bid-ask spread was necessary for the successful launch of POKT. The Foundation Directors deemed that two separate market makers were necessary to ensure a successful POKT market entry across multiple exchanges. And from the last few days we can say that this was a success.

For those thorough readers, these funds were not included in PEP-4, being specifically excluded from the last proposal. The door was left open to reimbursement.

While the original proposal indicated that Pocket Network, Inc. would fund market makers, our legal counsel advised against this, suggesting that the Foundation would provide superior legal protection for the project.

Budget

11,000,000 POKT will be placed back into the Foundation Treasury for deployment into similar, high-leverage transactions, where using the Foundation entity is ideal or discretion is a must, as in the case of these listings.

Rationale

The Foundation plays an important role in the Pocket Ecosystem, which should not be underappreciated. The Foundation can interface with real world entities, like market makers. The ability to both reduce risk and friction in these transactions makes it possible to work with world-class vendors on high leverage engagements that often require discretion. Without this reimbursement the Foundation would be limited in its ability to to grow Pocket Network in the ways it’s been acting previously. We should continue to support the Foundation in this way through this reimbursement.

Dissenting Opinions

“Leave that POKT in the DAO Treasury” - The DAO could be viewed as the best possible mechanism for distributing and making decisions on it’s treasury. We would argue that the DAO is not effective for all transactions, meaning that the Foundation remains an important mechanism to doing business with meatspace. Further, some transactions require discretion, which cannot be achieved with DAO proposals, which the Foundation and its Directors can excel at.

“That’s too much” - Market making requires large amounts of capital. The Foundation tried to balance a successful launch with minimizing cost.

Deliverable(s)

The DAO distributes 11,000,000 POKT to the Foundation Treasury.

Contributor(s)

DAO - Sends funds

Foundation Directors - Receive funds

Copyright

Copyright and related rights waived via CC0.

7 Likes

Makes sense to me :+1:

1 Like

I support this proposal without reservation.

As pokt matures in the greater crypto marketplace, the Foundation will need the ability to make decisions regarding allocations for exchange listings without the encumbrance of individual approvals.

1 Like

You have my vote on this proposal.

I agree to this as well

I agree with this proposal.

Suggest targeting listings with: Binance, Okex, Kucoin and maybe FTX.

It’s easier to make pineapple pizza to be loved universally than disagreeing to this proposal.

Aye.

Absolutely will support this, especially as Pocket continues to grow across multi-chains in the near future.