This proposal is covering one element in our Angel Vault launch roadmap and we’d like to get the community’s vote and feedback on it.
TL;DR
Giveth loans ICHI $500k USD of GIV tokens. The sum will be deposited by ICHI, subject to the following DAO to DAO deal. ICHI to repay either the same number of GIV tokens $GIV tokens or $600k USD of Angel Vault LP tokens within 6 months.
Background posts
You can find the details of the Angel Vault in this forum post here:
And how to secure the funds to launch the vault via Rari Fuse pool here:
The Deal
A $GIV loan for 500k USD worth of $GIV to ICHI where ICHI tries to make a profit on this loan through market making activities. ICHI will use this to bootstrap the Angel Vault and build the $oneGIV wall protecting its price. This loan will be returned to the Giveth community after 6 months either as the number of GIV tokens given at the time of the loan OR - $600k in Angel Vault LP (a 20% return on principal loan) which will be Protocol Owned Liquidity in the pool/vault for the Giveth Community.
ICHI really likes our team and product. They’re selective with this option and usually offer it to projects they like and would like to back. So it’s completely optional for us but it’s an interesting offer and we suggest trying it!
Question marks
There have been some concerns and questions within the Giveth community around the security and warranties of giving away such type of a loan, especially considering the current market turmoil and security breach, we need to assess everything very carefully. I will invite the ICHI team to comment on this thread about this concern.
Background: At ICHI we were always concerned about our liquidity and looked at different ways to create healthy/sustainable liquidity in the market for our token. We realized that there was no way to do this that didn’t lead to selling the ICHI token and hurting our project. Therefore when Uniswap v3 was introduced with Concentrated Liquidity, we created this Angel Vaults mechanism for communities like ours looking for healthy liquidity. After stress testing, we realized that they work as we expected, and decided to offer this mechanism to other communities.
As Yass explained, we do this type of market making with our native ICHI token and offer out this loan option to projects we believe in. While it is by no means mandatory, we offer this because it aligns both projects’ goals by incentivizing us to protect the GIV price and enable it to grow unrelated to market conditions.
From a security perspective we will look to market make exactly as we do for the ICHI token. The only concern from a loss of funds perspective is the normal risks taken on by anything in the DeFi space - namely, a hack of the smart contract or of the Uniswap protocol. Outside of that, with this option, the worst case scenario for Giveth is that the community receives back the same amount of GIV tokens that were loaned out in the first place.
I’m not very experienced on Market Making, so I would like to know risks about:
Lowering the price of the GIV token.
Shifting part of the funds from the buy wall into a sell wall.
Any other implications to the GIVeconomy.
I also would like to know how does ICHI usually manages the uncertainty of getting back the loan. I mean, I really like what ICHI is doing and I consider they have strong fundamentals. I wanna see ICHI grow and our partnership grow together. But how do we know that if some kind of shock comes in this 6 months the GIV tokens or the value will get back to Giveth?
I’m not sure where does Giveth directly benefit? They would use this to support our Univ3 Pool? What happens after 6 months when ICHI pulls liqudity? It would go along way to bootstrapping the pool but only a temporary solution given the timeframe.
What are the conditions to receive the same number of GIV tokens vs. 600k USD of Angel Vault LP Tokens?
Feels like if we’re loaning such a large amount wouldn’t it make sense to charge an interest rate?
What we plan to do with the GIV tokens is put them into a Uniswap pool strategy. What this means is that the LP tokens we hold in the liquidity position will vary both from a ratio of tokens perspective and from a USD value perspective but we will maintain a minimum amount of GIV tokens. This means at the end of the 6 months, even in the worst case scenario where GIV is worth $0 we will be able to return the same amount of GIV tokens to the Giveth community. In other words, the tokens are principal protected based on number of GIV tokens. This is what enables us to almost guarantee (I say “almost” because of the risk of a black swan event like a hack of the pool/contract) the return of the exact amount of GIV tokens we received at the end of the 6months.
From what I have seen, Angel Vaults are the best liquidity plan on the market today that leads to the least sell pressure on the GIV token. Hence, this is meant to be the best way to provide value to the GIVeconomy. Let me know if you have other questions
@mitch the benefit to GIV is that it turns 500k GIV into 600k LP - This is hugely important to understand as what it does is two important/sustainable things:
Provide a 20% boost of funds to GIV
Turn GIV tokens into Protocol Owned Liquidity (POL) - meaning the GIV tokens turn into LP in the pool that the GIV community holds! (similar to what Olympus Pro was doing but better )
It is important to note that Angel Vault LP is LP in the Uniswap pool so that liquidity turns from a temporary deposit to one that can stay in there as long as the GIV community sees fit. It’s a win-win here as GIV now will have the benefits of POL in a Uniswap pool that is managed for them and ICHI can make a profit from the Market Making side.
So ICHI collects the swap fees and will leave their loaned GIV in the LP as long as the GIV holders agree? How is that decided or enforced? a multisig with a SafeSnap/Zodiac module comes to mind
I can see where it makes sense in returning the 600k LP but the deciding metrics aren’t clear between getting the 600k worth of LP tokens or returning the same amount of GIV tokens loaned
The GIV tokens are sent to the ICHI multisig, ICHI uses its market making strategy to earn fees and convert it into Angel vault LP. At the end of the 6months, the teams evaluate what the LP is worth/the strategy’s performance was. If it was able to earn/convert enough GIV to Angel Vault LP (up to $600k) then the funds are returned in LP. If not, the teams look at the loan funds and GIV can decide whether they want the LP or the same amount of GIV tokens back.
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