Recipient(s): Pocket Network Foundation and the bridge to be released
Category: Imbursement / Distribution
Related Installments: PEP-5: Allocate POKT from the DAO Treasury to Launch/Support the wPOKT Program, wPOKT Green Paper (the original source), PEP-21 Bypass wPOKT LBP and go straight to the bridge
Asking Amount: Up to 1M POKT
This proposal intends to reverse the proposal: PEP-5. The rationale for this has been outlined here and PEP-21 Bypass wPOKT LBP and go straight to the bridge.
To that end, Pocket Network, Inc. will not be claiming any of the POKT allocated by PEP-5. This includes any of the tokens outlined below:
However, we still intend to launch wPOKT to open the Pocket Network ecosystem to the benefits of the ERC-20 format. This launch will require a small liquidity pool, and this proposal seeks to introduce a budget with this narrowed focus in mind. Other potential options are outlined in dissenting opinions.
While we’ve been approached by community members who are willing to provide liquidity on the AMMs, we’d still like to provide a baseline of wPOKT AMM liquidity. Based on our calculations, we have determined that we should target 1M POKT on the bridge as an initial seeding. In addition to this, we propose the Foundation provide the equivalent amount of USD(C/T) for a 50/50 pool. These numbers were calculated by determining a slippage threshold of 3% at a $25,000 transaction. This allows us to keep bridge risk to a minimum while enabling a new venue for others to purchase wPOKT. Users will be natively incentivized to provide additional liquidity which will only prove to increase the performance of the pool.
Please view this model to see the math at current prices. Key assumptions:
Liquidity is provided at all prices
Fees aren’t included in calculations
I am therefore proposing that we allow for a week window for the POKT community to send their own POKT to the bridge to provide liquidity on Uniswap. Once the week timeframe is elapsed, the bridge signers will complete the minting process of wPOKT. wPOKT will then be able to be used to provide liquidity in the Uniswap pool.
I’ve written a full-length post about exactly why we are no longer proceeding with the wPOKT farming application as originally planned. Please find that here: [link]. Due to this, we no longer have need for the initial amount requested in PUP-5. Outside of having flexibility for governance payments and another on-ramp through an AMM, the scope of wPOKT is limited. With a narrower scope, we should reduce the budget.
1M POKT from the DAO Treasury allocated to the AMM pool
830,655 USD(C/T) from the Foundation Treasury allocated to the AMM Pool (amount subject to change based on POKT price)
1M POKT from the DAO Treasury to the Foundation Treasury offsetting the prior bullet’s USD(C/T) transfer
Since we are no longer launching the wPOKT farming app, and the others are already seeing the potential lack of needing to do an LBP, I believe we need much less POKT for the bridge to execute on what we’d like to use wPOKT for.
Why don’t we do an LBP? While an LBP would provide a natural backstop with purchases used to provide liquidity, the general sentiment in a recent proposal is that there is no need for an LBP given the recent listings. The LBP cancellation proposal will go to a vote; if it is approved, then no LBP will be done, if it is approved, a new proposal should be voted on to agree to a new LBP budget, since the original proposal is now outdated and likely allocates too much LBP budget for these new circumstances.
What about an incentive program to seed liquidity? While helpful, I would prefer to see what the natural demand for providing liquidity on wPOKT is before deciding to use DAO treasury resources to incentivize further depth in DEXs.
- Set start and end date for the initial seeding of wPOKT bridge
- Release documentation on how to use the bridge
- Launch wPOKT Ferrum bridge
- Allow for 1 week of bridge seeding by community members.
- If you plan on sending POKT through the bridge, you’ll need to match it with the correct amount of USDC on Ethereum. For example, if you send 50k POKT, you’ll need $40,000 in USDC to match.
- Calculate the difference required to make up 1M POKT seed, then disburse from the DAO treasury
- Complete wPOKT minting and create Uniswap wPOKT <> USDC pool
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