[withdrawn and replaced by HIP-4] HIP-? Sell UBI to finance the DAO

DAO
1

Due to feedback this proposal was withdrawn in favor of an auction and put to vote as HIP-4.

Introduction

The DAO currently owns 4 000 000 UBI. We propose to sell some portion of it at market price in order to finance its operations.

Proposal

The Kleros Cooperative has expressed interest to buy for 150 000$ of UBI from the DAO. In order to keep the process fair, the sale will be open to any buyer buying at least 1000$ (below that it’s easy to buy on Uniswap and subventioning the transaction fees wouldn’t be worth it). The sale will start 1 week after this proposal is accepted and will last 1 day. (exact time to update when it’s put to vote) The price will be the Uniswap price at the start of the UTC day.

From a practical perspective buyers will be able to send ETH or DAI directly to the DAO, the DAO will then send back the UBI amount corresponding to buyers corresponding to their purchases.
In case more than half of the DAO reserve were to be bought, the DAO will only sell half and reimburse everyone in proportion of their purchase (ex: if the DAO has 2000 UBI and 2000 UBI are bough, the DAO would only sell 1000 so buyers will get half the UBI and half of their contribution will be reimbursed).

Justification

It isn’t made to be a big sale but just to get some quick funding for DAO without having to deal with a complex sell of its treasury. Allowing anyone to buy ensure that the treasury management of the DAO is fair and not made to profit particular actors.
Using a smart contract for the sale would take some extra time and since UBI is controlled by the DAO buyers already have to trust the DAO.

3 Likes
2

As we have seen the UBI price range from $0.60 to $2.80 the past 24 hours perhaps an average of the previous 7 days or something like that would find a fairer price? There is a risk of price manipulation that day to raise or lower the price before the sale.

2 Likes
3

At the time I posted this, I didn’t expect such a high swing.
Well maybe taking the average price of the previous day or even of the previous 7 days. What do you think?
The risk with not taking the market price is that:

  • If the average is higher than market price, no one would buy.
  • If the average is lower, the DAO loses money to arbitrageurs.
1 Like
4

Or even better, we can use Gnosis Auction, this way the pricing would be automatic.

2 Likes
5

Gnosis Auction looks great, I would personally be happy with an auction as a solution.

2 Likes
6

Going with Gnosis Auction, we would need to determine the amount we want to sell and a reserve price (so it would be determined in term of UBI sold and not in term $ value obtained).

We could sell
500 000 UBI with a reserve price of 0,00024 ETH/UBI (approx 0.5$ at current rate).
The reserve price means that if the price is lower than that, some UBI may not be sold.
Note that prices are determined depending of the bids, so it doesn’t mean selling UBI at 0.5$, it means that if the clearing price were to be lower than 0.5$ the DAO would not sell those UBI.

1 Like