This is a copy pasta of @karmaticacid’s great post for the collateral for collateralizing our FEI loan… This one is for collateralizing our oneGIV token.
Introduction / Catch Up
There has been significant discussion on setting up the Angel Vault and the road to get there. Basically we need to get a $600k to $1M of FEI to create oneGIV (stable coin) to deposit into the Angel Vault (as a GIV/oneGIV pair).
The amount of FEI that we need will depend on what we predict our market cap will be at the launch of the Angel Vault. The volatile market conditions make this relatively unpredictable. We want to borrow enough FEI to create an angel pool that creates a buy wall that is 10% of our market cap at launch, for the rest of this post we ASSUME that is $800k FEI but it likely will be less than that.
The plan to get the FEI is to set up a Rari Fuse pool, basically our own Aave style borrowing/lending pool named the “Regen Pool”, and incentivize our community to deposit FEI into that pool. We are aiming for a 30% APR (part of it being part of the GIVstream) for about $1.5M of FEI deposited, the APR will be less if more people deposit.
We will be putting GIV into that pool & borrowing the FEI. Then using that FEI to create oneGIV. We will be providing $1.2M USD worth of GIV which will collateralize up to 4M oneGIV to be minted and safely cover any fluctuations in the GIV token price with a 250% collateralization.
Anyway, this is all explained at length in this post:
This Proposal
This proposal is here to discuss this one element of that whole big shebang, namely:
We need to provide & manage the GIV collateral for the oneGIV token
There are two parts to this proposal:
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Decide on & confirm the params & signers of the multisig that manages the oneGIV token
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Vote to send GIV to that multisig so that it can manage the GIV collateral for oneGIV.
Background
This multisig will control the contract that holds all the collateral for the oneGIV token. The oneGIV token is a very odd duck, in that it is minted by 80% FEI and 20% GIV and is burnable for 100% FEI. This is awesome because it creates demand for the GIV token without directly creating sell pressure… but we shouldn’t be Lunatics about it!
All of these mints and burns will happen with a contract managed by this multisig. Here is the one for oneFOX. When people mint oneGIV, this contract will get the FEI and GIV, when people burn oneGIV, this contract will send FEI back to them. Because of this imbalance, the multisig may be forced to sell GIV on the market to get FEI to better collateralize the oneGIV token.
I would suggest that we take an active management approach and target an 85% FEI backing if the GIV price is rising by creating Univ3 positions on GIV/oneGIV that will automatically sell GIV for us as the price rises. Also if we reach 60% FEI backing, we can trigger more aggressive sells of GIV to get back to 70%.
The nice thing is, we sell our GIV via a multisig, not via some automated liquidation method, so we can control the impact. It is also worth mentioning that we are creating a system that will create demand for GIV so selling into that demand while the price rises is the prudent approach, to prevent having to sell when our reserves run low.
There are also very interesting arbitrage opportunities that will arise when oneGIV market has price fluctuations that we can take advantage of to improve our FEI holdings and support the oneGIV token.
The oneGIV token will hopefully become a core part of the GIVeconomy. We will be able to use it to stabilize our economy via the angel vault, but also we can use it to pay salaries and donate to our favorite projects!
It is worth mentioning that oneGIV is not an algo-stablecoin like UST, it will be over collateralized by FEI and GIV and the GIV will be overcollateralized at an initial rate of at least 500%, likely more. We are putting up $1.2M GIV to back at most $250k GIV (if we borrow $1M in FEI). As oneGIV is minted, that collateralization percent goes down, but also if oneGIV is minted, we are pulling GIV off the market so it should create positive price pressure, which we as active managers of this token will automatically sell into with a Univ3 sell into to stay well collateralized with stable tokens.
1. The oneGIV Management Multisig
In this call the Ichi team explains that we need a 4/6 gnosis safe for managing the collateral & the process of collateralizing oneGIV I would like to suggest a 4/7 gnosis safe for easier management. The multisig will have 2 ICHI team members so I recommend the following 5 nrGIV holders since they are closest to the process:
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Griff
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Willy
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Lauren
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Mitch
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Giantkin
Do you think these are good signers to represent Giveth in the 4/7 multisig to manage the oneGIV collateralization?
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Yes, love that bunch!
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No, I will comment my alternative suggestion
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Abstain
0 voters
2. Sending GIV to the oneGIV Management multisig
Context for the Numbers
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oneGIV is minted by 80% FEI and 20% GIV.
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We are assuming we will mint around 1M oneGIV, though the exact number will be determined based on the market cap of GIV and requirements set forth by ICHI for minting oneGIV and setting up the angel vault. This means we will need around $200k GIV to mint the oneGIV.
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We propose to cap the supply of oneGIV tokens at 4M. Which will mean to maintain a 250% collateralization of the GIV portion if 4M oneGIV is created so we will want $1.2M USD worth of GIV.
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I think the multisig should hold an extra $100k in GIV to sell as the GIV price grows & we want to collect FEI to add collateralization to the oneGIV token. This also gives us some buffer to deal with price volatility fluctuations to pull all this off. Any funds we have over the $1.2M we will keep in the multisig to potentially sell to back the peg.
The market is extremely volatile right now, but here is some napkin math:
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If we intend to mint $1M of oneGIV, we need $200k equivalent of GIV to pair with $800k FEI
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If we intend to be able to have 4M oneGIV minted we need $1.2M GIV to keep 250% collateralization
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If we intend to provide the multisig with some GIV to buy FEI with as needed, we should pad these numbers with $100k extra GIV
Total: $1.5M US worth of GIV
So! Although the math is TBD, and we might ask for less by the time the vote passes this is the most we expect to need and the process we hope to follow, baring any objections.
Do you agree to send the needed amount of GIV from liquidity.giv.eth to the oneGIV management multisig to manage the collateralization of the oneGIV token?
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Yes, send 'er
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No, I will comment my objections
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Abstain
0 voters
Next Steps
I will leave this proposal up for the standard 5 day advice process. If we get soft consensus on the multisig here, we will go ahead & set that up. If we get soft consensus on sending the funds, I will put up a snapshot vote to ratify this movement of funds from liquidity.giv.eth & then take the steps to send it.