Reflexer Finance DAO recently (miraculously) recovered ~$1.5m. Assuming it is the DAO that owns these funds, my proposal is for ~$250k of them to be deployed as an ‘equity buyback’. I suggest a preset daily buy of ~$1373 for 182 days (6 months), using a Cowswap TWAP.
This routine buying over 6 months:
a) Reduces frontrunning and insider trading opportunities
b) Keeps number of transactions and thus gas costs relatively low
c) Reduces losses through slippage
d) Reduces FLX price volatility
The main benefits of this proposal are:
Reflexer has been selling FLX for payroll for several years; the buyback replenishes the DAO’s FLX reserve at a fraction of the price at which it was sold, near all time low at time of posting
FLX looks likely to follow KITE in becoming yield-bearing (which seems necessary if FLX is to have some intrinsic value now the protocol is ossified). Buying FLX before this change to tokenomics is fully priced in gives the DAO a reliable share of protocol revenue at a reasonable price. This will facilitate grants for future projects in the MGL, similar to that given to develop RAI-dollar.
In tradfi, equity buybacks are common and a very positive move - shows the protocol backs its own token and demonstates aligned incentives
The DAO still has over $1m in cash reserves after this buyback, including the $140k allocated to RAI-dollar
I think this is a great idea. An extra consideration is that with RAI dollar on the way, part of becoming a well known and widely used project (like it or not) is token price appreciation. This would help to get eyes back on the Reflexer ecosystem and the money god league. I think there is a lot of latent brand recognition with a lot of Ethereum OGs which has faded over time as the project has faded into obscurity. I think that part of coming back into wider knowledge and discussion in the Ethereum ecosystem is quite simply token price appreciation. It’s definitely not everything, but it is a significant positive feedback loop which generates interest and users which begets more interest in the token and underlying protocols.
This is of course on top of all of the great points you made. I hope to see this gaining traction.
I really like this proposal. It not only creates positive buy pressure to FLX, benefiting holders, it replenishes the DAO’s reserve, benefiting the project, but probably most importantly this positive action will get old and new eyes on the project, which will be key to the success to future development.
I think having a fixed schedule of buys which arent too big should should help prevent too much action from bad actors and creates predictability. And at the end of the day it still leaves plenty of funds in reserve with plenty of funds for project development.
Yes. Great idea. The $1.5million recovered by the team is a very exciting and significant development, I’ve never seen a situation like it.
If FLX will start making more sense to hold as an asset by more resembling KITE once RAIv2 launches, then the DAO should definitely be accumulating FLX with anything between the 1/6 ($250k) proposed, and 1/3 ($500k) of the recovered funds imo.
Opportunity cost is low - majority of the funds don’t seem to have been allocated to anything else. Sitting earning no yield makes little financial sense, and FLX doesn’t have much room to fall in price here, unless Reflexer folds entirely as a project which is very unlikely considering the amount of cash in reserve.
TLDR If FLX is going to become more like KITE, then I can’t think of many better uses for a significant portion of this money, somewhere between $250-500k, than the DAO investing in a substantial FLX holding, especially while FLX is this undervalued.