Blockswap 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 $1,200,000 worth of BSN Tokens to Efficient Frontier as a loan for market making services.
- The ultimate amount of BSN tokens to be transferred will be calculated based on the listing price at the time of transfer to Efficient Frontier.
- Efficient Frontier will commit to make markets on CeFi exchanges and 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
CeFi
Efficient Frontier will make markets for the BSN token on centralized exchanges that list the token. We quote on both sides of the token’s order books so that traders can trade efficiently. All trading is done through the exchange API, with 24/7 human monitoring in order to adjust the parameters based upon market conditions.
DeFi
Efficient Frontier will provide liquidity to the Uniswap v3 pool so that traders and users can also trade BSN on-chain with minimal slippage.
Commercial Terms
Loan Terms
| Loan Terms | Explanation |
|---|---|
| $1,200,000 worth of BSN | EF will take out a loan in BSN, which is ultimately only returned in BSN. |
| $100,000 worth of USDT (Optional) | EF will take out a loan in USDT, which will be returned in USDT. This USDT will be used to purchase BSN in the situation that the price drops upon listing. If the price goes back up above the 14-day TWAP (time-weighted average price), then we will return the USDT. If the price stays below the TWAP through the contract, then at the end of the loan, EF will return the acquired tokens and any remaining USDT. |
Option Terms
| Option Terms | Size | Strike and Explanation |
|---|---|---|
| 18 Month Option - Tranche 1 | $400,000 worth of BSN | Option to purchase the client’s issued token. At the end of the 18-month period, Efficient Frontier can exercise the option. The strike price is set at the 14-day time-weighted average price (TWAP) of the first approved exchange that lists BSN (CeFi or DeFi). |
| 18 Month Option - Tranche 2 | $300,000 worth of BSN | Strike price is set at a 10% premium to the 14-day TWAP after the first supported CeFi listing. |
| 18 Month Option - Tranche 3 | $250,000 worth of BSN | Strike price is set at 30% premium to the 14-day TWAP after the first supported CeFi listing. |
| 18 Month Option - Tranche 4 | $250,000 worth of BSN | Strike price is set at 60% premium to the 14-day TWAP after the first supported CeFi listing. |
Additional Terms
| Service | Cost | Explanation |
|---|---|---|
| CeFi Market Making | Included with Option | Includes Market Making, Dedicated Account Manager, Telegram Support, 24/7 Monitoring, Reporting. |
| DeFi Liquidity Provision | Included with Option | Liquidity providing and rebalancing on Uniswap V3 pool. |
| Onboarding Cost, Strategy Advisory | Included with option |
Objective
To provide healthy liquidity for the BSN ecosystem on both centralized and decentralized exchanges.
Benefit
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.
CeFi: Efficient Frontier will cover up to 6 pairs from the following exchanges:
- Binance
- Coinbase
- OKX
- Gate.io
- KuCoin
- Huobi
- Crypto.com
- BitMart
- MEXC
Additional pairs will be considered according to market demand and exchanges listings and requirements.
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 Efficient Frontier. 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 prices and return any remaining part of the BSN loan. If the option is not exercised (and the Efficient Frontier chooses to return the loan), the BSN loan shall be returned to Blockswap.
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 make markets for BSN with a loan and option model, in which 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:
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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.
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No conflict - Performing the market making services shall, under the offer, not breach any regulatory or contractual requirement governing Efficient Frontier.
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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.
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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
- (b) any breach by Efficient Frontier or its agents or subcontractors 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.
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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.