Table of contents
This proposal involves:
- Migrating JuiceboxDAO's project to the
- Creating and funding a Uniswap v3 ETH<>JBX pool.
- Deploying and adding a buyback delegate for this pool to JuiceboxDAO's project.
The buyback delegate contract is intended to maximize the number of project tokens payers receive from a project. If tokens are cheaper to buy from Uniswap than to issue from the project, payments go to Uniswap; otherwise, payments issue tokens from the project. This optimizes token acquisition for payers, drives the secondary market price towards the project's issuance rate, and reduces new token issuance.
The current ETH<>JBX pool on Uniswap is a shallow pool which is for v1 JBX. The DAO should deploy a v3 JBX pool with sufficient liquidity to support the buyback delegate.
JBETHPaymentTerminal3_1_1 enforces JBX membership fees during redemptions when redemption rates are less than 100%, which slightly offsets the risk posed by high redemption volumes. It also addresses a minor bug and optimizes gas usage, which is important as all projects interact with JuiceboxDAO's ETH terminal when paying fees.
Reasonable modifications may be made to the following implemention details:
- Multisig to set the JuiceboxDAO project's terminal to the
JBDirectory) and perform a terminal migration to the
JBETHPaymentTerminal3_1_1at the same time via a multisend transaction.
- Multisig to create a ETH<>v3 JBX pool on Uniswap v3 with a 1% fee, an initial price of 1,300,000 JBX/ETH, a minimum price of 10,000 JBX/ETH, and a maximum price of 2,000,000 JBX/ETH, and to deposit 10 ETH and 13,000,000 JBX into the pool. Allow the multisig to update this position at their discretion (9/14) in the 90 days following this proposal's approval.
- Deploy a buyback delegate for use with v3 JBX and the new liquidity pool.
- Adjust JuiceboxDAO's project to incorporate the buyback delegate and the
JBETHPaymentTerminal3_1_1 must take place before the delegate is added, as terminal migrations would necessitate the redeployment of the buyback delegate.
The proposed ETH<>JBX liquidity pool rates have been calculated based on the current issuance rate of 56,855 JBX/ETH. Assuming a successful passage of the proposal to re-open redemptions at a 90% redemption rate, initial redemptions would occur at ~1,728,180 JBX/ETH. The present Uniswap rate is approximately 1,316,650 v1 JBX for 1 ETH.
The pool should be on Uniswap v3 because buyback delegate work began before Uniswap v4 was released, and the work that an upgrade would entail wouldn't be worth the minor upside (small gas savings under certain circumstances).
The steps pertaining to the buyback delegate itself are self-explanatory given this proposal's motivation.
Unless the buyback delegate is removed, JuiceboxDAO will not receive ETH from fees until JBX's issuance cost is less than its Uniswap price. This would require substantial fee throughput and may never materialize. JBX will accumulate among project creators and reserved rate beneficiaries, which could render the delegate's removal unlikely or impossible (as they would likely vote against its removal).
This proposal also has:
- Smart Contract Risks: Even though the buyback delegate contract has been audited, there's always the risk of overlooked vulnerabilities.
- Economic Risks: The DAO may lose funds by providing liquidity non-optimally, and may face arbitrage risk from its liquidity position or the project via redemptions. This proposal could have unintended economic consequences, like a drop in the price of JBX due to higher than expected sell pressure.
- Dependence on Uniswap: The proposal relies heavily on the function of Uniswap, which could pose a risk if there are unexpected issues or changes to Uniswap.
- Shallow Liquidity: The liquidity pool might not be deep enough for the buyback delegate to reach sustainability. The DAO may need to deposit more funds down the line.
- Multisig Risk: This proposal allows the multisig to make discretionary transactions, which risks the multisig acting against the best interests of the DAO.
- Operational Risks: This proposal's implementation requires a coordinated effort from DAO members. Mistakes could be made.
- Dependence on Contract Crew: This proposal relies on the diligence and good faith of contract crew members.
- Risk of Runaway Issuance Reduction: The current issuance reduction rate (0.5%) may delay or outpace secondary market price alignment.
The proposal should be implemented within 60 days following approval, under the discretion of the contract crew and the multisig.