Blockswap Market Making Governance Proposal
Authors: Andrew Tu, Tim Freed, Zach Reingold, Raz Peleg
Proposal Summary
Efficient Frontier is publishing this proposal to seek the Blockswap community’s approval for a market-making agreement. The proposal would entail the following:
- Authorize Efficient Frontier as an official Blockswap market maker.
- Transfer 25,000,000 BSN ($500,000 worth of BSN based on a BSN price of $0.02) to the Blockswap Liquidity Council. The Liquidity Council will sell 5,000,000 BSN ($100,000 worth of BSN) to ETH.
- The Liquidity Council will then transfer the BSN and ETH to Efficient Frontier as a loan for market-making services.
- Efficient Frontier will commit to providing liquidity in the Uniswap V3 pool.
- Efficient Frontier will either return the loaned amount at the end of the market-making period or purchase the tokens for pre-determined strike prices (detailed below).
About Efficient Frontier
Efficient Frontier is a cryptocurrency algorithmic trading and market-making firm. We spun out of a traditional finance high-frequency trading firm in 2017 and have since grown to become one of the leading market makers in the cryptocurrency ecosystem. Our team is composed of traditional finance quants and traders, as well as experienced crypto-natives, all of whom share a passion for making cryptocurrency markets transparent and fair. As a designated market maker, we are proud to provide the highest standard of service and ethics in the industry.
Services
- DeFi
- Efficient Frontier will provide liquidity to the Uniswap v3 pool for 18 months so that traders and users can also trade BSN on-chain with minimal slippage.
Commercial Terms
Loan Terms
| Loan Terms | Explanation |
|---|---|
| 20,000,000 BSN / $100,000 worth of ETH | EF will take out a loan from the Liquidity Council in BSN and ETH, which is ultimately only returned in BSN. If only part of the option is exercised, then the remaining loan shall be returned to the DAO. |
Option Terms
| Option Terms | Size | Strike and Explanation |
|---|---|---|
| 18 Month Option | 25,000,000 BSN | Option to purchase BSN. At the end of the 18 month period, Efficient Frontier can exercise the option. The strike price is set at the price of the Uniswap v3 pool at the time of LPing into the pool. |
Additional Terms
| Service | Cost | Explanation |
|---|---|---|
| DeFi Liquidity Provision | Included with Option | Liquidity providing and rebalancing on Uniswap V3 pool. Efficient Frontier will initially seed an asymmetric pool with BSN on the sell-side. We will seek to rebalance this pool over time so that the pool is ultimately symmetric. |
| Onboarding, Strategic Advisory and Customer Success | Included with Option | Includes Dedicated Account Manager, Telegram Support, 24/7 Monitoring, Reporting. |
Objective
To provide healthy liquidity for the BSN ecosystem on decentralized exchanges.
Benefits
Liquidity is very important for traders and users to be able to properly buy and sell the BSN token. Our goal here is to make markets and provide liquidity to the Blockswap ecosystem so that people can easily and efficiently enter and exit their trades.
Covered Exchanges and Pairs
DeFi: Efficient Frontier will create 1 pool on Uniswap v3. Additional pairs will be considered according to market conditions.
Voting Options
Voting Yes:
Voting YES for this proposal would indicate that the above terms for market making SHOULD be approved and that BSN tokens should be lent to the Liquidity Council, who will then lend the tokens to Efficient Frontier. After receiving the BSN from the DAO, the Liquidity Council will sell 5,000,000 BSN ($100K based on a BSN price of $0.02) into ETH, which will be lent to Efficient Frontier as part of the loan. At the end of 18 months, Efficient Frontier shall have the option either to (i) return the loan in BSN or (ii) purchase the loan in whole or in part at the strike price. If the option is not exercised (and the Efficient Frontier chooses to return the loan), the BSN lent shall be returned to the Liquidity Council.
Voting No:
Voting NO would indicate that the above terms for market making SHOULD NOT be approved and that there should be no lending of BSN tokens to Efficient Frontier for market making.
Conclusion
Market making is a key function to building efficient markets. Efficient Frontier proposes to provide liquidity for BSN on DeFi with a loan and option model, where we take a loan in the BSN token and receive an option to purchase this loan after the term ends. We look forward to answering any questions here and working together with the Blockswap DAO to provide liquidity to the BSN ecosystem.
Efficient Frontier Warrants
- Authority and Competence: Efficient Frontier has the full right, power, and capacity to perform its obligations and provide the services under the offer and it shall exercise a degree of competence and professionalism which would reasonably be expected from a skilled and experienced provider engaged in the same type of business as Efficient Frontier.
- No conflict: Performing the market making services shall, under the offer, not breach any regulatory or contractual requirement governing Efficient Frontier is subject to.
- No actions: To Efficient Frontier’s knowledge, there is no action or threatened action against Efficient Frontier which would substantially impair its right to perform the market making services or adversely affect its financial condition.
- Indemnification: Efficient Frontier shall defend and hold harmless the DAO and DAO members from and against all third-party claims or actions, costs and expenses arising from or in connection with (a) any claims by third parties resulting from or in connection with the provision by Efficient Frontier of the market making Services, or (c) any breach by Efficient Frontier or its agents or sub-contractors of applicable laws or regulations. The indemnification shall be subject to the following conditions: (i) the party seeking indemnification shall notify Efficient Frontier in writing of the applicable claim, promptly after becoming aware of the claim, and (ii) the party seeking indemnification shall provide Efficient Frontier with the right to exclusively conduct the defense of such claim, and shall assist with such defense as may be reasonably requested by Efficient Frontier. In the event that any DAO members seek indemnification, they must appoint one representative with the full authority to represent them vis-à-vis Efficient Frontier with respect to such matter, and Efficient Frontier will be required to interact only with such representative.
- Compliance: Efficient Frontier shall have sole responsibility for complying with all legislative and regulatory requirements relating to the market making services and has the means, resources, and know-how to satisfy such requirements.