Discussion: Allocate ~$250K SBR (5 year locked as veSBR) to purchasing UXP

UXD Protocol is planning on raising SBR by selling around $500k USD worth of UXP. The UXP will be sold at a discount to the current SBR price.

I propose having the DAO purchase all UXP that is not able to be sold in this sale, up to ~$250K USD worth. (at most 3M SBR at current market prices) The DAO will manage the UXP in its treasury and stake it for veUXP whenever that mechanism is released.

Benefits

  • veUXP will be another source of revenue for the DAO, in addition to swap fees.
  • UXD will likely be much more involved in the Saber ecosystem, helping solidify Saber’s position as a primary source of liquidity for native Solana stablecoins. The founder has been talking a lot about participating in the Sunny/Saber wars.
  • In general, it makes sense for veSBR to be distributed to the projects building on top of SBR, since they are the ones that will be growing the Saber DAO the most.

Downsides

  • This makes Saber less neutral. This could hurt the DAO if this prevents new stablecoins from wanting to list on Saber.
    • On the other hand, this sets the stage for stablecoin projects to raise veTokens from the Saber DAO, which could cause more projects to want to copy this model.
    • Stablecoin projects are generally not competing against each other unless they share the same exact mechanics, so stablecoin projects might not actually find this to be an issue.
  • The cost of ~3M SBR. However, the financial cost seems negligible due to the SBR being 5-year locked.

Conclusion

I’m in favor of this proposal. I’d like to see more projects getting involved in Saber governance, and we should support UXD being an early player here.

There are a few details that still need to be ironed out before we create a proposal on-chain (e.g. what will the discount be?), but I’d like to see discussion around this before this sale happens.

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What mechanism is UXD Protocol using to raise SBR, is it using Invictus Dao Flare?

Also my only concern here is will the treasury get too complicated if we start adding non blue chip tokens? Usually treasuries hold stable coins or blue chip token because it does not want to divert too much into all the smaller coins. Anyway I am a supporting for UXP protocol and think that it has a bright future, but wanted to bring up this point anyhow.

You raise a good point about ensuring other stablecoins feel like there’s a place for them in Saber, but the amount you’re talking about isn’t so significant that UXD will somehow gain too much share. Also, Saber is pretty open - just look at the rates on all the UST farms. If nothing else, this puts a little wind in the sails of a Solana native project. I like your idea.:+1:

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Does the DAO already have a treasury or wallet in existence? if so, what are the balances of the DAO? If not, where is the SBR to purchase the UXP coming from? In general i agree adding tokens of strategic partners to the DAO is a good for alignment - I just want to understand exactly where the funds are coming from and how much the DAO actually has for future purchases.

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I like this idea. UXP’s UXD stable coin is seeing widespread adoption and rapid mint sellouts each time more tokens become available. I suspect it’ll be the UST of the Solana ecosystem. We should definitely get in on that.

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Hard cap is 10B SBR, of which the DAO has a limit of 2.5B to mint https://blog.saber.so/introducing-sbr-the-saber-protocol-token-5f1f1103d57d

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Im in favor of this proposal, as it will strengthen both projects, and serve the overall mission of crypto of decentralizing money.

That the Saber Dao will profit from this only adds to the size of my YES.

Its a future blue chip sir!

BLUF: Yes, should do deal because UXP has a great team, but the DAO should also establish a framework moving forward for evaluating these opportunities/deals so that it’s doesn’t accumulate random shitcoins, and so that there’s a way to price these deals.

Thanks for proposing this @igm and @kento. This purchase would indeed make SBR much less neutral, this is fine IMO. The reality is that any protocols that choose to participate early in the SBR wars will by definition grow their influence on future DAO actions; this is the whole point of the SBR wars. I’ll point out that it doesn’t seem like they have incentive to vote to add additional stable coins in the future, but they only hold so much vote power in the end, and SBR will also have influence on their vote as well, so maybe it’s a wash in the end, but regardless this is also a reward for being early. There’s also nothing stopping other protocols from proposing similar deals with better upside for the SBR DAO, but UXP seems to be the only one so far, which says a lot in and of itself.

With all that said, that means SBR should carefully evaluate which partners it does these sort of deals with, as in many ways it is contributing to the crowning of bluechips in the ecosystem because whoever controls sbr controls liquidity controls defi. This means that we should have some framework to evaluate minimum viable potential purchases/partners. As an example, what if USH and LUNA both come forward with similar proposals?

Just off the top of my head, there is one easy factor to go off of as a start: team. Are they shipoooors? Will they be active, meaningful contributors in SBR governance? Do they seem like they are good actors in the ecosystem at large?

There’s also probably some set of hard metrics to evaluate how much one veSBR is worth vs one veUXP that would help with discount discussion. Both protocols have some expected value accrual to the vote tokens that can taken into consideration with regards to a valuation, along with current TVL, expected growth, etc. I haven’t done enough research myself to intelligently speak about this topic, and maybe this is too tradfi of a way of looking at it, but it would be great to hear from both core teams (and any other participants) how they think about this in the context of this deal.

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Makes a lot of sense for the go-to LP token destination to more closely knit themselves into Solana-native and fully decentralized stablecoin projects. UXD Protocol has a lot of potential to be dominant, especially if they can hit and maintain their 10M (then 25M UXD) capitalization goal(s) without issue, through some market turbulence. It’s also a relatively small % of treasury SBR.

Agree with @kook about the reputation due diligence. Suggest a streamlined version, such as a reference check with the folks who did the UXD P audit as they should be impartial and UXD leadership will have to grant consent to discuss. Intangibles like investor base, discord activity, outstanding. Commitment to open-source might be a question to ask.

Really like the idea overall. :smiley:

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I think the same :slight_smile: so I’ll wait patiently for this…

The proposal is now live here!

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UXD Protocol dev here, quickly chiming in regarding our commitment to open source mentioned above:

While we’re closed source at the moment (front-end, program, tooling), it is temporary, mainly to ensure we have a head-start over potential forks.

We are planning towards open sourcing all of our code progressively, from the least critical components, to the most critical ones eventually (after additional audits, relevant milestones, etc…).

In fact, we’re already working into contributing back Solend & Raydium integrations to solana-labs/governance-ui upstream, that we’ve implemented for our immediate operational needs.
This is early work in progress but I can assure you time will show we’re committed to giving back to the ecosystem.

The next logical step for us would be to open our TypeScript client that allows interacting with the UXD program & retrieving on-chain protocol/DEX data.

Happy to answer any other ~dev-related questions :slight_smile:
Thank you for your consideration on this proposal.

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Is this a publicly available bonding for the $500k of UXP with only Saber DAO acting as a backstop for up to $250k? Or will Saber DAO get first right to allocate $250k?

Where will the SBR for UXP bonding take place (e.g. UXD Protocol/Saber websites, Invictus Flare, etc.)?

@brob more news late post

bUXP will be available on the 9th of February, 2022.

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