While the TrueFi Foundation very much appreciates the ongoing support it receives from Archblock, it also knows that it is in the best interest of the entire ecosystem for the foundation to more fully diversify its funding sources. This will maximise the probability of TrueFi surviving and thriving through any winter, and also further increase TrueFi’s decentralisation.
This interest has led to discussions with several potential investors, with one standing out in particular, DWF Labs.
DWF Labs is a market maker and investment firm and the current proposal from them is as follows:
Total investment of 3.6M USD in stablecoins
bought via OTC agreement from the DAO treasury in 150,000 USD / TRU per day increments at an industry standard discount rate
Market making for TRU for 12 months (without additional TRU to be borrowed)
Overall the directors of the TrueFi Foundation feel that this proposal is reasonable and will set up the TrueFi Foundation for success despite current market conditions. We suggest a slight adjustment to the proposal and would like to see it split between 1.8M USD in stablecoins now and a further 1.8M USD in stablecoins at a later stage in 2023.
We invite the community to discuss this proposal and ask questions before we are making an official vote.
Thanks @Codeknight without being able to give you exact number the typical range is anywhere from 7-20%, however with a strong project like truefi we are able to be on the lower end. Does that help?
Hey everyone, I’m Nicole Maffeo the cofounder of SIZE Markets which is an on-chain OTC protocol. I read the proposal and agree on diversifying funding sources.
Treasuries use SIZE to create custom on-chain, sealed bid auctions. TrueFi would just schedule a recurring auction, set a reserve price (% discount you mentioned makes sense), and could add vesting parameters that allow for token lock up.
TrueFi can also whitelist other buyers beyond DWF to allow for competitive price discovery.
We have an OTC swap protocol that was built for DAOs to handle this. Battled tested with Gnosis using it for a $2m swap and Gitcoin doing a $6m treasury diversification with strategic partners.
It’s pretty straightforward and would handle the escrowless swaps between TrueFi and DWF labs. No fees, on-chain, can add lockups as well if you like (but sounds like you don’t want to.) Happy to share if it’s useful for what you’re doing here.
What kind of KPIs can TrueFi expect for liquidity? What exchanges and DEXes will DWF market make on?
I know we are looking to diversify TrueFi foundation board membership, would someone from the DWF team be able to join the board in tandem with this investment? This is much needed.
Would the DWF team be willing to set up a community Q&A in the coming weeks to give folks a chance to know them better?
To @Codeknight 's point, what is the “industry standard” here and can we lock this down more precisely?
In tandem with the potential DWF funding, it would be great for the Foundation board to confirm and lock-down a concrete funding arrangement Archblock. As a representative TrueFi contributor, even with taking on all of the engineers and moving them over to be direct contributors alongside myself and others, we have a relatively modest burn of <2mm/year. Between DWF and additional funding from Archblock, we could easily lock down 3+ years of runway which would put us in a real position of strength for the future.
As follow-ups, I am speaking with Hedgey later today and just DM’d @nicole_maffeo as well to learn more about their solutions
I would add that % discount also depends on the length of the vesting parameters (if lock-up / cliff). I agree on the range though. How did you guys arrive at the 150k USD/TRU per day vesting increments?
Thank you @nicole_maffeo I will have a look at your solution and I am sure that the community in the future will utilise better tools and will be more aligned with other DAOs.
This funding round is meant to ensure that Truefi is independent and can concentrate on building for the next year or two and was negotiated by the directors of the foundation as outlined in the BOD meeting notes.
High-level Market Making KPI questions answers by DWF:
Bid offer spread between 30-50bps
Overall 95%-97% up time
Depth and trading volume improvement
We’ll need the Truefi marketing team to work with us closely to make these improvements sustainable. You will also have access to our weekly MM which gives you more insights & transparency in our MM performance.
The Archblock trading team has a list of detailed KPIs that are provided to any market maker prior to signing any contracts.
Please keep in mind that TrueFi currently does not have any market maker for TRU. Traditional market makers will demand token loans as well as a fee for their services.
Yes, that is the idea.
I will find that out and get back to the community.
@Ryan you know best here that we can not share all the information we want. The information has been provided to the directors as well as to the DAO council. I am sure you agree that the numbers are in line with what you have seen before.
Archblock has transferred all assets to the DAO as intended, the only outstanding item at the moment is IP related which is pending an updated legal contract. Archblock will continue to provide services to TrueFi and the current engineering resources will continue to work with the community in addition to this.
While this is helpful the directors feel strongly that the DAO should be set up for independent success and be able to make decisions beyond Archblock. It is difficult to fund current size remuneration packages ongoing with the limited non-TRU treasury funds.
From a pure business perspective ‘cash is king’ in the current climate, we don’t know how long this crypto winter lasts.
I am looking forward to more productive discussions and ideas how we can tackle this issue.
When is the estimated start date for the OTC transaction to begin?
Is the idea of the proposal to extend additional runway or is it more to find a market maker?
Does it make much sense to sell 7-8% of the TRU supply with little vesting to a trading firm versus trying to find venture investors with a longer-term fund horizon?
If DWF gets 150k USD per day, does that only mean 24 days to get the whole allocation?
When is the estimated start date for the OTC transaction to begin?
As soon as we have answered all the community questions.
Is the idea of the proposal to extend additional runway or is it more to find a market maker?
To extend runway, however as we lost our market maker this is an added bonus
Does it make much sense to sell 7-8% of the TRU supply with little vesting to a trading firm versus trying to find venture investors with a longer-term fund horizon?
We have spent the last months trying to find venture investors and strategic partners. Our timing is not the best. We are inviting anyone from the community to please put forward anyone they think could be a good partner.
If DWF gets 150k USD per day, does that only mean 24 days to get the whole allocation?
12 days as we are only talking about the first 1.8M USD at the moment. In discussions with DWF we already determined that this timeline can be extended and the purchases can be done 2-3 a week rather than daily.
Ryan x Tyler: Thanks for the time on Friday. Sharing a proposal with the broader community. Aligns with Alex’s latest points as well as our conversation.
$1.8M Sealed bid auction post FOMC.
Auction $1.8M Tru tokens at a 15% discount WITH vesting parameters.
6 month lock-up with 50% cliff followed by 6 month linear vesting.
Explore whether Wintermute could be a good partner to add.
Vesting minimizes market impact while reinforcing the longer term, strategic partnership with DWF.
It might also make sense to allow the community to take part in the auction. That said, TrueFi can also always run a second auction down the line that is community oriented.
Great chatting with you both as well @ryan.rodenbaugh @ tyler. Happy to share more on the scope of using Hedgey for this swap & vesting with the community as well.
Like we did with Gitcoin, the swap, vesting, and optional voting are pretty straightforward. If you have those terms in place already with DWF, our protocol can facilitate the swap via excrowless OTC with baked in vesting parameters.
As far as terms go, the protocol is able to facilitate whatever discount, cliff, and vesting you decide. Happy to chat more on a community call.
It would be helpful to have a clearer justification for the TRU sale. Something like “With this money, we can do X. Without this money, we would have to do Y.”
That gives the DAO a stronger basis for evaluating the proposal.
Thanks @nicole_maffeo just one note, the discount mentioned in your post is a standard discount and not taken into account the actual offer (which I am afraid I can not disclose for privacy reasons), it also does not take in account the cost of market making for TRU for 1 year. Alex
a very good point. The current stablecoin reserves for TrueFi have been allocated within the current budget already. The council has been very good in keeping the costs to a minimum however based on the current net runway development would need to stop before the end of the year. With the additional funds provided we will be extending the runway for TrueFi to the end of the following year.
The majority of the current spend is allocated to current salaries and doesn’t allow for increases or new hires
The current budget does not include all costs for the independent running of the DAO.