Also the ragequit is just a first step solution for getting market value close and around book value, this negates the governance attack factor largely. Then i agree on clearing up the DAO Governance side and revenue generation side which ultimately aims to go beyond just book value.
1 thing I do think that need to be taken into account is whether it is legally ok to do - once you do payouts to token holders you are getting already close to what are considered securities according to the Howey test. It doesn’t matter that it is decentralized or that the association is in Switzerland, if there are US token holders then the SEC has jurisdiction
I have to disagree, it will just allow Raiders to come back every season and exploit any gap in BV it does not solve the issue. I would say we incentivise for the long term, lock the treasury, distribute the yield at the current yield. the current locked ANT if would be a 60% yield for those holders, even at 20% of supply wrapped it would be 7-15% yield which people would buy ANT to participate in, buying pressure and move the value up.
I am also not sure, but pretty sure there is tax liabilities if you do a rage quite functionality, it is distributing profit. I am not a lawyer or accountant, though. @F.C.Savigny you seem to know can you clarify.
“Withholding tax: Switzerland levies a federal withholding tax on dividends and certain types of interest payments at a rate of 35%. This tax is deducted at the source, meaning the company or financial institution distributing the profit will withhold the tax and transfer it to the Swiss tax authorities.”
On that assumption ANT is already trading at near BV, and people can exit now on the open market.
Regarding the current smart contracts, yes. However, the DAO as a social institution is more than 3 years old? Token FAQs for instance.
100% - however without clear incentives no solution will be found on the “social” side of things. AragonDAO isn’t special in this sense, many old DAOs have problems with voter engagement without clear incentives to participate. Let’s recall that the Athenian citizens were paid to participate in the assembly!
On-chain activity. I’m a big believer in privacy and I would rather not create any regulatory troubles, so I won’t doxx wallets here. Please note, I don’t see any personal issues with this – anyone is self-sovereign on his wallet activity.
On the final point reminder that contributors have tax liabilities eg my effect tax on crypto is over >40% everything else is held. If you remove the tax from the calculation you will see that most ANT is held and not sold.
No, it is certainly not over 3 years old. The DAO has only just launched.
Would the yield be in ETH/Stablecoins?
How would that differ from ragequit in terms of distributing of profits?
I am not sure about the legal complications - but i am just talking from a mechanical point of view, Ragequit is better than buybacks, regarding raiders shorting after a buyback or after a ragequit, in your head, ragequit would mean the spread between BV and Market will decrease before and increase after the ragequit, all i am saying is this is not mechanically going to happen vs a buyback. For the gap to increase after a ragequit, they would have to sell the tokens, just answer me where these tokens would come from.
It does not have to be the same tokens, can easily take out a option to short ANT. Borrow the ANT, get the ETH and Stables and then buy the ANT when it detaches after the rage quit ends.
This page from 2020 and states
ANT is the native token of the Aragon Network. Today it is used to back the supply of ANJ tokens used in Aragon Court, as well as for voting on proposals in the Community Funding DAO. ANT holders will be given control of the Aragon Network in Phase 3 of the Aragon Network launch.
Maybe our disagreement comes from you thinking more formally, code-wise and me perceiving the DAO as a social thing first?
Ho yeah and regarding ragequit Swiss tax, it is not a dividend as it’s not profit, but asset management (the DAO and the AA are separate entities). Making a subdao for ragequit could also be a possibility, as AragonDAO wouldn’t be liable for it.
Yes, it is perception community funding was not what we are trying to build now which is a DAO to govern a protocol.
I have to work on the DAO that has been launched and make that work.
It would be if it knew that the funds were being distributed that way from the beginning, which everyone can now see would be the plan from this public forum.
Afraid it is profit, higher than the ICO price is profit.
I think you have to think this through more, you are incorrect here. Lets walk through it step by step from the raiders POV:
In your description, the raiders would borrow ANT either onchain or on binance, they would then use this ant to ragequit and receive ETH and Stables. Then buyback the Ant to pay back their borrow.
This is at the cost of the raider, price would have increased between his borrow and buying back, plus he pays in funding, spread and trading fees both legs. I dont see how this leads to the spread widening after ragequit.
The reality is what will happen is people will arb the ragequit, until it is closed. After which those who did the arbing have no way to sell any tokens, they have none. I am just countering your argument for saying it leads to raiders shorting and selling after the ragequit. The ragequit just provides a floor, its the same as a buyback in the end just less costs to the treasury, because the arbers have to pay the trading costs. We can set it at whatever 0.9x 0.8x BV, i do think it should be some discount to BV however.
Another way it could be put: $ANT is a governance token that has been executing governance decisions for many years in line with $ANT mission. So when @Yakitori say’s its not a new project, I think they would be referencing this, rather than the technicality of it’s recent Aragon Dao deployment.
As a long term ANT holder I would like to thank @luis for sharing this proposal, as I can personally resonate with many of the points that were mentioned.
That being said, I also believe that we need to be mindful of the potential for complexity as we move forward. Therefore I think it is important that we descope where possible.
With that in mind, here are my suggestions (at time of writing, treasury value of approx 170M):
Allocate 25M to a long term ANT buyback (1-2 years): the buyback tokens can be redistributed to contributors.
Allocate 15M to ANT DEX liquidity pool in Uniswap V3: This would increase accessibility of ANT in the market
Allocate 80M in ETH to stake and delegate the yield towards the DAO: Rather than turning the treasury into a hedge fund, we should focus on staking the ETH to generate yield for the DAO.
Vest 50M to the DAO over 5 years: ANT holders could vote on how to allocate the 10M budget. (e.g. to fund team that build decentralized governance infrastructure)
Consider ANT inflation of 5% per year: This would redistribute more ANT to active participants of the project (voters and contributors), incentivizing participation and growth.
I hope these suggestions are helpful
Not to get bogged down with the ins and outs of mechanics or the past.
I think we should start agile and simple and keep the complexity low. Take the quick wins.
Still formulating after the last 24 hours, but here is my thought. I think a buyback to distribute to contributors is good, but not sure it is legal as @F.C.Savigny has stated or will need to be done behind closed doors. And Rage quit will incur a tax of 35% (unconfirmed, but pretty sure), so ANT is trading at book value with Rage quit; no need to implement it. People can sell on the open market now.
If we can and do a buyback, I would distribute it to funded guilds on a 4-year vesting schedule, which can only be used for voting post-vesting. It would solve some of the low distribution issues. I would let the guilds work together on a proposal to distribute it. Maybe some are held for future funded guilds.
I think the quickest win is the Yield generation to wANT holders. Honestly, we should start for 1 year initially. I would see higher wrapping, no selling or ragequits needed, the price gets to BV, and ANT has some utility.
Going to keep iterating and come up with some more structured thoughts though.
There is a lot of things that yield 10-20% apr, i dont think that provides the quickest resolution. I guess the terminology of rage quit is at fault, because it is the same as a buyback just better method, instead its a contract where you set a price and people sell their ant to you, i think the key is to not offer exactly Book Value, but rather the treasury would quote a spread, 0.9x for example, in this perspective the treasury is actually just managing itself i think is what @Yakitori is alluding to. Because with each rage quit, the value of the treasury goes up (if you count ANT tokens as having value, otherwise we can look at it as the book value per ant goes up)
Indeed – instead of “rage quit”, which is a loaded world, we could just say “buy order at book value”. This can be done pretty easily on-chain with Cowswap nowadays. Aura has done it successfully last year to sell some of its tokens to the market.
It wouldn’t be a redemption (so no 35%, no requalification as droit-valeur), as it would just be a treasury diversification, just like it has been done already. I don’t believe that discussing it here makes it illegal. DAO members have currently no direct power over the treasury, which is in the hands of the AA, who is the one to convince (and who will choose between closed doors).
It is also in line with the financial duty of the AA, as it would allow the DAO to avoid a governance attack.
@AClay tbqh i think the decision here is simple - not sure who is representing you all legally but I’m sure they’ve said this to you already:
The legal ramifications of the treasury not being managed by the DAO are pretty severe. You and the AA team have a choice of whether you want to be an uncompliant securities issuer or not. The point of the treasury being managed by the DAO is to show decentralization of decision making. You do not have a choice - all roads lead to same answer. The fact that ANT was originally was an ICO puts even more liability on AA and the DAO if AA does not comply. The decision making cannot be centralized.
The arguments against buyback/“RageQuit” also show a fundamental misunderstanding of market mechanics and calls into question AA’s ability to act as a fiduciary.
Sorry @mleanos. I am not part of the AA. I will let you go back and read my comments I am for a buyback and trying to be helpful here.
I can’t be clearer, if we go down the rage quit/anything that looks like a direct exit for financial gain, only then there would be a change in the classification of ANT, and there is a tax in Switzerland of 35% minimum. Not saying you can’t go down that route, but, I am saying in that case, we are at BV.
This is why I am for incentivising wANT holders with the yield and working on some sort of buyback with distribution to the builders of the product.
Regardless of legal considerations, the problem ANT is facing is that it trades below its book value. I agree that anything that can be done within the boundaries of available options should be explored, with a strong emphasis on the sole objective of bringing ANT back to its book value.
If this isn’t achieved, it portrays how investors buying ANT tokens and holding ANT tokens consider that any funds allocated to product development are value destructive. If the current management and product development is value destructive, the reasonable solution is to cease any spending and study options to turn this into a viable endeavor.
Despite any effort that could be put to separate the token from the treasury, they are intertwined because of their history and design. The risk is that governance and budget allocation progressively freeze because holders realize that the treasury isn’t producing any return for them. It is important to fix this situation as fast as possible.
As a side note, I wouldn’t qualify a rage quit as a direct exit for financial gain, because it can take many forms, for example, an inverse bond like OHM implemented or a price floor similar to what Temple implemented with RAMOS. We are not looking at how ANT holders can make profit here, but how we can reinstate a sane and viable treasury governance to Aragon.
I described two mechanisms above to return ANT to BV, avoiding tax. I would appreciate your input on those @Wismerhill.
TBC - wANT Yeild & Buyback with distribution will work on formulating something more